Sustainability and Stakeholder Value Creation: A Coopetition Perspective

MASTER THESIS

Submitted in Partial Fulfillment of the Requirements for the Degree of

MASTER OF SCIENCE

in Strategic Management

Univ.-Prof. Dr. Kerstin NEUMANN

Department of Strategic Management, Marketing and Tourism

The University of Innsbruck School of Management

Submitted by Lukas WINKLER

Innsbruck, May 2019

Abstract The phenomenon coopetition plays a significant role when business firms in the same industry

face a common challenge such as solving socio-environmental issues or fostering stakeholder-

oriented value. However, in the existing coopetition literature, the examination for this specific

concern remains still scarce on both the theoretical and empirical level. For the purpose of

narrowing this gap, the aim of this thesis is to integrate the phenomenon of coopetition into the

sustainability literature, which includes the concept of stakeholder value creation. In this

context, the thesis developed a multidimensional framework that extends the understanding of

managing and balancing competition and cooperation to foster stakeholder-oriented value

creation. The results categorize four different dimensions, which are essential for stakeholder-

oriented value creation in coopetition. These concern inter-organizational proximity, syncretic

rent-seeking behavior, collaboration style for conflict management, and socio-environmental

value. The findings indicate that by acknowledging and adopting the mentioned categories in a

coopetitive partnership, competitors have an increased probability of successfully establishing

industry initiatives for sustainability.

Keywords: Coopetition, Sustainability, Stakeholder-oriented value creation, Cooperation,

Inter-organizational proximity, Syncretic rent-seeking behavior, Collaboration

style for conflict management, Socio-environmental value

I

Table of Content

List of Figures .................................................................................................................... III

List of Tables ..................................................................................................................... IV

1. Introduction ..................................................................................................................1

1.1. Problem Description ...............................................................................................2

1.2. Research Objective .................................................................................................3

2. Sustainability ................................................................................................................4

2.1. Industry Initiatives for Sustainability .......................................................................5

2.2. Stakeholder Value Creation in Sustainability...........................................................6 2.2.1. Stakeholder Orientation ...................................................................................7 2.2.2. Stakeholder Value ...........................................................................................9

3. Coopetition .................................................................................................................. 12

3.1. Theoretical Foundations of Coopetition................................................................. 13 3.1.1. The Resource-Based View ............................................................................ 13 3.1.2. Game Theory ................................................................................................ 14

3.2. Cooperation and Competition ................................................................................ 18 3.2.1. Relationships in a Business Network ............................................................. 18 3.2.2. Dynamic Nature of Cooperation and Competition ......................................... 20 3.2.3. Typologies of Coopetition ............................................................................. 23

3.3. Inter-Organizational Orientation in Coopetition .................................................... 25 3.3.1. Motives for Coopetition ................................................................................ 25 3.3.2. Strategic Rent-Seeking Behavior ................................................................... 26 3.3.3. Coopetition and the Role of Proximity........................................................... 32 3.3.4. Success Factors of Coopetition ...................................................................... 34

3.4. Coopetition Management ...................................................................................... 35 3.4.1. Situational Tactics between Global Rivals ..................................................... 36 3.4.2. Coopetitive Tensions and Conflict Management ............................................ 39 3.4.3. Value Dynamics in Coopetition ..................................................................... 44

4. Stakeholder-Oriented Value Creation in Coopetition ............................................... 48

4.1. Significance of Inter-Organizational Proximity in Coopetition .............................. 49

4.2. Adaptation of Syncretic Rent-Seeking Behavior .................................................... 51

4.3. Adaptation of Collaboration for Conflict Management .......................................... 55

4.4. Importance of Socio-Environmental Value ............................................................ 57

II

5. Conclusion ................................................................................................................... 59

5.1. Discussion and Theoretical Contribution .................................................................... 59

5.2. Managerial Implications ............................................................................................ 62

5.3. Limitations and Future Research ................................................................................ 65

References ........................................................................................................................... 67

III

List of Figures

Figure 1: Conceptual framework of coopetition performance................................................ 14

Figure 2: The value net model .............................................................................................. 17

Figure 3: Relationships between competitors ........................................................................ 19

Figure 4: Competition – Cooperation relationship................................................................. 20

Figure 5: Rent-seeking strategic behavior ............................................................................. 27

Figure 6: Coopetition success factors .................................................................................... 34

Figure 7: Situations and situational tactics in coopetition ...................................................... 36

Figure 8: Conflict management styles ................................................................................... 42

Figure 9: Multidimensional framework of stakeholder-oriented value creation in coopetition

............................................................................................................................. 48

IV

List of Tables Table 1: PARTS model - coopetition elements ..................................................................... 16

Table 2: Typologies of coopetition ....................................................................................... 23

Table 3: Value appropriation ................................................................................................ 45

Table 4: Types of value ........................................................................................................ 45

Introduction

1

1. Introduction

“The issues we face are so big and the targets are so challenging that we cannot do

it alone, so there is a certain humility and a recognition that we need to invite other

people in. When you look at any issue, such as food or water scarcity, it is very clear

that no individual institution, government or company can provide the solution.”

Paul Polman, CEO of Unilever (Confino, 2012)

Nowadays, the worlds’ population face societal grand challenges that require coordinative

actions to be solved (George, Howard-Grenville, Joshi, & Tihanyi, 2016). Due to the rise of

globalization, population growth, and the continuous exploitation of natural resources, it is of

prime importance to take grand challenges seriously. George et al. (2016, p. 3) define grand

challenges as “specific critical barrier(s) that, if removed, would help solve an important

societal problem with a high likelihood of global impact through widespread implementation”.

That is why the United Nations (2015) manifested seventeen sustainable development goals in

order to solve global grand challenges. These goals are associated with, for example, poverty,

climate change, or environmental degradation. Notably, the last goal, “partnership for the

goals” sheds light on a problematic domain that encourages closer examination. This goal

covers, among other things, systemic issues and appeals multiple stakeholders to enhance

global partnerships. In global partnerships, multiple stakeholders can mobilize and share their

knowledge, expertise, and technological resources towards the achievement of sustainable

development goals (United Nations, 2015).

In the global economy, business firms constitute vital players that affect and are affected by

sustainability issues. Business firms exploit the worlds’ natural resource base and transform

them into products as well as pollution affecting the human environment (Imperatives, 1987).

Therefore, a critical viewpoint rests on business firms and their involvement in this dilemma,

managing their actions towards sustainability (Christ, Burritt, & Varsei, 2017). More

specifically, business firms are appealed to take a critical role in tackling societal grand

challenges by conceiving sustainable development as a common goal (Christ et al., 2017).

Conversely, an increasing number of firms have concerns about sustainability issues and are

trying to accomplish not only economic but also social and environmental benefits. As a result,

it is evident that some businesses already acknowledge the importance of changes in

sustainability (Porter & Kramer, 2011).

Introduction

2

For instance, Unilever with its tea brand Lipton collaborated with the Rainforest Alliance

certification and enabled to mainstream sustainability in their tea production. Initially, Lipton,

as a global player in the tea industry, recognized the growing concern of its consumers for

sustainability in the key markets and used its new strategic resources as a competitive

advantage. However, after successfully implementing their initiative, the other major

competitors climbed on the bandwagon and also certified their tea production with the

Rainforest Alliance certification. As a consequence, Liptons’ revitalizing strategy for the

supply chain was an important trigger that sustainably transformed the entire tea industry

(Braga, Ionescu-Somers, & Seifert, 2011).

This business case suggests that industry-wide initiatives can have great potential for a globally

noticeable sustainable impact and give response to societal grand challenges. Nevertheless, it

is almost impossible for one company to undertake this mission on its own. This is the reason

why sustainable development should be seen as a common multi-actor problem and not as an

individual action (Imperatives, 1987). Volschenk, Ungerer, and Smit (2016) suggest that for

initiating a sustainable impact, effective collaboration between different stakeholders is needed.

Correspondingly, in order to react on global grand challenges, coordination and collaboration

between business firms and multiple stakeholders are requirements for managing these

challenges and cannot be solved in isolation (Ferraro, Etzioni, & Gehman, 2015; George et al.,

2016; Imperatives, 1987).

1.1. Problem Description Based on literature, business firms have various opportunities for implementing an industry

initiative. Firms can cooperate with many stakeholders such as suppliers, customers,

government, or public institutions (Clarkson, 1995). Active cooperation with proximal

stakeholders is also crucial for a focal firm’s survival. Notwithstanding, the most effective way

for initiating an industry-wide “cleaning” rests most likely on the cooperation among

competitors because these actors can have the biggest impact on the respective industry. One

of the fundamental problems for such an implementation is on the difficulty of this kind of

relationship as cooperation between competitors is by nature conflicting (Chen, 2008).

Academic research suggests that there already exist specific forms of cooperation between

competitors, for example, research and development consortia or sharing manufacturers

(Dagnino, 2009). In this context, two or more competitors put their strengths together in order

to strive for the achievement of a common goal, while they are usually competing in another

Introduction

3

part of the value chain. The successful management of a competitor’s collaboration can result

in benefits for each partner and their stakeholders involved. Though, such an agreement also

involves a significant risk of failure. Several studies highlight that more than half of all strategic

alliances fail (Bleeke, Ernst, & Ernst, 1993; Kogut, 1994; Kale, Dyer & Singh, 2002). This high

failure rate is due to the fact that companies lack in knowledge and experience of the dynamic

nature of an alliance, which simultaneously involves competition and cooperation (Russo &

Cesarani, 2017). In that case, competitors face the challenge to achieve and maintain successful

cooperation collectively. As a consequence, the overall question for management and academic

research arises if the likelihood of a successful competitor’s collaboration can be encouraged

by the improvement of sustainability issues.

1.2. Research Objective Since the last two decades, there has been an increasing trend in scientific research to focus on

the specific phenomenon called “coopetition”, which is the simultaneous cooperation and

competition between business firms (Bengtsson & Kock, 2000). In a coopetitive partnership,

the involved actors strive for achieving advantages from the competition and the cooperation

side which can lead to overall value creation, awarding multiple stakeholders (Christ et al.,

2017; Cygler, Sroka, Solesvik, & Debkowska, 2018; Limoubpratum, Shee, & Ahsan, 2015;

Ratten, 2018; Rusko, 2011). Although coopetition can be described as a multilateral and

multifaceted construct, coopetition may represent a set-up plan for managing a successful

partnership that involves multiple stakeholders in order to achieve common sustainable

development goals. Consequently, the thesis investigates the construct of coopetition and how

a cooperative competition between competitors can foster stakeholder-oriented value creation

in order to help solving societal grand challenges.

By considering the arguments mentioned earlier, this conceptual work addresses this research

gap by answering the following question:

How can coopetition be managed and balanced to foster

stakeholder-oriented value creation?

Sustainability

4

2. Sustainability Sustainability can be defined as the “development that meets the needs of the present while

safeguarding Earth’s life-support system, on which the welfare of current and future generations

depends” (Griggs et al., 2013, p. 306). From an economic perspective, the idea of sustainability

demonstrates the rising expectations of business firms to raise their social and environmental

engagement. Nonetheless, there is still a large number of firms which view sustainability as a

costly business activity and represents a “necessary evil to maintain legitimacy and the right to

operate” (Hart & Milstein, 2003, p. 56). Therefore, global capitalism has been criticized for

neglecting vital cultural and environmental factors in the global economy (Nye Jr, 2001).

Similarly, Porter and Kramer (2011) criticized and questioned the current capital system

because it neglects societal challenges and needs. The authors further suggest that companies

thrive for economic success at the costs of the broader community. For decades, a fundamental

problem has been resting on business firms and their obsolete approach of value creation (Hart

& Milstein, 2003). Firms mainly create value by focusing on the financial outcome and gaining

quick results while they are missing out specific customer needs and neglect further aspects that

affect their long-term success. As a result, companies are appealed to take back the reins and

create shared value that concerns business and society (Porter & Kramer, 2011). In this context,

the main focus lies on aligning business firms with society and the natural environment in order

to manage their interconnected relationship towards a long-term existence (Assembly, 2015).

The implementation of sustainability initiatives goes beyond enhancing legitimacy and

reputation for a firm, but may also speed up innovation, encourage repositioning, reduce risk

and costs, and consolidate growth path and trajectory (Hart & Milstein, 2003). Several

companies such as Google, Intel, Johnson&Johnsen, Nestlè, Unilever, and Walmart have

already shown sustainable initiatives by managing more significant innovation and growth not

only in the society but partially in the industry (Porter & Kramer, 2011).

Business firms can address sustainability issues by focusing on societal needs of their

stakeholders that reflect in products and markets, such as nutritious food or less environmental

damage. Moreover, firms can focus on redefining their productivity in the value chain, which

includes, for example, health and safety standards. Furthermore, companies can address

sustainability issues by enabling cluster developments (for instance, standard organizations or

trade organizations) (Porter & Kramer, 2011).

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After introducing and providing a first notion of the concept of sustainability, the chapter

continues with examining industry initiatives for sustainability and the relevance of establishing

sustainability standards.

2.1. Industry Initiatives for Sustainability In academic research, an increasing concern of “greening” an industry has been widely

recognized in the 1990s (Fischer & Schot, 1993). In particular, the word “greening” derives

from a “green economy” which defines an economy that “results in improved human well-

being and social equity, while significantly reducing environmental risks and ecological

scarcities” (UNEP, 2011, p. 2). Despite the economic values of industries, industrialization has

caused substantial pollution loads and ongoing exploitation of natural resources (Hunter

Lovins, Lovins, & HAWKEN, 1999). As a consequence, a growing interest has been perceived

in how the private sector can establish new approaches, strategies, and systems to manage social

and environmental problems by, for example, raising standards (Welford, 2014).

In general, standards can be defined as “agreed criteria by which a product or service’s

performance, its technical and physical characteristics, and/or the process, and conditions,

under which it has been produced or delivered, can be assessed” (Nadvi & Wältring, 2002, p.

6). Most of the available research focuses on mandatory public standards in developed countries

(designated as governmental regulations), whereas less attention was given to voluntary

standards (Giovannucci & Ponte, 2005).

In contrast to mandatory public standards, voluntary standards are established, adopted, and

monitored by private bodies or business firms (Henson & Humphrey, 2010). More precisely,

voluntary standards are located in the private sector and play a significant role in fostering a

green economy. Hence, business firms can form coalitions with other businesses for setting a

standard (Potts, Lynch, Wilkings, Huppé, Cunningham, & Voora, 2014).

In the last decade, sustainable practices, inferred from societal demands, have been

implemented and influenced private sector activities (Potts et al., 2014). In light of this,

voluntary sustainability standards gained increased recognition and have enjoyed a fast-

growing market value (Giovannucci & Ponte, 2005). What is more, Potts et al. (2014) indicate

that a growing number of companies getting integrated into standard-setting and

implementation processes. Companies form voluntary sustainable standards in order to provide

certifications for products or production services, label definition, or the setting of codes of

conduct (Giovannucci & Ponte, 2005). Besides, each initiative tends to pursue an ethical

philosophy, which is defined beforehand in the standard-setting process (Potts et al., 2014).

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From an industrial perspective, especially in the commodity markets, organizations have

successfully established a wide range of sustainability standards which have a global presence

and record a growing standard-compliant production, for example, for coffee, forestry, tea or

cotton (Potts et al., 2014). Global present initiatives include the 4C Association, ProTerra,

Bonsucro, Fairtrade, Rainforest Alliance, to name a few (Potts et al., 2014). Some of these

initiatives were initially induced by industry-led dialogue and cooperation of multiple

stakeholders (for instance, Bonsucro).

Voluntary sustainability standards can be formed and coordinated by key players in the industry

who search for consensus and mutual business opportunities (Giovannucci & Ponte, 2005).

Such initiatives represent a potential pre-competitive venue that brings competitors together in

order to preserve public resources or to collectively create new markets (Potts et al., 2014).

However, a well-known reason for market failure is that competitors are unable to collectively

plan or take actions for the purpose of maximizing benefits for all actors involved. They instead

make self-interest decisions individually for maximizing their benefit, which in turn, results in

a consistent overuse of resources and a decreased social welfare (Hardin, 1986). A possible

solution for this issue is to find a so-called “Nash equilibrium”, in which competitors elaborate

an optimal strategy that results in a situation where every involved player is better off (Nash,

1950; 1951). However, the implementation for such initiatives largely depends on the

commitment of each involved player and the established rules for the standard system (Potts et

al., 2014).

So far, the thesis has described sustainability in the global economy and the importance of

sustainability initiatives in industries. In that regard, sustainability initiatives are induced by

multiple stakeholders (Potts et al., 2014). Therefore, the following subsection investigates in

the subject matter of stakeholders and the creation of stakeholder value in more detail.

2.2. Stakeholder Value Creation in Sustainability

Several studies suggest that the role of business firms includes responsible actions by focusing

on a wide range of interest groups into their corporate strategies (Agle, Donaldson, Freeman,

Jensen, Mitchell, & Wood, 2008; Freeman, 1984; Mitchell, Agle, & Wood, 1997). In this thesis,

stakeholder value creation is subdivided into stakeholder orientation and stakeholder value.

That is why the following subsections take a closer examination on both classifications.

Sustainability

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2.2.1. Stakeholder Orientation The responsible behavior of firms describes a stakeholder orientation, in which focal firms take

the issues of their stakeholders into account (Heikkurinen & Bonnedahl, 2013). A focal firm

has constant relationships with customers, suppliers, and is also a performer to other actors

(Araujo, Dubois, & Gadde, 2003).

Stakeholder orientation does not mean to separate economic and other responsibilities of a firm

but instead merge them (people-planet-profit) through its stakeholders (Freeman, Harrison,

Wicks, Parmar, & De Colle, 2010). In contrast to traditional business, stakeholder orientation

arises as an alternative approach in terms of ethics and responsibility (Heikkurinen &

Bonnedahl, 2013). According to Carroll (1991, p. 41), ethical responsibility represents

“standards, norms, or expectations that reflect a concern for what consumers, employees,

shareholders, and the community regard as fair, just, or in keeping with the respect or protection

of stakeholders’ moral rights.” In other words, a business firm can integrate social and

environmental issues in its business activities when they engage and interact with its

stakeholders (Heikkurinen & Bonnedahl, 2013). Furthermore, network literature and

stakeholder literature repeatedly suggest that firms, who take stakeholder interests into account,

end up with a higher business performance than firms with conflicting views toward

stakeholders’ interests (Dyer & Singh, 1998; Freeman, 1984; Freeman, Martin, & Parmar,

2007).

The origin of stakeholders emerged from the strategic management literature (Rhenman, 1968)

and evolved afterwards in a stakeholder orientation or stakeholder approach (Freeman, 1984;

Freeman, 2010). The definition of stakeholders refers to those groups or individuals “who can

affect or is affected by the achievement of the organizations’ objectives” (Freeman, 1984, p.

46).

In this respect, Freeman et al. (2010) classified between primary or secondary stakeholders.

Primary stakeholders constitute those stakeholders viewed from a narrow-angle, which include

customers, employees, local communities, suppliers, and financiers. Whereas, secondary

stakeholders include all stakeholders in a broader sense, such as competitors, government, non-

governmental organizations, union leaders, consumer advocate groups, special interest groups,

and the media (Freeman et al., 2010).

For each business firm following a stakeholder orientation, it is vital to focus on stakeholders

who promote and positively influence its business operations, instead of those who undermine

the achievement of its organizational objectives (Heikkurinen & Bonnedahl, 2013). Mitchell et

al. (1997) suggest three different attributes to identify “salient” stakeholders, which are power,

Sustainability

8

legitimacy, and urgency. This approach supports business firms to differentiate between

stakeholders who are critical for the achievement of their organizational objectives

(Heikkurinen & Bonnedahl, 2013).

Driscoll and Starik (2004) extend this view by adding on proximity as a further attribute of

stakeholder salience. The authors argue that the role of proximity (spatial distance to the

stakeholders) is as important as the time aspect, which refers to as stakeholders’ urgency

(Mitchell et al., 1997). The academic literature suggests that proximity relates to the business

variable relatedness (Tsai, 2000) or the concept of stakeholder networks (Heuer & Starik,

2002). Driscoll and Starik (2004) point out that spatial nearness plays a vital role for business

firms to recognize and interact with stakeholders. Additionally, the authors claim that the

greater the proximity, the higher the probability of developing stakeholder relationships and

vice versa. Not only physical proximity, but also cognitive proximity matters in the case that

organizations share similar ideas, approaches, and actions (Bansal & Roth, 2000).

For instance, business firms in the same industry acknowledge themselves as dependent or

proximate stakeholders because of their integration into the same or allied industry associations.

Moreover, proximate stakeholders have a close connection to a firm’s shared value chain and

include those organizations, which are shared by firms or those, who consider themselves as

buyer or suppliers of a firm. Besides, proximity describes the affinity organizations may have

for one another in terms of complementary missions, strategies, structures, resources or

organizational members. Another criterion that applies for proximity refers to the concept of

ubiquity, in which stakeholders are virtually omnipresent, and the reciprocal co-existence

between a firm and its stakeholders represents proximity. Thus, the concept of ubiquity is

especially relevant to perceive the natural environment as primordial stakeholder (Driscoll &

Starik, 2004).

Those stakeholders, who are essential for the growth of sustainability, such as the poor or the

natural environment, are most likely less salient than other stakeholders (Hart & Sharma, 2004).

In turn, several non-governmental organizations successfully acted as active counterparts who

give a voice to sustainability-related stakeholders by creating uprising about sustainability

concerns around businesses (Heikkurinen & Bonnedahl, 2013).

According to Heikkurinen and Forsman-Hugg (2011), a firm can add responsibility by adopting

a stakeholder orientation through either applying a responsive approach or by applying a

beyond responsive approach.

Firms which apply a responsive approach can use appropriate organizational capacities to react

to already existing demands of relevant stakeholders and take actions to upcoming changes in

Sustainability

9

the market. Such initiatives include, for instance, the adaptation of higher labor standards or

considering renewable energy, which, in turn, may enhance the achievement of organizational

objectives (Heikkurinen & Forsman-Hugg, 2011).

In contrast, firms that apply a beyond responsive approach can create new stakeholder demands,

which, in turn, transform the market. Initiatives of a beyond responsive approach include, for

example, cleaner production. This approach encourages firms to find new and innovative

solutions in business operations in order to take responsibility (Heikkurinen & Bonnedahl,

2013). In conclusion, firms with a solid stakeholder orientation can generate additional value

for stakeholders by adopting a responsive or beyond responsive approach and thus, contribute

to the improvement of sustainability issues (Heikkurinen & Bonnedahl, 2013).

After analyzing the responsible behavior of a firm or stakeholder orientation, the next section

explores stakeholder value in more detail.

2.2.2. Stakeholder Value According to Harrison and Wicks (2013, p.100), the definition of value can be generally

understood as “anything that has the potential to be of worth to stakeholders.” In this context,

the received value depends on the utility of how stakeholders can make use of it in their utility

function. In line with the firm’s multi-stakeholder approach of Freeman (1984), a firms’

performance describes “the total value created by the firm through its activities, which is the

sum of the utility created for each of a firm’s legitimate stakeholders” (Harrison & Wicks, 2013,

p. 102). Therefore, legitimate stakeholders refer to those groups a firm has an obligation to and

which regular cooperative participation constitutes an ongoing issue (Phillips, 2003).

Legitimate stakeholders mainly refer to stakeholders in the narrow sense which are customer,

suppliers, and the communities, in which a firm operates (Harrison & Wicks, 2013). However,

it depends on each situation how legitimate or salient stakeholders are perceived (Driscoll &

Starik, 2004). In addition, it is essential to identify specific aspects that are vital to stakeholders

(Spiller, 2011). Harrison and Wicks (2013) state that the perception of stakeholder value can

be evaluated by a stakeholders’ utility function and can be categorized in four different ways:

Þ Stakeholders’ utility associated with real goods and services

Þ Stakeholders’ utility associated with organizational justice

Þ Stakeholders’ utility from affiliation

Þ Stakeholders’ utility associated with perceived opportunity costs

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The first category refers to stakeholders’ utility that can be perceived in the form of real goods

and services. The stakeholder value in this utility function indicates the most transparent one

because the exchange of goods and services include immediate financial compensation

(Harrison & Wicks, 2013). In this case, Barney (2011) argues that some of a created value

include time and effort, which represent a degree of uncertainty how a purchase reflects in the

expected level of utility. Conversely, the financier expects an appropriate return of its

investment.

The second category relates to stakeholders’ utility that is associated with organizational justice,

which involves a firms’ respect, fairness, and reciprocation to stakeholders (Cropanzano &

Mitchell, 2005). Organizational justice concerns reciprocal exchanges, in which the value

creation is handled fairly (Simon, 1966). Especially, when multiple stakeholders are involved

in the value creation process, the interdependence between the actors has a significant influence

on the relationship and their outcome (Ekeh, 1974).

Concerning the third category, stakeholder utility derives from the affiliation with other

organizations. Therefore, the social identity theory identifies organizations in social categories

and their association with others (Ashforth & Mael, 1989). A positive relation towards others

reflects valuable connectedness and empowerment (Hogg & Turner, 1985). Affiliation with

other organizations can also foster a common interest between different stakeholders (Putnam,

2000). More precisely, Hartman and Phillips (2011) point out that affiliation can encourage

collective action for a common good that leads to a win-win situation, in which all involved

stakeholder benefit.

The last category to perceive stakeholder utility pertains to the opportunity costs and the

interconnectedness of the above-mentioned categories. In that case, the perception of

stakeholder utility depends on the stakeholders’ belief that the trade they have made is almost

equally valuable than if they have made a similar trade with other organizations. Thus, the

categories, as mentioned above, overlap to some extent. For instance, the degree of justice

influences organizational affiliation, whereas the value of goods and service influences the

perception of justice. In that sense, Susniene and Vanagas (2006) highlight that a business firm

is in the center of a network with other stakeholders, whose behavior is partially shaped by the

firm’s way of treatment.

This chapter starts by introducing sustainability and suggesting that business firms in the global

economy are appealed to align their operations with societal concerns. It is followed by

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indicating that this can be established among other things through industry initiatives for

sustainability. Especially, competitors play a significant role in establishing such initiatives and

henceforth, may create a path towards a green economy. What is more, the section explains the

importance of stakeholder value creation and points out that a firm’s strong stakeholder

orientation leads to better performance (Dyer & Singh, 1998; Freeman et al., 2007; Freeman et

al., 2010; Harrison & Wicks, 2013). In the end, it describes stakeholder value and how

stakeholders of a firm perceive value in their utility function (Harrison & Wicks, 2013).

The next part investigates in the collaboration between competitors and hence, introduces the

phenomenon of coopetition. Moreover, the chapter analyzes different approaches on how to

manage and balance a cooperative relationship between competitors.

Coopetition

12

3. Coopetition Coopetition is an etymologic combination of cooperation and competition. The underlying

assumption of coopetition is that both concepts, cooperation, and competition, are distinctive

but not mutually exclusive (Bengtsson & Kock, 2000). Therefore, when properly managed,

competitors can source advantages from both cooperation and competition.

There are few discussions in academic literature about the origin of the term coopetition. On

the one hand, the origin of coopetition can be traced back to 1913, when Kirk S. Pickett first

recognized “Co-opetition” in the Sealshipt Oyster system as the idea of cooperative competition

(Cherington, 1913; Smith & Vogel, 2010). In this case, dealers in the system also cooperated

with their competitors to strengthen their own business. The authors described a competitor as

equal to the “oyster sold from the wooden tub” (Cherington, 1913, p. 144) in order to shed light

on more business opportunities than just to compete. Although it is not documented, it implies

that cooperative competition between competitors can create value for the whole market (Della

Corte & Aria, 2016).

On the other hand, several researchers claim that the term relates back to 1980, when Ray

Noorda, Chief Executive Officer of Novell, was the first person who believed in the philosophy

of coopetition and shaped its companie’s value system by the simultaneity of competition and

cooperation (Dagnino, 2009; Lado, Boyd, & Hanlon, 1997; Nalebuff, Brandenburger, &

Maulana, 1996; Walley, 2007).

In the mid-1990s, Nalebuff et al. (1996) set one of the first milestones to embrace the

phenomenon in academic research. In this study, coopetition is pictured as collectively

cooperate for creating a large business pie and afterwards, competing for the biggest slice of it.

Lado et al. (1997) describe coopetition as a situation, where two or more business firms

simultaneously having competitive and cooperative intentions, whereas Padula and Dagnino

(2007) define coopetitive partnerships as situations when firms are interacting among each

other based on a partially convergent interest structure.

Coopetition is also illustrated as a unique mindset which enables companies to tap into “blue

oceans”, which is associated with redefining or creating new markets and find innovative

solutions, while facing the struggles in the existing industry or so-called “bloody red ocean”

(Chin, Chan, & Lam, 2008; Kim & Mauborgne, 2006). From a more practical view, firms most

likely coopete in the industry for value creation by competing on product or factor markets,

while they are simultaneously cooperating in areas such as product design, manufacturing or

distribution and the definition of new standards (Padula & Dagnino, 2007).

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13

After analyzing the origins of the term coopetition and providing a first notion of the

phenomenon, the following subsections explain the theoretical foundations on coopetition.

3.1. Theoretical Foundations of Coopetition Academic scholars and researchers have been analyzed coopetition from different theoretical

viewpoints such as the transaction cost theory (Ritala & Hurmelinna-Laukkanen, 2009),

organization/strategic learning (Luo, Slotegraaf, & Pan, 2006), network theory (Gnyawali, He,

Madhavan, 2006; Tsai, 2002), institutional economics (Mione, 2009) or resource dependency

theory (Oum, Park, Kim, & Yu, 2004). Notwithstanding, with regard to the research question

of this thesis “How can coopetition be managed and balanced to foster stakeholder-oriented

value creation?”, coopetition is constructed by the resource-based view and the game theory

approach which are examined in the following subsections.

3.1.1. The Resource-Based View The resource-based view arises from the literature of strategic management and addresses

economic orientations, scientific approaches, and strategic behavior. The underlying

assumption of the resource-based view is that companies possess unique assets and resources

representing a competitive advantage, which ensure its effective and efficient use in an unstable

and changing environment (Markiewicz & Adamus, 2012). The heterogeneity between firms

originates from their resource profiles and that these resources cannot wholly be transferred

across the firms (Barney, 1991). As a result, the market success of a firm depends on its acquired

resources (tangible or intangible) and its differentiation to competitors (Markiewicz & Adamus,

2012).

Applying the resource-based view on coopetition, to cooperate with competitors does not

merely include financial capital, but can also be sourced through fixed assets such as research

facilities, manufactures, competent employees or their knowledge (Markiewicz & Adamus,

2012). From a more contextual view, an analysis of different organizational relationships and

activities may provide clarification where coopetition remain suitable in the value chain.

In order to understand coopetitive dynamics, Chen (1996) analyzed competitive dynamics and

argues that it derives from two factors – market commonality and resource similarity. Market

commonality refers to a competitor’s presence in the market and analyzes to what extent its

operations overlap with those of the focal firm. Whereas, resource similarity describes the

degree of a competitor’s strategic resources compared to those of the focal firm (Chen, 1996).

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14

From this perspective, each business firm has a unique market profile and resource

endowments. Hence, both factors allow firms to draw comparisons towards each other, which

might help them to determine how they interact in the market (Chen, 2008).

Peng, Pike, Yang, and Ross (2012) adapt this perspective, in which they suggest that both

factors of competitive dynamics link to coopetitive dynamics (Figure 1). In this case,

cooperation refers more to resource similarity, whereas competition contributes more to market

commonality (Luo, 2007; Osarenkhoe, 2010). Cooperation and competition are essential

elements of a firm’s overall strategy. That is why market commonality and resource similarity

represent the cornerstone of coopetition dynamics and result in an overall improvement of the

performance, at least for a temporary period (Peng et al., 2012).

Figure 1: Conceptual framework of coopetition performance (Peng et al., 2012, p.536)

Nevertheless, achieving substantial growth and long-term success is only possible with a

sustained competitive advantage which arises from valuable, rare, inimitable, and non-

substitutable resources (Barney, 1991). The resource-based view implies that the focus of

coopetition is on achieving competitive advantage and managing scarce resources which cannot

be developed individually (Della Corte & Aria, 2016). This leads to the assumption that

coopetitive partnerships could help to assess firms’ resources and identify deficiencies that

could be complemented through cooperation (Markiewicz & Adamus, 2012). As a

consequence, a firm’s competitive advantage can also include tacit, inimitable cooperative

partnerships with and the success of its coopetitors (Quintana-Garcia & Benavides-Velasco,

2004).

3.1.2. Game Theory From a management perspective, game theory investigates in inter-organizational strategies for

situations, in which there is the possibility of a cooperation equilibrium (or failure) evoked by

the mutual interactions between the involved players (Nowak, Sigmund, & Leibowitz, 2000).

The game theory approach enables investigations in imperfect market situations which

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15

generally contains a small number of players, incomplete contracts, limited information,

covered actions or the situations for opportunistic moves (Nowak et al., 2000).

Lado et al. (1997) criticized the game theory approach of being too “Machiavellian” because it

highlights opportunism as a critical understanding of structuring and managing inter-firm

collaborations. Nevertheless, the game theory suggests to find win-win opportunities with

competitors and avoid destructive strategic behaviors but emphasize on gaining mutual

advantages (Quintana-Garcia & Benavides-Velasco, 2004).

In most coopetition studies, the game theory is associated with different scenarios such as the

prisoner’s dilemma or the stag hunt, involving two actors (Ritala & Hurmelinna-Laukkanen,

2009). However, the focus here rests on coopetition with multiple actors. In this context, a

social dilemma provides a better perspective on coopetition in order to analyze strategic

interactions between several partners. More specifically, the social dilemma approach may

represent a better understanding of the challenges that intra-industry competitors face while

managing a coopetitive agreement (Zeng & Cheng, 2003).

A social dilemma represents a situation, in which rational actors form an alliance and need to

decide whether they want to cooperate for maximizing mutual benefits or they want to defect

in order to concentrate on gaining private benefits. The essential characteristic of a social

dilemma describes the conflict between the individual and collective rationality (Zeng &

Cheng, 2003). When the involved actors collaborate unified, then all players benefit. When

only one player acts opportunistically, then the player gets a higher payoff automatically,

because multiple parties put value in the agreement. Whereas, when all players act in their self-

interest it will turn out worst for them (Dawes, Van De Kragt, & Orbell, 1988).

Zeng and Cheng (2003) suggest that a social dilemma is more difficult to manage than a

prisoner’s dilemma because of three crucial distinctions. Firstly, it is more tempting for a

partner to act non-cooperative and defect in multi-partner coopetition, because the initiated

harm will be allocated to several players and not compress to only one party. Secondly, the

uncertainty in multi-partner coopetition is higher than in a two-party situation. Consequently,

it is harder to determine which partner is responsible for detection. Thirdly, in a two-person

dilemma, each player can assess the other players’ contribution based on his or her actions and

thus, include rewards and/or punishment for the counterparty. For a multi-partner coopetition,

this means that the influence potential is mitigated which describes a lack of controllability over

the partners’ behavior (Zeng & Cheng, 2003).

The social dilemma implies that behaving opportunistic seems to be more beneficial for each

actor. However, the game theory approach may shed light on where firms in an industry have

Coopetition

16

to interact with competitors strategically and where they can find win-win situations for all

partners involved. Drawing from the underlying assumption that each party put in little and can

gain much out of the agreement, opportunistic moves downgrade the foundation of partner

cooperation and may lead to value destruction (Zeng & Cheng, 2003).

Nalebuff et al. (1996) advices actors to detect win-win situation in such a dilemma. In general,

win-win strategies in coopetition are beneficial because they lead to less resistance and do not

pressure competitors to give up ground. In addition, a win-win move is more sustainable and

does not force competitors to retaliate. Another reason is that imitation of a win-win action is

advantageous, not harmful (Brandenburger & Nalebuff, 1995). Thus, the identification of an

appropriate coopetition strategy may lead to a sustained competitive advantage for all players

involved.

For achieving a proper mindset in a coopetitive partnership, it requires a specific technique such

as out-of-the-box thinking (Nalebuff et al., 1996). By considering competition and cooperation

simultaneously, Nalebuff et al. (1996) identified five critical elements of the game (Table 1).

These five elements are players, added value, rules, tactics, and scope.

PARTS Model

Players Added value Rules Tactics Scope

Table 1: PARTS model - coopetition elements based on Nalebuff et al. (1996, p. 33)

Players refer to the competitors in the network who collectively create a bigger business pie

and hence, receive added value. Rules and tactics are considered for the players to strategically

“looking forward and reason backward” depending on the competitors’ moves (Brandenburger

& Nalebuff, 2002, p. 274). The scope includes the volume of the game and the linkages through

players, added values, rules, and perceptions (Nalebuff et al., 1996). Coopetitors must be aware

of all PARTS, and if necessary, they need to align or change some elements during the

partnership because of different factors, as the entrance of a new player or an increase of the

scope.

Furthermore, Nalebuff et al. (1996) introduced the Value Net Model (illustrated in Figure 2),

which shows possible players within a coopetitive partnership and their interdependencies. The

value net model structures multiple, direct and indirect, vertical and horizontal relationships of

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17

a firm with different stakeholders, such as competitors, suppliers, complementors, and

customers (Padula & Dagnino, 2007). In contrast to a competitor, a complementor relates to a

company that provides supplement products or services for mutual customers. For instance,

Intel Corporation and Microsoft Corporation demonstrate a complementor partnership. Since

every computer needs a hardware as well as a software to function appropriately, Intel provides

the hardware and Microsoft allocates the necessary software. The vertical and horizontal

interdependences in the value net show where value can be collectively created and captured

between the network members (Cygler et al., 2018). That is why, from a contextual perspective,

the value net observes interactions of competitive and cooperative relationships and

investigates in how the interdependences affect coopetitors perceptions in organizations

(Bengtsson, Eriksson, & Wincent, 2010).

Figure 2: The value net model (Nalebuff et al., 1997, p. 8)

The value net model also allows to distinguish between dyadic coopetition or multifaceted

coopetition. On a dyad-level, coopetition proceeds on one layer between only two competitors.

In contrast, Rusko (2012, p. 65) defines multifaceted coopetition as „a contextual coopetition

network comprising of two (or more) coopetitive firms, in which also at least one or more

actors, such as own or foreign government, customers or other stakeholders of the firms are

involved”. Multifaceted coopetition with additional stakeholders indicates that the interplay of

the actors’ roles, processes, and objectives increases in complexity (Eikebrokk & Olsen, 2005).

The environmental interactions are based on “sets of competitive and cooperative relationships

and interdependences in the environment influence the behavior of individuals, groups or

organizations” (Bengtsson et al., 2010, p.198). Thus, the multifaceted approach of coopetition

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18

encompasses a broader perspective, which includes additional stakeholders and the opportunity

for a win-win-win situation (Walley, 2007).

This subsection of coopetition has been attempted to provide a summary of the theoretical

foundations of coopetition based on the resource-based view and the game theory. The next

subsection entails a more comprehensive investigation in the two core elements of coopetition,

cooperation and competition.

3.2. Cooperation and Competition Coopetition includes two different streams, which are cooperation and competition. The nature

of both core elements can be identified in global business networks. The following subsections

include the analysis of interactive relationships of competitors. More precisely, these parts

entail different relationships between competitors in a business network (Bengtsson & Kock,

1999), the dynamic nature of cooperation and competition (Chen, 2008), and a contextual

clarification of coopetition typologies (Dagnino, 2009).

3.2.1. Relationships in a Business Network In a business network, firms can have different relationships simultaneously (Bengtsson &

Kock, 2000; Dagnino, 2009). Cooperation activities with vertical actors, such as suppliers or

customers, are more formal and visible because it usually involves physical resources derived

from distribution activities (Bengtsson & Kock, 1999). In terms of horizontal interdependence,

cooperation with direct or indirect competitors is mainly informal and characterized by social

exchanges rather than economic exchanges (Bengtsson & Kock, 2000). In both areas, a focal

firm has a decisive role in a network context (Lavie, 2006). In the following, the section

examines different horizontal relationships between competitors, which are co-existence,

cooperation, competition, and coopetition.

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19

Figure 3: Relationships between competitors (Bengtsson & Kock, 1999, p. 181)

Co-existence includes information and social exchanges without economic exchanges.

Therefore, low connection between competitors results in a higher distance. A mutual

dependency exists, but the organizations do not interfere with each other. In general, a high

degree of trust and strong, informal norms are present, though the competitors’ goals are not

overlapping (Bengtsson & Kock, 1999).

In contrast to co-existence, competition in a business network is associated with an action-

reaction pattern. This means if one competitor makes a strategic move by launching a new

product, the others will respond, for example, by product differentiation. Social norms and trust

between competitors are mainly manifested in informal rules and their strategic goals are

similar in structure because they have the same buyer. Interactions are direct and

straightforward.

Cooperation contains frequent interactions and mainly involves social, knowledge, and

economic exchanges. Social norms and trust distribute the power among partners in a formal

cooperative agreement which means that conflicts rarely occur. Common goals encourage

closer proximity between the actors (Bengtsson & Kock, 1999).

Coopetition in a business network combines economic and social exchanges between

competitors. On the cooperative side, the power interdependence rests on functional factors

referring to the value chain, whereas on the competitive side, the power interdependence relates

to their position and strength. Nonetheless, conflicts primarily occur in competition and rarely

in cooperation (Bengtsson & Kock, 1999). Strategic goals, for example, are stipulated mutually

in cooperation but are pursued independently in the competition (Bengtsson & Kock, 1999).

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20

3.2.2. Dynamic Nature of Cooperation and Competition In several coopetition studies, the dynamic nature of coopetition is described as a paradox

(Chen, 2008; Gnyawali, Madhavan, He, & Bengtsson, 2016; Raza-Ullah, Bengtsson, & Kock,

2014). A paradox defines “contradictory yet interrelated elements (dualities) that exist

simultaneously and persist over time” (Smith & Lewis, 2011, p. 382). The neoclassical

economics theory indicates that cooperation and competition are two opposites located on one

continuum (Porter, 1985). Nevertheless, the perspective on cooperation and competition has

changed towards a more paradoxical notion of two distinct, but interrelated continua (Luo,

2004). In that sense, the consideration of the simultaneity among cooperation and competition

will be more beneficial for competitors by considering competition or cooperation on an

individual basis (Lado et al., 1997).

The relation between competition and cooperation can have different constellations. As

illustrated in Figure 4, both concepts can be described as independent opposites (dyadic),

interrelated opposites (binary) or interdependent opposites (all-inclusive).

Figure 4: Competition – Cooperation relationship (Chen, 2008, p. 298)

The first constellation (3-1) views competition and cooperation as two independent and

incompatible opposites. Both incompatible opposites are “absolutes” and hence, considered

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21

separately (Chen, 2008, p. 298). Gomes-Casseres (1996, p. 7) emphasizes the importance of

the separation between these two forces “like oil and water, competition and cooperation do not

mix. Instead, they operate side by side, one after the other, or layered one on top of the other”.

Similarly, Bengtsson and Kock (2000) argue that cooperation and competition are two

fundamentally contradicting logics which need to be managed separately. This constellation

draws on the neoclassical economic argument that one concept excludes the other and results

in a zero-sum scenario (Chen, 2008). In an inter-firm relationship, two influencing forces drive

the balance of competition and cooperation. The first force describes the mutual interest that

strives for joint value maximization, whereas the second force constitutes the self-interest of

each firm, emphasizing on aggressive actions and seeking for an individual profit increase. As

a result, when one absolute increases, the opposite decreases (Zeng & Cheng, 2003).

The second conception (3-2) demonstrates cooperation and competition as two interrelated

opposites. Inter-firm relationships or its actions with both cooperative and competitive

approaches come from either the ambiguity or the mixed nature of both concepts (Chen, 2008).

For instance, General Motors once offered consumers a $1000 coupon on car equipment when

consumers are buying a car. However, the voucher could also be redeemed at a competitor’s

store, which results in a sales boost of a rival. In this case, it is not clear whether competitors

should see the initiative of General Motors as a competitive or a cooperative action and thus,

represents ambiguity (Chen, 2008). Besides, the influencing forces of cooperation and

competition are influencing each other by forming inter-organizational relationships.

According to the Chinese yin/yang philosophy, competition and cooperation are forming a

dynamic unity and hence, generated significant importance for inter-firm dynamics (Chen,

1996).

A coopetitive situation entails innately a certain degree of risk and uncertainty because the

involved organizations may have different views on the relationship. This relationship

asymmetry can be seen, for instance, in a network economy. If a firm wants to introduce a new

standard, it must collaborate with other firms and develop a single-network with

complementary resources of others. Examples for such a standard are automated teller machine

(ATM) networks, high-definition television (HDTV) standard or cellular phone networks.

These cases show initiatives of establishing a new standard and include both cooperative and

competitive aspects (Chen, 2008). After a standard has been established, the competitors face

an increase in competition, which is even more intensified when new players join the network.

Afterwards, the competitors must still collectively maintain the standard in order to not waste

valuable resources (Shapiro & Varian, 1999).

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22

The interrelation and the constant pressure on organizations to balance the dualities are

manifested in such a situation. The word “compete” combines two Latin words “com”

(together) and “petere” (to aim at), which means more or less “to strive after something, in a

company or together” (Chen, 2008, p. 299). This derivation indicates that even in such a

divergent situation of two opposites, the competitors are to a certain extent intertwined and

mutually influence each other (Bengtsson & Kock, 2000).

In the third constellation (3-3), cooperation and competition are unified in both circles and

characterized by dependency and relation. Thus, the interdependent opposites are seen as an

“all-inclusive” constellation (Chen, 2008). In this conception, inter-organizational relationships

or their actions can be either of cooperative or competitive nature. The inter-organizational

research suggests that organizations are embedded in an interconnected business environment

and their viability or performance rests on its interdependence with other organizations (Dyer

& Sing, 1998; Oliver, 1990; Ring & Van de Ven, 1994). In this context, research investigations

of inter-firm relationships include, in particular, resource exchange and reciprocity (Ring &

Van der Ven, 1994). From this perspective, two different aspects are important to consider: The

first aspect suggests that cooperative and competitive ties build up the foundation of inter-

organizational relationships. The second issue implies that the idea of organizational

interdependence is a significant part of understanding organizational performance and survival

since organizations are dependent on the actions and decisions of each other (Chen, 2008).

Inter-firm dynamics also consider the “all-inclusive” constellation from an individual level,

which includes behavioral interactions among firms at the action-response level (Lado et al.,

1997). In this regard, the interplay of cooperation and competition between the inter-firm

relationship is complex and multifaceted. On the one hand, a competitive action may provoke

a cooperative response, whereas, on the other hand, cooperation between competitors may

release a competitive retaliation. In addition, the all-inclusive interdependent opposites include

relationships with neither competitive nor cooperative interactions. This kind of situation goes

beyond the scope of simultaneous competition and cooperation and is characterized as

conservative. In this case, competitive or cooperative interactions are undetected but still

represent a relationship or action of unused opportunities (Chen, 2008). The conservative

relationship mentioned above mainly relates to a co-existence in horizontal relations.

After analyzing the dynamic nature of coopetition and the three possible constellations between

cooperation and competition, the next section describes different horizontal relationships in a

business network.

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23

3.2.3. Typologies of Coopetition

With regard to the structure of coopetition, it can be distinguished between dyadic coopetition

and network coopetition, which mainly differentiates in the number of firms involved in the

partnership (Dagnino, 2009). Both structures can be either constellated as simple or complex.

Table 2: Typologies of coopetition (adapted from Dagnino, 2009, p. 30)

Simple dyadic coopetition occurs when two firms on a single layer in the value chain

cooperatively compete, such as Sony and Samsung (Ritala, 2012).

Complex dyadic coopetition includes more than two dyadic relationships among several layers,

which, for instance, can be seen in the automobile industry, for example, Volkswagen-Porsche,

Honda-Isuzu or Opel-Suzuki (Dagnino, 2009, p. 31). Most studies investigated coopetition on

a dyadic level, whereas less attention was given to a network level (Gnyawali & Madhavan,

2001).

Simple network coopetition describes a partnership between multiple firms on one single layer

of the value chain. It includes, for instance, “parallel sourcing” in buyer-supplier partnerships

or horizontal relations between competing firms in an industry (Dagnino, 2009; Kentworthy,

1995).

Toyota Motor Corporation in the automobile industry illustrates an excellent example of a

buyer-supplier relationship. In this case, Toyota criticized the American way of making

business with its suppliers, in which different organizations made competitive bids in order to

help Toyota in increasing innovations and reducing costs. This type of relationship has been

assessed by Toyota as destructive because it only leads to reduced costs in the short-term. That

is why Toyota transformed its operationalization and formed an association for the suppliers.

As a consequence, Toyota enhanced suppliers to competitive cooperation instead of solely

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24

competition. In the supplier association, information spread out among the suppliers about the

latest innovative accomplishments, which lead to quicker developments. Toyota rewarded

every supplier that contributes to innovative solutions for decreasing costs.

Horizontal relationships between more than two competing firms can be created by trade

associations (strategic alliances) or government incentives. Such agreements lead to several

economic benefits that can be achieved through greater research and development investments,

and workforce (for example, employee training). Economic benefits can also be attained

through the support of financing, technology distribution, sharing manufactures, faster

agreements on standards, and a quicker launch of products to market (Dagnino, 2009;

Kenworthy, 1995). Moreover, firms can accomplish knowledge value through knowledge

creation and knowledge transfer. This requires great communication and information exchange

that can be applied in mutual product co-design and co-development (Dagnino, 2009).

The last coopetition structure refers to complex network coopetition, which represents a

partnership among multiple firms on various layers of the value chain (for example, industrial

districts, firm cluster or multilateral agreements) (Dagnino, 2009). For instance, Michelin,

Goodyear, Pirelli, and Dunlop are global rivals in the tire industries. They collectively made a

multilateral agreement on Michelin’s invented “pax system” that includes a new service

innovation improving comfort and performance for customers. Subsequently, the system

became a new industry standard. However, the pax system failed in the end because of the

missing contributions of other actors in the network economy, such as car manufacturers and

service stations (Adner, 2012).

This section of coopetition has described the interconnectedness of the core concepts,

cooperation, and competition. Moreover, it has provided an overview of different relationships

in a business network and different typologies of coopetition. The next part analyzes the inter-

organizational orientation of competitors participating in coopetition.

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25

3.3. Inter-Organizational Orientation in Coopetition In this thesis, inter-organizational orientation in coopetition is divided into four subsections.

The first one analyzes the motives of business firms for establishing a coopetitive partnership

(Ritala, 2012). The second subsection describes different rent-seeking behaviors that

coopetitors may adopt (Lado et al., 1997). The third subsection explains the role of proximity

in coopetition (Steinmo & Jakobsen, 2013), and the fourth subsection illustrates different

success factors of coopetition (Chin et al., 2008).

3.3.1. Motives for Coopetition

Following a game theoretical perspective, competitors cooperate in order to enlarge the overall

business pie and afterwards, compete for the biggest slice of it (Nalebuff et al., 1996). The

resource-based view, on the other hand, indicates that competitors strive for achieving

competitive advantage by managing scarce resources that cannot be developed individually

(Della Corte & Aria, 2016). Benefits arise in coopetition when they mutually increase the total

value and then individually capture the value. Grounded on the game theory and the resource-

based view, Ritala (2012) mentions three specific motives that describe the rationale of

engaging in coopetition:

Þ Increasing the size of the current market or create a new one

Þ Creating efficiency in resource utilization

Þ Improving a firm’s competitive position

The first motive concentrates on increasing of the current market size or mutually creating a

new one. Enlarging the market size or creating new markets typically refers to incremental or

radical innovations. Competitors cooperate for improving their products and services or create

new ones (Quintana-Garcia and Benavides-Velasco, 2004). The main mechanisms for gaining

innovation benefits from coopetition are first, the compatibility and interoperability, and

second, the aspect of sharing risks and costs. Firms in the same industry must have a certain

exchangeability, which allows coopetitors to cooperate on a particular issue in order to create

additional value for their customers (Ritala, 2012). Especially competitors are more likely in

possession of necessary complementary resources for the initiative (Das & Teng, 2000). In

addition, due to the high costs of an initiative, competitors are more willing to share the

occurring costs and risks (Gwynne, 2009).

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26

The creation of efficiency in resource utilization relates to the second motive in coopetition.

Firms show engagement in coopetitive relationships due to their desire to use fewer resources

or utilize their current resources more efficient. Especially in scale alliances, competitors join

together, bundle, and integrate supplementary resources to share risks and costs (Dussauge,

Garrette, & Mitchell, 2000). Therefore, it enables them to gain efficiency advantages. In

general, scale alliances most commonly occur in the airline industries (Garrette, Castañer, &

Dussauge, 2009).

The third motive concerns the improvement of a firm’s competitive position. Firms do not only

want to protect their market share but also try to improve their competitiveness within the

industry. In both cases, firms use coopetition for defending their competitive advantage and

encouraging the development of new technologies. For instance, Sony and Samsung engaged

in coopetition for developing liquid crystal display (LCD) panels in order to achieve

competitive advantage (Gnyawali, He, Madhavan, 2008; Ritala, 2012).

3.3.2. Strategic Rent-Seeking Behavior A firm’s rent-seeking behavior is characterized as strategic and value-oriented, involving the

acquisition and development of resources for the generation of superior results (Rumelt, 1984).

The behavioral performance highly depends on the mobilization, allocation, and exchange of

strategic assets (Lado et al., 1997; Rumelt, 1987). Lado et al. (1997) developed a conceptual framework of different behavioral approaches for

economic rent-seeking (Figure 5). The framework goes beyond the neoclassical approach

(Porter, 1985) and explains cooperation and competition as two interrelated opposite ends of

one continuum. Moreover, it addresses four different types of rent-seeking behaviors, with

which organizations can generate economic rents and may achieve sustainable business

performance.

Four categories of strategic rent-seeking behaviors can be identified which are monopolistic

rent-seeking behavior, collaborative rent-seeking behavior, competitive rent-seeking behavior,

and syncretic rent-seeking behavior. In the following, the four categories are explained in more

detail.

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27

Figure 5: Rent-seeking strategic behavior (adapted from Lado et al., 1997, p. 119)

3.3.2.1. Monopolistic Rent-Seeking Behavior Monopolistic rent-seeking behavior is characterized by low cooperation and low competition.

This particular type of behavior is seen as beneficial in the short term but indicates to decrease

societal welfare in the long term and thus, jeopardize the survival of the firm (Lado et al., 1997).

Moreover, a firm that adopts a monopolistic behavior is viewed as inflexible and complacent,

which suppresses innovation and entrepreneurial attitude (Leonard-Barton, 1992). Under these

circumstances, monopolistic rent-seeking behavior may not be sufficient for achieving a

sustainable business performance (Lado et al., 1997).

3.3.2.2. Competitive Rent-Seeking Behavior Firms exhibit and adopt a competitive rent-seeking behavior in order to achieve a better market

position and/or generate a competitive advantage over competitors. This can be achieved either

by manipulating the constructional variables of an industry or by creating unique and inimitable

resources, skills, or expertise (Barney, 1991; Porter, 1985). Besides, this particular type of

behavior reflects a firm’s zero-sum orientation towards its stakeholders (Lado et al., 1997).

Competitive rent-seeking behavior is seen as an attitude that increases productivity and

efficiency. Moreover, it enhances a firm’s creativity by establishing new combinations of

resources, methods, and processes in order to develop new products and services (Nelson,

1991).

However, the competitive orientation faces criticism as being too limited in three different

foundations. Firstly, competition signifies a zero-sum game, in which one firm’s success

reflects another firms’ loss (Jarillo, 1988). Accordingly, when another competitor possesses a

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28

particular resource that a firm requires, competitive rent-seeking behavior tends to enhance the

protection of a firm’s unique and hard-to-copy resources or increases the possibility of

opportunistic moves towards the others (Pfeffer & Salancik, 1987). In this context, firms may

overlook cooperative possibilities for achieving a “variable plus-sum game” (Rouse, 2005).

Secondly, competitive-rent seeking behavior may neglect the importance of social

embeddedness in an industry because it represents the fundament for creating and developing

idiosyncratic and relational resources (Lado et al., 1997). Thirdly, competitive rent-seeking

behavior seeks to capture and privatize beneficial externalities and mutualizing costs. As a

consequence, dysfunctional outcomes occur, which consists of short-term benefits. In line with

monopolistic rent-seeking behavior, competitive rent-seeking behavior can be beneficial in the

short term but may not be sufficient for achieving a sustainable performance (Lado et al., 1997;

Schoemaker, 1990).

3.3.2.3. Collaborative Rent-Seeking Behavior

Collaborative rent-seeking behavior is characterized by low competition and high cooperation.

Business firms with this kind of behavior strive for common benefits, combining mutual

resources, skills, and capabilities. In contrast to the competitive rent-seeking behavior, firms

seek opportunities with competitors to share their resources in order to gain competitive

advantage. The interdependent relationship between competitors fosters a broader stance by

emphasizing on collective interest rather than only one firms’ interest. Collaborative rent-

seeking behavior promotes altruism, develops trust, and underlines mutual exchanges between

the partners (Lado et al., 1997).

Collective interest emerges from focusing on a long-term perspective and strengthening

altruism. Altruism describes a principle of ethical practice that supports the identifications of

positive-sum games between potential partners (Barney & Hansen, 1994). Positive-sum games

can be implemented by forming joint ventures or strategic alliances, which are characterized

by fundamental requirements, such as trust and commitment (Gulati, Khanna, & Nohria, 1994).

Induced commitments can be seen as the trigger for a firm’s trustworthiness that leads other

partners to reciprocal reactions, such as providing and sharing resources to the partnership.

Trust reduces uncertainty and enables social control (Barber, 1983; Ring & Van de Ven, 1994).

More specifically, it serves as a requirement for a social system to sustain a cooperative

relationship within and among organizations. What is more, trust leads to reduced transaction

costs because it can hamper opportunistic behavior (Barney & Hansen, 1994).

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A sustained cooperative relationship requires ongoing reciprocal interactions and mutual

expectations for economic exchanges (Axelrod & Hamilton, 1981). Thus, reciprocity mitigates

opportunism and encourages collaborative rent-seeking behavior. In summary, when firms

apply collaborative rent-seeking behavior including altruism, trust, commitment, and

reciprocity, it increases the probability of gaining a cooperative advantage (Kanter, 1994).

However, collaborative rent-seeking behavior also includes risks. Intensive cooperation may

lead to strategic rigidity, which results in dysfunctional outcomes (Lado et al., 1997). When

strategic alliances continuously strengthen and deepen their relationship, they may be doomed

when they miss out to break up the relationship due to environmental changes (Phillips, 1989).

Additionally, high cooperation may be disadvantageous for firms in terms of developing a habit

for cooperative partners and fail to differentiate them from opportunistic firms (Frank, 1988).

This may lead firms to blunder into a trap and get exploited by others in the relationship. Even

though collaborative rent-seeking behavior enables partners accessibility of sharing resources,

it may not be sufficient in generating a sustainable performance (Lado et al., 1997).

3.3.2.4. Syncretic Rent-Seeking Behavior Syncretic rent-seeking behavior is described as highly cooperative and competitive. With

adopting this particular form of behavior, firms seek to realize a dynamic balance among

competition and cooperation (Lado et al., 1997). By doing so, firms can not only strengthen

their competitive position by developing and leverage idiosyncratic resources but can also

simultaneously share costs and risks that arise by mobilizing their skills (Hamel, 1991).

Competition may encourage innovation inside the partnering firms, which result in knowledge,

technical, and market growth rights (North, 1990). According to the strategic alliance literature,

syncretic rent-seeking behavior leads to socioeconomic progress (Lado et al., 1997). Therefore,

it encourages knowledge development and knowledge exploitation that include raising volume

and quality of products and services, and give rise to market expansion (Aoki, 1990; Gerlach,

1992).

Besides, the syncretic rent-seeking behavior outlines win-win opportunities deriving from

cooperation and represents possibilities to enhance efficiency stemming from competition.

Nevertheless, this requires managing and handling conflicts and competitive confrontations

constructively. Such requirements are viewed as important factors that lead to “greater

openness, knowledge and understanding” between the alliance partners (Anderson,

Rungtusanatham, & Schroeder, 1994, p. 483).

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30

Also, syncretic rent-seeking behavior leads to greater strategic flexibility. Competitive

advantage can be gained by leveraging unique resources, whereas cooperative advantage can

be achieved by collaborating with trustworthy partners, identifying win-win situations, and

making necessary adjustments of resource commitments to achieve the strategic goals of the

coalition (Barney & Hansen, 1994; Gulati et al., 1994; Parkhe, 1993). The case of Toyota in

the automobile industry, as delineated in section 3.2.3., provides evidence of the power of

syncretic rent-seeking behavior in buyer-supplier coopetition (Hill, 1995; Lado et al., 1997).

In line with other behavioral approaches, syncretic rent-seeking behavior contains certain

limitations. It might fail to strengthen a firm’s competitive position when the expenses of the

implemented strategy predominate the discounted present value that occurs to the firm. Costs

of such a coopetitive partnership encompass the maintenance of a repertoire of cognitive maps,

behavioral routines, and providing an organizational resource for both cooperative and

competitive behavior. Moreover, syncretic rent-seeking behavior includes the costs of each

strategic move with the specific transaction partners. The more partners are involved, the more

expensive the partnership. A large number of partners may result in an increased rejection from

the involved partners in order to create mutual benefits (Aram, 1989). The increased rejection

stems from the fact that with multiple partners, specific inputs are difficult to evaluate or

monitor, such as firm-specific human or technological aspects, which further lead to

opportunism (Williamson, 1985).

Syncretic rent-seeking behavior may also fail to gain economic rents if the strategic goals and

expectations of the partners are not coherent, or one partner accumulates resources slower than

other partners (Hamel, 1991). As a consequence, the stimulation of developing and exchanging

knowledge is getting suppressed and may miss the opportunity for effective rents. In sum,

syncretic rent-seeking behavior may result in sustainable business performance, but it depends

on the situation and the extent of the resource contributions between the partners (Lado et al.,

1997).

3.3.2.5. Key Competencies for Coopetition Partners applying Syncretic-Rent Seeking For achieving a sustained business performance, business firms should not only consider

applying an appropriate rent-seeking behavior but also acknowledge specific drivers for

economic rents such as managerial, input-based, transformational, and output-based

competencies (Lado, Boyd, & Wright, 1992).

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31

Managerial competencies refer to a top managements’ capability to communicate and develop

a strategic vision including cooperative and competitive relations with competitors (Lado et al.,

1997). Thus, the leaders’ responsibilities and strategy development depend on specific

cognitive maps and the appropriation of perceptual structures (Maruyama, 1982). In this regard,

it is to differentiate between morphostatic and morphogenetic mindscapes. Morphostatic

aspects concentrate on homogeneity, harmony, and maintaining the current status. In contrast,

morphogenetic factors include heterogeneity, tensions between both dualities, and the

orientation towards organizational change (Hurst, Rush, & White, 1989). Lado et al. (1997)

argue that applying a morphogenetic perception facilitates business firms to strive for

cooperative and competitive strategies simultaneously.

Concerning input-based competencies, business firms need to balance their resource

investments in a coopetition relationship. Sanchez (1995) differentiates between internalized

resources, relational resources, and market resources. Internalized resources can be directly

owned and controlled by the firms. Firms with competitive rent-seeking behavior most likely

focus on investments in internalized resources (Lado et al., 1997). Whereas firms with

collaborative rent-seeking behavior may emphasize on building relational resources, which can

be obtained by cooperative agreements (Sanchez, 1995). Additionally, altruism supports

relational resources (Kanungo & Conger, 1993) and maintaining cooperative ties with

stakeholders. The third type of resource investments refers to market resources, which can be

publicly accessed from the “spot” market (Lado et al., 1997).

Consequently, firms that are applying a syncretic rent-seeking behavior in coopetition need to

balance their investments of internalized, relational, and market resources by cooperative and

competitive interactions (Lado et al., 1997).

Transformational competencies such as innovation, organizational learning, and organizational

culture enable competing firms to develop collaborative ties (Hamel, Doz, & Prahalad, 1989).

Strategic intentions of coopetition include the generation of competitive and collaborative

advantages that stems from transformational processes that are also characterized by tensions,

contradictions, and ambiguities (Browning, Beyer, & Shetler, 1995). Tensions, conflicts, and

contradictions are more or less perceived as negative phenomena. However, throughout a better

understanding of these characteristics, organizations can develop a specific type of “moral

community” over time, in which they foster reciprocal interdependencies, encourage open

communication, conduct altruistic contribution of precious capabilities, and rely on mutual trust

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32

(Browning et al., 1995; Lado et al., 1997). Thus, Lado et al. (1997) point out that syncretic rent-

seeking behavior has positive relations to process constructive conflicts, contradictions, and

cultural differences.

Output-based competencies relate most likely to reputational aspects, which can be facilitated

by syncretic rent-seeking behavior (Lado et al., 1997). Reputation refers to a firm’s brand name

or to the quality of a product or service, and can be increased, for example, through participation

in certification contests (Rao, 1994; Spence, 1973). The reputational aspect serves as a

competitive signal and represents how stakeholders perceive a business firm compared to the

competitors (Fombrun & Shanley, 1990). Developing a strong reputation can lead to an increase

in a firm’s organizational legitimacy to stakeholders and trustworthiness to partners (Lado et

al., 1997). What is more, with a solid reputational base, opportunistic behavior may not be

viewed as a valuable option in cooperative relationships (Barney & Hansen, 1994).

3.3.3. Coopetition and the Role of Proximity In order to better understand the interaction process between coopetition partners, this section

analyzes the role of proximity in coopetition. Proximity is constructed by three main types:

Organizational proximity, technological proximity, and geographical proximity (Steinmo &

Jakobsen, 2013).

Organizational proximity proceeds between inter-organizational relationships and involves

social, cognitive, institutional, and cultural proximity (Boschma, 2005; Knoben & Oerlemans,

2006).

Social proximity describes a partnership that involves trust, friendship, kinship, and experiences

and is essential for innovative improvements and collaboration (Boschma, 2005; Letaifa &

Rabeau, 2013). Moreover, it enhances effective communication between the partners through

cooperative interactions, which, in turn, consolidate the reputation and trust of the partners

(Balland, 2012; Maskell & Malmberg, 1999). Close social interactions between partners are

essential for useful knowledge exchanges and are key requirements for developing absorptive

capacity (Hotho, Becker-Ritterspach, & Saka-Helmhout, 2012).

Cognitive proximity concerns shared values in a partnership and the similarities of the partners’

perception, interpretation, and evaluation of the world (Wuyts et al., 2005). Similar to social

proximity, intense cognitive proximity between partners facilitates their communication among

each other and the absorptive capacity (Boschma, 2005). Therefore, the partners need a solid

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33

base for managing the transfer of information and expertise, which further facilitates learning

between them (Knoben & Oerlemans, 2006; Nooteboom, 2000).

Institutional proximity focuses on the coordination of actions between organizations and is

characterized by different norms and rules. Intense institutional proximity facilitates collective

learning by transferring knowledge on common ground (Knoben & Oerlemans, 2006).

Cultural proximity between organizations refers to common understandings, interpretations or

routines, which can enhance the interactions and result in quicker results (Knoben &

Oerlemans, 2006).

Next, technological proximity refers to the degree of technical knowledge that can be gained

from other organizations (Knoben & Oerlemans, 2006). Absorptive capacity plays a crucial

role in technological proximity and can be obtained by technological intermediaries through

gatekeeping, technology watch, and road mapping (Spithoven, Clarysse, & Knockaert, 2010).

Cohen and Levinthal (1990, p. 128) define absorptive capacity as “a firm’s ability to recognize

the value of new, external knowledge, assimilate it and apply it to commercial ends”. That is

why an organization with a certain degree of absorptive capacity can learn from all

organizations equally (Knoben & Oerlemans, 2006).

Geographical proximity mainly describes local, territorial, spatial or physical proximity, which

positively influences performance on cooperation (Broekel & Boschma, 2011). Close

geographic proximity facilitates interactions between the partners and support knowledge

transfer and innovation (Knoben & Oerlemans, 2006). Moreover, high physical proximity

between coopetitors facilitates the development of mutual trust because of an increased

likelihood of face-to-face interactions (Ponds, Van Oort, & Frenken, 2007).

The different roles of proximity between coopetition partners have been analyzed in this

subsection. It has been suggested that several factors of organizational, technological, and

geographical proximity can be beneficial for coopeting partners, which may lead to a successful

coopetitive partnership (Knoben & Oerlemans, 2006; Steinmo & Jakobsen, 2013). The next

subchapter examines further aspects that coopetitors should consider to establish and develop

a successful coopetition relationship.

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3.3.4. Success Factors of Coopetition The following subsection analyzes a framework of Chin et al. (2008), which contains three

main pillars that are necessary to consider when firms want to achieve and sustain a successful

coopetitive partnership. These three pillars are Management Commitment, Relationship

Development, and Communication Management. Although the framework in Chin et al. (2008)

also includes subfactors, the adapted framework (illustrated in Figure 6) focused more generally

on the different factors of the three main categories, which are explained in the following.

Figure 6: Coopetition success factors (adapted from Chin et al., 2008: p. 442)

The first pillar covers management commitment including management leadership, long-term

commitment of the involved partners, and the ability of organizational learning (Chin et al.,

2008). Management leadership describes a manager’s responsibility and their attitude towards

the partnership (Kotzab & Teller, 2003). Long-term commitment outlines the willingness of

every involved partner for the continuity of the relationship (Zineldin, 2004). Organizational

learning depends on the ability of how the partnering firms detect, process, and deploy the

information shared in the partnership (Huber, 1991).

The second category addresses the relationship development and hence, includes the

development of trust and knowledge/risk sharing. The development of trust is crucial in

coopetition with multiple partners because of the high uncertainty aspect (Zeng & Chen, 2003).

The alignment of common goals and development of a mutual organizational culture strengthen

the trust between the partners (Doney & Cannon, 1997). What is more, knowledge plays an

essential part in coopetition and represents a source of competitive advantage. In addition to

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35

trust, the identification of useful knowledge and the effectivity of knowledge and risk sharing

demonstrate supporting components of the relationship development (Carayannis, 1999).

Shared knowledge must be of value for more than only one firm because otherwise, it

constitutes a useless input (Levy, Loebbecke, & Powell, 2003). Effective knowledge sharing

results in added value that may emerge from synergy effects between the firms. In addition,

effective risk sharing is essential in coopetition to distribute not only potential losses but also

to encourage firms to cooperate for high-potential initiatives (Morgan & Hunt, 1994).

The third pillar focuses on communication management between coopetitors. It includes the

mutual elaboration, development, and implementation of coopetition strategies. Additionally,

it concerns the monitoring of information flows via an information system support (Chin et al.,

2008). Information systems support is important for the assistance in coordination and control

of joint ventures (Birnberg, 1998). More specifically, it maintains the interchange of data that

keep the involved partners up to date and ensures effective communication and coordination

between them (Friedman & Barnes, 1992). Another supporting aspect of communication

management is the application of an appropriate conflict management system. High information

flow in coopetition leads by nature to inevitable conflicts (Tidström, 2014). Thus, an effective

conflict management system is needed to prevent the relationship from escalations (Crawley,

1992). When a conflict arises, it needs a certain amount of time in terms of a conflict resolution

process (Zineldin, 2004). Moreover, in order to improve the conflict management system, the

organizations should continuously control conflict intensity, conflict processes, and conflict

management skills (Quintana-Garcia & Benavides-Velasco, 2004).

This subsection has shown what components business firms need to consider for establishing a

successful coopetitive partnership. The next section analyzes different aspects of coopetition

management.

3.4. Coopetition Management In a global environment, business firms that engage in coopetition are confronted with different

situations and challenges, which require an appropriate management (Luo, 2007). Additionally,

as delineated above, an effective conflict management system is needed to process occurring

tensions (Tidström, 2014). Furthermore, the aspect of value dynamics plays a vital role in

coopetition management that calls for a more detailed investigation (Volschenk et al., 2016).

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36

Thus, the following subsections analyze different situational tactics between global rivals,

coopetitive tensions and conflict management, and value dynamics in coopetition.

3.4.1. Situational Tactics between Global Rivals

Luo (2007) developed a framework with different scenarios of global coopetition (Figure 7). In

that framework, each coopetitive situation depends on the number of foreign markets and the

number of global rivals involved. The four situations concentrating, dispersing, connecting,

and networking also include different situational tactics, which are delineated in the following.

Figure 7: Situations and situational tactics in coopetition (Luo, 2007, p.136)

3.4.1.1. Concentrating Situation A concentrating situation represents a small number of rivals simultaneously competing and

cooperating in very few international markets. Such a situation most likely refers to growing

organizations that are still engaged with global expansion in order to reach a global scale in

their operations (Luo, 2007). For example, Bacardi focuses on the high-end vodka market in

the United States and South America, while they are simultaneously coopeting with a few

rivals, such as Pernod-Ricard from France and Allied Domecq from Great Britain (Luo, 2007).

Global players in a concentrating situation tend to consider two strategic responses to keep their

position, which are either turnaround or participation (Luo, 2007). Turnaround means seeking

for new opportunities by tapping into new international markets. Whereas participation relates

to developing a relationship with leading players. Participation is crucial of becoming a part of

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37

the global network and collaborate with leading rivals in the market in form of an alliance

partner, supplier, distributor, or co-producer (Luo, 2007).

3.4.1.2. Dispersing Situation A dispersing situation constitutes a setting where a few global rivals have coopetitive relations

in many foreign markets. In this situation, a few global rivals compete in different geographic

markets for market share or position holding while they are simultaneously cooperating in, as

for instance, cost-effective resource sharing in upstream activities. Here, firms may consider

solidification or emphasis as strategic tactics. Solidification refers to holding the firm’s position

in the market by consolidating their market power through differentiation, economies of scale,

or innovation. Emphasis is a more defensive tactic compared to solidification because it

includes avoiding direct and intensive competition. However, an emphasis tactic includes the

orientation of common needs of cooperation between rivals. Solidification is preferred from a

relatively stable rival and emphasis is preferred from a relatively weak rival (Luo, 2007).

3.4.1.3. Connecting Situation The connecting situation is represented, when many global rivals have coopetitive relations in

a few concentrated markets. Typical industries for such a situation are sports utility, plasma

television, fashion, and apparel. A large number of rivals in limited markets represent a high

potential for cooperation and low entry barriers.

For instance, in the plasma television industry, Mach-One Corporation focuses on the United

States and Chinese markets and cooperates with competitors, such as LG, Samsung, Sony,

Hitachi, and Matsushita. In this connecting situation, Mach-One simultaneously competes with

them in downstream activities as product quality or advertising, and cooperate in upstream

activities, such as sharing suppliers, establishing industry standards or cross-licensing

technologies (Luo, 2007).

Another example is shown in the automobile industry. Tata Motors has coopetitive relations to

many rivals including Fiat, Ford, Suzuki, Kia, Mitsubishi and Hyundai in the Indian and

Southeast-Asian market. In the coopetition process, Tata Motors simultaneously cooperates

with its rivals in joint marketing or research and development, and compete in production or

sales marketing (Luo, 2007).

Strategic tactics of global players in connecting situations may include differentiation or

position. Position in concentrated markets refers to occupying a central position and

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38

maximizing economic returns by exploiting available and distinctive resources. Notably,

leading players can impact global competition by applying a position tactic through product

innovation or technical standards (Barney, 1986; Chen, 1996). Concerning a comparative small

global rival, a position tactic can help firms to sustain in specific concentrated markets. By

adopting a differentiation tactic, global rivals focus on innovation, quality, customer

responsiveness, or national adaptation in order to increase their competitive position in the

concentrated markets (Luo, 2007).

3.4.1.4. Networking Situation The networking situation describes many global rivals in a broad range of international markets.

The global diversification in such a situation includes many opportunities for coopetition with

different rivals in various industries because of the increased probability of complementary

resources between rivals (Noda & Collis, 2001). In different industrial networks, a coopetitive

agreement between global rivals has loosely coupled structures, which means that they most

likely consist of informal basis and do not constrain the members’ behavior (Luo, 2007). In that

case, coopetitive relationships can be of high complexity, in which a focal firm has different

coopetition intensities with many rivals. For example, Royal Philips Electronics engages with

semiconductor and electronic rival Toshiba Corporation in a coopetition balanced relationship

(high competition and high cooperation) and simultaneously has a more cooperative-dominant

relationship to the global storage device producer BenQ Corporation. In addition, Phillips

engages with multiple telecom service providers, such as Telefonica, Telecom Italia, and

Deutsche Telekom in a monopolistic manner comprising of low cooperation and low

competition. Last but not least, Phillips also maintains a competitive-dominant relationship

with Panasonic Corporation that can be explained by their high resource similarity and high

market commonality and therefore, including fewer cooperation efforts (Luo, 2007).

Strategic tactics in networking situations refer to either sponsorship or integration. A global

rival considers a sponsorship tactic in three different ways: 1) act as a mediator in high rivalry

between members of the global network, 2) form common grounds with rivals for collaboration

(research and development consortia, standard supply bases or production clustering) or 3)

establish beneficial conditions in the global industry by either designing industrial

environments or national/global environments (Luo, 2007). These options of a sponsorship

tactic can lead to an increase in cooperation and in a decrease of competition in the global

network, which in turn, can boost the initiators’ financial returns (Gomes-Casseres, 1994).

Sponsorship tactic also describes a strategic tactic of the coopetition arrangement that includes

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39

the coordination and allocation of specific roles for each involved coopetition partner (Luo,

2007). Therefore, a focal firm may identify different positions for the involved partners and in

which markets they should compete (Lado et al., 1997). The integration tactic includes specific

allocation and coordination of resources that are needed for the cooperation exchange and the

competitive confrontation (Luo, 2007).

This section of coopetition management has analyzed coopetitive situations and situational

tactics between global rivals. As indicated in section (3.3.4.), the successful management of

coopetition also includes an appropriate management of occurring conflicts. That is why the

next part of coopetition management examines tensions in more detail and investigates how

coopetition partners can manage different types of conflicts.

3.4.2. Coopetitive Tensions and Conflict Management The management of simultaneous cooperation and competition may result in several

advantages for the involved firms (Bouncken, Gast, Kraus, & Bogers, 2015). However, the

convergent dualities are inherently conflicting, which makes it difficult for coopetitors to

sustain and balance their relationships (Bengtsson & Johansson, 2014). Therefore, the

following subsections investigate in different types of tensions, the importance of trust and

commitment in managing coopetitive tensions, and different conflict-handling behaviors in

coopetition.

3.4.2.1. Types of Tensions The interplay between cooperation and competition affects the mutual dependence between the

involved actors and results in different intensities of tensions (Fang, Chang, & Peng, 2011).

Although the terms tension, conflict or crisis are perceived as negative sides of business

relationships (Bradford, Stringfellow, & Weitz, 2004), these aspects indicate a requirement to

work on the coopetition relationship, which may lead to new ideas that benefit all partners

involved (Tidström, 2014).

Tension is a subordinate term of conflict, and in most studies, both terms are mainly used

interchangeably (Bengtsson & Kock, 2003; Fang et al., 2011; Mele, 2011; Tidström, 2014).

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40

In coopetition research, tensions refer to roles (Bengtsson & Kock, 2003), knowledge (Chin et

al., 2008, Tsai, 2002), power and dependence (Osarenkhoe, 2010) or opportunism (Lado et al.,

1997; Osarenkhoe, 2010).

Role tension relates to the general orientation of the coopeting partners among cooperation and

competition. For example, a competitor may perceive a role tension when there is a deviation

of the objective of a partner’s organization and the objective of the coopetitive agreement.

Knowledge tension in coopetition focuses on the ratio of a partner’s knowledge sharing and

knowledge restraint (Tidström, 2014). Coopetition partners share their knowledge through

cooperation and aim to capture knowledge through competition (Khanna, Gulati, & Nohria,

1998). The tension of power and dependence relates, for instance, to the size of the involved

partners (Osarenkhoe, 2010). In practice, one partner with substantial resources may use its

power to pressure a smaller partner and take specific actions against its interests, which, in turn,

leads to a particular dependency (Zeng & Chen, 2003). When a partner obtains resources from

another company, the enriched firm may reduce its dependency from the others in order to gain

more control (Luo, 2005). Consequently, there is an imbalance between power and dependence

that lead to a tension in the coopetition relationship (Tidström, 2014).

Another acknowledged tension refers to opportunism, which describes a competitor’s tendency

to evil cunning, pursuing self-interest actions, and taking advantage of a partner (Tjosvold,

Wong, & Wan, 2010). Opportunism tension mainly occurs through competition, but it can also

be induced by cooperation (Bengtsson & Kock, 1999). For instance, when a competitor allows

another competitor to gain insight into its firm’s resources, as a response, the other competitor

may copy the other firms’ core competencies (Lado et al., 1997). Consequently, the competitor

that revealed its resources may feel endangered and take a defensive stance because of the given

opportunity of self-interest behavior (Bengtsson & Kock, 1999).

3.4.2.2. Key Requirements to balance Tensions – Trust & Commitment The balance of coopetition is linked to the above-mentioned tensions and requires prerequisites

such as the fundamental considerations of trust and commitment (Tidström, 2014). According

to Chin et al. (2008), conflict management that includes trust and commitment is viewed as

significantly relevant to maintain a successful coopetition partnership. Thus, trust and

commitment represent essential requirements in coopetition that can influence and decrease

coopetitive tensions when adequately managed (Tidström, 2014).

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Trust is defined as “a willingness to rely on an exchange partner in whom one has confidence”

(Moorman, Zaltman, & Deshpande, 1992, p. 315). Moreover, it is not only necessary to

establish cooperation but also to develop and sustain cooperation with competitors (Chin et al.,

2008). In addition, trust increases over time by sharing resources, communication or utilization

and therefore, ensures clarity for firms about its partners’ balance of self-interest versus

common interest (Morris, Koçak, & Ozer, 2007). In order to develop trust, coopetitors need to

have clear common goals and adopt a mutual organizational culture (Chin et al., 2008).

In this context, common goals serve as an interconnection of the partners and their different

interests (Mohamed, Stankosky, & Murray, 2004). Similarities in cultures and processes

facilitate the partners’ interactions and promote closer cooperation (Saxton, 1997). That is why,

respect, understanding, acceptance, integrity, and tolerance are crucial elements for establishing

a common organizational culture (Chin et al., 2008). In conclusion, the trust factor serves as a

mediator for conflicts and can increase a partner’s satisfaction (Anderson & Narus, 1990). In

other words, when inter-organizational trust is present, a partner is more likely to agree to each

other’s propositions (Lui & Ngo, 2005).

The commitment of a relationship is defined as “an enduring desire to maintain a valued

relationship” (Moorman et al., 1992, p. 316). Thus, commitment can be understood as a long-

term orientation (Ndubisi, 2011). Chin et al. (2008) argue that long-term commitment is crucial

for maintaining a successful coopetition partnership. A long-term commitment can neutralize

tensions and may enhance legitimacy for the achievement of mutual goals (Tidström, 2014;

Zineldin, 2004). In order to implement a long-term commitment, the partners need to consider

the adoption of complementary strengths and weaknesses, establish a long-term arrangement

through formal agreements or trust, and continuously do periodic reviews for maintaining a

close relationship (Chin et al., 2008). In contrast, a partner’s under-commitment leads to a

reduced performance of the whole coopetitive partnership and may also determine the existence

of the partnership over time (Morris et al., 2007).

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3.4.2.3. Conflict Management Styles As mentioned earlier, occurred tensions in coopetition relate to conflicts that require appropriate

management (Tidström, 2014). Thomas and Kilmann (1978) developed a five-category concept

in order to assess interpersonal conflict-handling behavior, which has been adopted by Tidström

(2014). The framework in Figure 8 includes different management styles, such as

collaboration, competition, compromise, avoidance, and accommodation.

Figure 8: Conflict management styles (Tidström, 2014, p. 264)

Avoidance is characterized as unassertive and uncooperative. This passive conflict management

style is rarely used and only be viewed as appropriate when a tension is unimportant or

constitutes no issue for the partnership (Tidström, 2014).

Competition includes no cooperative elements. This conflict-handling behavior refers to a zero-

sum structure, which is characterized as highly assertive (forceful) and uncooperative

(Tidström, 2014). A competition-style emphasizes on confrontations between competitors and

can have positive and negative outcomes for the partnership. Bradford et al. (2004) argue that

the consequences of a competition conflict-handling behavior depend on each individual

situation. In this study, confrontation implies an appropriate strategic opportunity when the

situation involves low interpersonal conflicts and high task conflicts.

Accommodation is perceived as purely cooperative without an assertive purpose. Similar to

competition, accommodation can lead to positive or negative consequences. Moreover, it

decreases possible negative emotion that hamper the achievement of mutual goals (Bradford et

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43

al., 2004) and indicates an appropriate strategic tension behavior when the decision does not

influence a partner’s competitive advantage (Tidström, 2014).

Collaboration implies to be the most fruitful conflict-handling behavior for managing conflicts

in coopetition and is characterized by high assertiveness and high cooperativeness.

Collaboration behavior seeks for optimal win-win outcomes, which is beneficial for all included

parties (Tidström, 2014). With the adaptation of a collaboration style, the coopetition partners

search for creative solutions considering both the interests of the coopetition network and the

other partners involved (Gross & Guerrero, 2000). By adopting an attitude of problem-solving,

it leads to the effective management of conflicts and should be used in any coopetition

partnership that also involves components of competition (Afzalur Rahim, Buntzman, & White,

1999; Bradford et al., 2004, Tidström, 2014).

Compromise is centrally positioned in the framework and relates to situations when the partners

mutually agree to certain conditions and tolerate a final decision (Rahim, 1983). This particular

type of conflict management is criticized as half-hearted and lazy (Pruit, 1983). Nevertheless,

it remains advantageous when the partners fail to maintain a collaboration style (Cupah &

Canary, 1997).

Although the concept of conflict-handling behavior by Thomas and Kilmann (1978) reach

broad acknowledgment, it has been criticized for a clear distinction between competitive and

cooperative styles in theory and practice (Van de Vliert & Kabanoff, 1990). Additionally, it

appears that different styles can be adopted at once by different partners (Tidström, 2014).

Another critical aspect rests on the style effectivity (Rahim, 1983). For instance, if none of the

partners possess adequate problem-solving skills and the coopetitive situation demands quick

decision-making between distrusted partners, competition or compromise seems to be suitable

(Thomas, 1992). In coopetition, managing tensions can only be effectively handled by

considering the interest of all network partners (Mele, 2011; Tidström, 2014).

The outcome of successful conflict management in coopetition may contribute to sustaining a

successful partnership (Chin et al., 2008). The adoption of an appropriate style depends on the

situation and the subject criteria of the partners (Tidström, 2014). Conflict is, therefore, neither

positive or negative. Hamel et al. (1989) point out that harmony is not a parameter for success,

but conflicts imply to be a gateway to beneficial collaboration.

After describing different aspects of conflict management, the next part of coopetition

management takes a closer examination of value dynamics in coopetition.

Coopetition

44

3.4.3. Value Dynamics in Coopetition The cooperation between competitors differs from cooperation with other stakeholders (Ritala,

2009). In contrast to other stakeholders, competitors have more heterogeneous resources, serve

the same customer, and are confronted with similar problems and challenges (Dagnino, 2009;

Ritala & Hurmelinna-Laukkanen, 2009). That is why the knowledge that is exchanged in

cooperation plays a significant role in the value creation process (Dagnino, 2009; Ritala &

Tidström, 2014).

In general, competitors cooperate in value creation for increasing the mutual business pie and

afterwards, compete in value appropriation for the biggest slice of it (Nalebuff et al., 1996).

This part of the thesis briefly analyzes the concept of value creation, which is followed by the

description of different value appropriation benefits. Last but not least, this section explains the

different types of value that can be obtained in coopetition.

3.4.3.1. Value Creation The value creation process relates to actions about increasing the sum of the value (Ritala &

Tidström, 2014). Value describes the willingness to pay from the end-customer perspective

(Brandenburger & Stuart, 1996). In coopetition, competitors cooperate simultaneously in order

to create value (Brandenburger & Nalebuff, 2002). A firm in isolation cannot obtain the value

that is created in collaborative relationships but only through idiosyncratic mutual contributions

of alliance partners (Volschenk et al., 2016). The competitors’ motives for joint value creation

range from supply-chain efficiency to innovation, nonetheless it depends on finding appropriate

value creating synergies between them (Ritala & Tidström, 2014). Finding value creating

synergies means that competitors can bring together distinctive, as well as complementary

resources to create strategic value or competitive advantage (Barney, 1991; Dagnino, 2009).

3.4.3.2. Value Appropriation In contrast to value creation, value appropriation includes actions to capture a specific amount

of the created value (Ritala & Tidström, 2014). The value creation and value appropriation are

mutually inclusive, which means that the whole business pie is identical to the sum of the slices

(Garcia-Castro & Aguilera, 2015). According to Dyer, Singh, & Kale (2008), the total sum of

the created value in coopetition is equal to the sum of common and private benefits. As shown

in Table 3, the caption of the created value in coopetition can be distinguished between common

Coopetition

45

benefits, privately captured common benefits, private benefits, and public benefits (Volschenk

et al., 2016).

Table 3: Value appropriation (based on Volschenk et al. 2016, p. 25)

The allocation of common benefits is of prime concern in coopetition, but value appropriation

also includes the generation of private benefits (Janssen, De Man, & Quak, 2013). Common

benefits concentrate on the value that accrues to all actors in the coopetition agreement (Khanna

et al., 1998). Private benefits describe the firm’s acquired resources from another partner, which

can be directly applied elsewhere (Padula & Dagnino, 2007; Park, Srivastava, & Gnyawali,

2014). For better clarification, Volschenk et al. (2016) extend the perspective of common

benefits by considering privately captured common benefits. This specific form of value

appropriation refers to the extent each firm can capture the common benefits. Therefore, the

total benefit for an involved firm is the sum of the private benefits and the privately captured

common benefits of a firm (Volschenk et al., 2016).

Last but not least, public benefits include societal and environmental factors that have the

potential to destroy or create value for other stakeholders and the coopetition partners

(Volschenk et al., 2016). As a consequence, disregard of public benefits in coopetitive actions

is described as sub-optimal (Harrison & Wicks, 2013).

3.4.3.3. Types of Value With engaging in coopetition, competitors can create different types of value. It can be

distinguished between economic value, knowledge value, and socio-environmental value.

Besides, if not adequately managed, coopetition can also result in value destruction (Volschenk

et al., 2016).

Table 4: Types of value (based on Dagnino, 2009; Volschenk et al., 2016; Gnyawali & Charleton, 2018)

Value appropriation

Common benefits Privately captured common benefits

Private benefits Public benefits

Types of value

Economic value Knowledge value Socio-environmental

value Value destruction

Coopetition

46

The economic value mainly refers to the aggregate investments of the coopetition partners.

Dagnino (2009) argues that economic value in coopetition reflects in added values such as inter-

firm cost reduction or revenue increase. That is why competitors pursue to increase the mutual

business pie and gain more out of the relationship than invested (Volschenk et al., 2016). If the

investments outweigh the benefits, value destruction follows (Gnyawali & Charleton, 2018).

Value destruction can be of an individual or collective nature. In coopetition, value destruction

can be distinguished between joint value destruction and firm value destruction. Joint value

destruction demonstrates a net loss in the coopetition relationship that can be mostly traced

back to distrust. Distrust can result in financial consequences, such as increased costs due to

overprotection of resources or additional costs of termination (for example, negotiation or

litigation). Firm value destruction relates to an individual firm’s net loss, in which opportunistic

partners may short-change the disclosure of partners’ valuable resources. Consequently,

individual investments outweigh the common benefits of the relationship (Gnyawali &

Charleton, 2018). Nevertheless, the consideration of only economic value has been criticized

for neglecting additional hidden value that can be preserved (Dagnino & Padula, 2002) and

goes beyond profit and economic return (Harrison & Wicks, 2013).

More precisely, competitors can generate knowledge value from engaging in coopetition

(Dagnino, 2009; Volschenk et al., 2016). Knowledge value is less visible than economic value

and describes the “growth in the interfirm knowledge stock” (Dagnino 2009, p. 18). In inter-

organizational coopetition, firms can receive knowledge value through intra-industry

knowledge creation and transfer. When appropriately managed, knowledge value can be

transformed into economic value (Dagnino 2009).

What is more, coopetition relationships can create socio-environmental value. This particular

type of value is defined as “the sum of intrinsic ecological value and benefits that accrue to

society because of environmental improvements” (Volschenk et al., 2016, p. 7). In other words,

socio-environmental value creation reflects in the utility function for society, which also

involves intrinsic value.

Several environmental ethicists defend the idea of intrinsic value that among other things,

includes the concerns for the natural environment and biodiversity (Rolston, 1989; Scott, 2006).

In addition, intrinsic value is highlighted in international announcements for sustainable

development goals (Handl, 2012). In this context, Sandler (2012) suggests that those who have

intrinsic belief need to consider socio-environmental value, which can be determined by

applying appropriate conservation goals. The coopetition partners cannot capture socio-

environmental value because it does not include rivalrous value (Volschenk et al., 2016, p. 7).

Coopetition

47

Instead, socio-environmental value accrues, for instance, from common reduction of resource

intensity, reduction of waste or when socio-environmental value follows a positive-sum logic

in the value appropriation process (Volschenk et al., 2016). As an example, Christ et al. (2017)

have analyzed a case of two large companies in the wine industry, Accolade Wines and

Treasury Wine Estates, in which the firms engaged in a reciprocal bottling and packaging

contract. In that case, both companies shared their manufactures in Australia and England. The

coopetitive agreement enabled each company to ship their wine with less weight to their end

markets that in turn, led to reduced costs. In addition, the less needed fuel for transportation

resulted in reduced carbon footprint that constitutes socio-environmental value or a public

benefit (Christ et al., 2017).

Notwithstanding, a public good is not viewed as equal to socio-environmental value. For

instance, the establishment of a shared logistic-network between coopetition partners can lead

to a decrease of carbon dioxide emissions and also, for example, to reduced costs of road

construction. The reduction of carbon dioxide emissions can be considered as both, socio-

environmental value and public good, whereas the reduced costs of road construction constitute

only a public benefit (Volschenk et al., 2016).

Resuming the chapter of coopetition, it starts by describing coopetition based on the theoretical

foundations, resource-based view and game theory, and suggests that coopetitors shall pursue

win-win solutions with other competitors by focusing on the achievement of sustained

competitive advantage (Barney, 1991; Nalebuff et al., 1996). Next, the chapter continues with

an attempt to break up the complexity of the dynamic interplay between cooperation and

competition (Chen, 2008). In addition, the part of coopetition includes the explanation of inter-

organizational orientation between business firms and their motives (Ritala, 2012), strategic

rent-seeking behavior (Lado et al., 1997), role of proximity (Steinmo & Jakobsen, 2013) and

success factors of coopetition (Chin et al., 2008). The third section of the chapter describes

coopetition management, which includes the interplay between global rivals (Luo, 2007),

tensions and conflict management (Tidström, 2014), and the value dynamics in coopetition

(Volschenk et al., 2016).

Stakeholder-Oriented Value Creation in Coopetition

48

4. Stakeholder-Oriented Value Creation in Coopetition This chapter includes the determination of how business firms can manage and balance

coopetition to foster stakeholder-oriented value creation. In that case, it attempts to categorize

different components in coopetition that competitors need to consider by establishing industry

initiatives for sustainability. In order to find answers to the research question “How can

coopetition be managed and balanced to foster stakeholder-oriented value creation?” this

chapter screens the last two chapters, sustainability and coopetition.

For this purpose, a multidimensional framework (illustrated in Figure 9) has been developed,

which represents four different categories that can be associated with stakeholder-oriented

value creation in coopetition. These categories include inter-organizational proximity, syncretic

rent-seeking behavior, collaboration for conflict management, and socio-environmental value.

The first section describes the significance of inter-organizational proximity in coopetition. The

second part links the adaptation of syncretic rent-seeking behavior with the stakeholder and

sustainability literature. Moreover, it analyses different situations of coopetition and how

syncretic rent-seeking behavior can enhance the establishment of voluntary sustainability

standards. The third section of stakeholder-oriented value creation explains the adaptation of a

collaboration style for conflict management in coopetition. Notably, in multi-faceted

coopetition increases the complexity of the partnership, which consequently, requires high

competence in conflict management. The last subsection in this chapter covers the importance

of socio-environmental value in coopetition and emphasize on its existence in a broader

stakeholder network.

Figure 9: Multidimensional framework of stakeholder-oriented value creation in coopetition (own illustration)

Stakeholder-Oriented Value Creation in Coopetition

49

4.1. Significance of Inter-Organizational Proximity in Coopetition

The role of proximity received increased recognition in the stakeholder literature and describes

an additional attribute of stakeholder salience (Driscoll & Starik, 2004). In a stakeholder

context, inter-organizational proximity pictures the affinity of organizations for one another in

terms of complementary missions, strategies, structures, resources, or organizational members

(Driscoll & Starik, 2004). On the other hand, coopetition research indicates that various factors

of organizational, technological, and geographical proximity between competitors can

influence a coopetition success (Knoben & Oerlemans, 2006; Steinmo & Jakobsen, 2013).

Considering both arguments, it can be suggested that the higher the proximity between the

partners in coopetition, the greater the likelihood of a stakeholder relationship development,

which is necessary for a successful multi-faceted coopetition. Notwithstanding, for promoting

stakeholder-oriented value creation in coopetition, distinctions should be made between

different types of proximity.

Social proximity encourages effective communication that is beneficial for innovative

improvements, reputation, and trust (Balland, 2012; Broekel & Boschma, 2011; Letaifa &

Rabeau, 2013; Maskell & Malmberg, 1999). On the other hand, social nearness in coopetition

partners enhances productive knowledge exchanges (Hotho et al., 2012), which is also vital for

intra-industry knowledge creation and transfer (Dagnino, 2009). Additionally, high social

proximity can increase reputation and trust in coopetition (Maskell & Malmberg, 1999) and as

a consequence, the temptation for opportunistic behavior decreases (Barney & Hansen, 1994).

This implies that great social proximity between the coopetition partners is crucial for the

promotion of stakeholder-oriented value creation.

Concerning cognitive proximity, on the one hand, stakeholder literature indicates that firms in

a mutual business relationship should pursue shared values and have common perceptions,

interpretations, and evaluation of the world (Wuyts et al., 2005). Similarly, Bansal and Roth

(2000) argue that cognitive proximity between organizations matters in case of sharing similar

ideas, approaches, and actions. On the other hand, the coopetition literature suggests that for

achieving an appropriate mindset in coopetition, the partners should enlarge their perspective,

which requires a specific technique such as out-of-the-box thinking (Nalebuff et al., 1996). As

a result, this thesis assumes that coopetition partners with a high cognitive proximity tend to

Stakeholder-Oriented Value Creation in Coopetition

50

promote common values through a broader stakeholder orientation and thus, indicate an

increased probability of stakeholder-oriented value creation.

Institutional proximity relates to specific norms and rules that are established between

coopetition partners in order to coordinate their interactions (Knoben & Oerlemans, 2006).

Robust institutional proximity in coopetition facilitates collective learning and can also

encourage the decrease of knowledge tensions between involved partners (Knoben &

Oerlemans, 2006; Tidström, 2014). As a consequence, institutional proximity suggests an

essential factor for stakeholder-oriented value creation in order to transfer knowledge on

common grounds and to focus on mutual salient stakeholders.

Cultural proximity between coopetition partners concerns common understandings, routines or

interpretations, which can lead to an increase of interactive productivity and consequently, may

result in faster achievements (Knoeben & Oerlemans, 2006). The coopetition research suggests

for establishing and maintaining a successful coopetitive partnership, coopetition partners need

to create a mutual organizational culture over time (Chin et al., 2008) in order to develop

collaborative ties between the involved actors (Hamel et al., 1989). This requires respect,

understanding, acceptance, integrity, and tolerance between the coopetition partners (Chin et

al., 2008). In contrast, the stakeholder literature implies that the evaluation of stakeholder value

refers among other things to organizational justice that includes fairness, respect, and

reciprocation to stakeholders (Cropanzano & Mitchell, 2005). In conclusion, high cultural

proximity indicates to facilitate the development of a mutual organizational culture between

coopetition partners, which, in turn, supports the creation of stakeholder value.

Technological proximity describes the extent of technical knowledge a firm can generate from

other organizations (Knoeben & Oerlemans, 2006). The mutual learning aspect plays a

significant role in establishing new technological innovations. The main requirements of

gaining innovation benefits in coopetition refer to the compatibility and interoperability of the

partners’ shared resources (Chin et al., 2008) Technological proximity implies a significant

factor for stakeholder-oriented value creation in coopetition in terms of pursuing product

innovations or technological improvements in the value chain, such as cleaner production or

investing in renewable energy (Heikkurinen & Forsman-Hugg, 2011).

Stakeholder-Oriented Value Creation in Coopetition

51

The local, territorial, spatial, or physical nearness of partners refer to geographical proximity

(Broekel & Boschma, 2011). Following the stakeholder literature, Driscoll and Starik (2004)

argue that a spatial closeness enhances business firms to recognize and interact with

stakeholders. The coopetition research suggests that geographical proximity encourage

knowledge transfer and innovation because of short information paths (Knoben & Oerlemans,

2006). Moreover, geographical proximity supports the development of trust because of an

increased probability of face-to-face interactions (Ponds et al., 2007). Thus, geographical

proximity indicates a contributory factor that increases the stakeholder-orientation of coopeting

partners and thus, may foster on stakeholder-oriented value creation.

4.2. Adaptation of Syncretic Rent-Seeking Behavior The stakeholder literature implies that a stakeholder orientation describes a firm’s responsible

behavior (Heikurrinnen & Bonnedahl, 2013). Similarly, the research of coopetition indicates

that syncretic rent-seeking behavior broadens the perspective of a multidimensional framework,

which includes public (social) responsibility (Rusko, 2012). Moreover, the literature of strategic

alliances recognizes that syncretic rent-seeking behavior leads to socioeconomic progress

(Lado et al., 1997). As a consequence, the adaptation of syncretic rent-seeking behavior can be

viewed as socially responsible and thus, encourages stakeholder-oriented value creation in

coopetition.

The case of Toyota confirms this argument by providing evidence of the power of syncretic

rent-seeking behavior in buyer-supplier coopetition (Hill, 1995; Lado et al., 1997). The parallel

sourcing approach established collaboration between the suppliers and enhanced their

effectiveness to gain quicker results (Rusko, 2012). Within this example, Toyota showed social

responsibility with an increased stakeholder orientation. Moreover, the suppliers demonstrated

the power of syncretic rent-seeking, which, in turn, led to an increase in innovation

performance.

Business firms that adapt a syncretic rent-seeking behavior in coopetition have a greater

strategic flexibility that includes a broad range of strategic options to source advantages from

competition and cooperation (Lado et al., 1997). Especially on the competition side,

competitive conflicts and confrontations are considered as vital and promote “greater openness,

knowledge and understanding” between the coopetition partners (Anderson et al., 1994, p. 483).

The stakeholder orientation approach suggests that business firms should focus on stakeholders

who support and positively influence their business operations (Heikurrinnen & Bonnedahl,

Stakeholder-Oriented Value Creation in Coopetition

52

2013). These stakeholders are described as salient and can be evaluated by their power,

legitimacy, urgency, and proximity (Driscoll & Starik, 2004; Mitchell et al., 1997). In this

context, the adaptation of syncretic rent-seeking indicates to increase the transparency between

coopetition partners in order to identify salient mutual stakeholders that can be integrated into

the value creation process to foster on stakeholder-oriented value.

The stakeholder literature suggests that by applying a responsive approach, business firms can

focus on improving already existing stakeholder demands, for example, through higher labor

standards or by integrating renewable energy practices in the value chain (Heikkurinen &

Forsman-Hugg, 2011). In line with sustainability literature, sustainable practices derive from

societal demands and influence industry initiatives (Potts et al., 2014). In accordance with the

coopetition literature, the responsive approach reflects one of the underlying motives for

coopetition, which is to create efficiency in resource utilization (Ritala, 2012). Similarly, the

beyond responsive approach relates to find innovative solutions for creating new stakeholder

demands (for instance, cleaner production) and correspond with another common coopetition

motive, which is to increase the current market or create a new one (Ritala, 2012). As a result,

the adaptation of syncretic rent-seeking behavior in coopetition implies to enhance the

adaptation of a responsive or beyond responsive approach to foster on stakeholder-oriented

value.

Besides, the potential benefits of implementing sustainability initiatives correspond with the

potential benefits accruing from the adaptation of syncretic rent-seeking in coopetition.

According to Hart and Milstein (2003), the benefits of implementing sustainability initiatives

can lead to a repositioning in the market, reduce risk and costs by distribution, speed up

innovation or strengthen growth path and trajectory. On the other hand, the coopetition

literature suggests that syncretic rent-seeking behavior may lead to an increase of the

competitive position (Ritala, 2012), which can be gained by leveraging unique resources and

share costs and risks (Lado et al., 1997). Moreover, competition enhances efficiency that

promotes innovation (North, 1990), whereas cooperation emphasizes win-win situations, which

encourages growth and development (Nalebuff et al., 1996).

Expanding this idea, critical players in an industry might consider industry initiatives by

applying syncretic rent-seeking behavior and fostering on stakeholder-oriented value. For

instance, concerning horizontal relations, voluntary sustainability standards demonstrate a

potential pre-competitive platform in an industry that brings competitors together (Giovanni &

Stakeholder-Oriented Value Creation in Coopetition

53

Porte, 2005) in order to find new business opportunities, such as preserving public resources

concerning common stakeholders (Potts et al., 2014). Voluntary sustainability standards have

gained increased recognition and perceived a fast-growing market value (Potts et al., 2014).

However, the effectiveness of syncretic rent-seeking behavior depends on each coopetitive

situation. For this reason, the following paragraphs analyse different coopetitive situations in

conjunction with the adaptation of syncretic rent-seeking for establishing voluntary

sustainability standards.

It is suggested that a concentrating situation does not constitute a suitable scenario to establish

voluntary sustainability standards because it most likely involves rather small and new rivals

in few foreign markets that strive for market expansion and achieving a global scale. However,

it is important to mention that small rivals can also use a participation tactic to develop a

relationship with other key players in the industry and participate, for example, as an alliance

partner. In such a case, small rivals are advised to adapt a collaborative rent-seeking behavior

and foster on collective interest, but attention is needed to avoid strategic rigidity (Lado et al.,

1997; Luo, 2007).

In a dispersing situation, the adaptation of syncretic rent-seeking behavior may encourage the

establishment of voluntary sustainability standards. The coopetition partners can pursue a

solidification tactic and use the partners’ market power through differentiation, economies of

scale, or innovation. For instance, rivals compete in market share or position holding while they

simultaneously cooperate in sharing suppliers or other cost-effective activities (Luo, 2007).

This indicates that big players in a dispersing situation can enlarge their perspective with a

syncretic rent-seeking behavior to focus on stakeholder-oriented value. A relatively weak or

small rival may consider a defensive stance in a dispersing situation because of its premature

existence in a global environment. Nevertheless, coopetition literature suggests that a small

rival can also follow a mutual venture with other big players by focusing on the common needs

of its rival (Luo, 2007). In this case, similar to a concentrating situation, a relatively small rival

may consider the adaptation of a collaborative rent-seeking behavior.

In a connecting situation, many global competitors can use a position tactic, in which they try

to occupy a central market position and exploit available and distinctive resources (Luo, 2007).

Therefore, the adaptation of syncretic rent-seeking behavior can increase the rivals’ strategic

flexibility to search for competitive advantage and identify deficiencies that could be

Stakeholder-Oriented Value Creation in Coopetition

54

complemented through cooperation (Markiewicz & Adamus, 2012). Referring to the plasma

television industry, the example of the coopetition partnership between Mach-One with its

rivals (LG, Samsung, Sony, Hitachi, and Matsushita) shows evidence of product innovation

and technical standards (Luo, 2007). This implies that the adaptation of syncretic rent-seeking

behavior in a connecting situation may encourage global rivals to foster stakeholder value

creation in terms of product innovations and the establishment of standards.

In the networking situation, competitors can have several coopetitive relationships with

different intensities. Thus, a networking situation suggests to be very complex, but also shows

many opportunities for cooperation because of an enhanced probability of complementary

resources between rivals (Noda & Collis, 2001). In a networking situation, both situational

tactics, sponsorship and integration, show indications for the importance of the adaptation of

syncretic rent-seeking behavior. For instance, syncretic rent-seeking behavior facilitates a

sponsorship tactic by finding agreement on common grounds (win-win opportunities), such as

research and development consortia, common supply bases, or production clustering.

Concerning the integration tactic, syncretic rent-seeking behavior strives for a dynamic balance

of competition and cooperation (Lado et al., 1997), which correspond with the coordination and

allocation of resources for the partnership (Luo, 2007). Conclusively, the adaptation of

syncretic rent-seeking in a networking situation implies a crucial role in order to manage and

balance coopetition for the creation of stakeholder-oriented value.

However, in order to achieve stakeholder-oriented benefits with the adaptation of syncretic rent-

seeking behavior, the coopetition partners need coherent goals with all the partners involved

(Hamel, 1991). Divergent goals between the partners may lead to a disbalance of a cost/benefit

ratio in coopetition. As a consequence, value destruction occurs, which also leads to failure to

strengthen a firm’s competitive position (Gnyawali & Charleton, 2018; Lado et al., 1997). As

a result, the adaption of syncretic rent-seeking behavior indicates to promote stakeholder-

oriented value creation, when the coopetition partners develop and pursue common goals that

refer on mutual salient stakeholders, instead of those stakeholders who undermine the

achievement of strategic goals (Heikkurinen & Bonnedahl, 2013).

Stakeholder-Oriented Value Creation in Coopetition

55

4.3. Adaptation of Collaboration for Conflict Management Tensions arise by nature in coopetition (Tidström, 2014). For maintaining a successful

coopetitive partnership, the involved partners continuously need to manage occurring tensions

(Chin et al., 2008; Raza-Ullah et al., 2014). The coopetition literature acknowledges the

adaptation of a collaboration style as the most fruitful style for conflict management because

this approach is characterized as highly assertive and cooperative (Tidström, 2014). This

implies that the adaptation of a collaboration style supports the communication and relationship

management, which are not only key success factors in coopetition (Chin et al., 2008), but also

enhance a sustained relationship for future interactions.

A problem-solving attitude leads to effective management of conflicts and should be used in

any coopetition partnership that also involves components of competition (Afzalur Rahim et

al., 1999; Bradford et al., 2004, Tidström, 2014). With adopting a collaboration style, the

coopetition partners search for creative solutions by considering both the interests of the

coopetition network and the interests of other partners involved (Gross & Guerrero, 2000). In

this context, a multi-faceted coopetition includes two or more business firms and at least one

or more stakeholders. This indicates that a collaboration style may encourage a multi-faceted

coopetition by fostering on stakeholder-oriented value. Notably, in a networking situation of

global coopetition, the adaptation of a collaboration style may facilitate a global rival choosing

a sponsorship tactic to serve as a mediator between the other network members (Luo, 2007).

The stakeholder literature argues that business firms should assemble their different

responsibilities, including profit, people, and the planet (Freeman et al., 2010). In order to

achieve an appropriation of all three responsibilities, business firms are advised to interact with

their stakeholders (Heikurrinnen & Bonnedahl, 2013). In a coopetitive partnership such as the

syncretic-rent seeking behavior, the adaptation of a collaboration style strives for optimal win-

win outcomes and benefits that accrue to all partners involved (Lado et al., 1997; Tidström,

2014). A collaboration style is seen as integrative, highly competent, and includes a problem-

solving attitude (Afzalur Rahim et al., 1999; Bradford et al., 2004; Tidström, 2014). These

aspects indicate to support coopetition partners in relationship development to foster on

stakeholder-oriented value creation in terms of finding consensus in the stakeholder network

and mutual business opportunities between the focal firms in an industry.

Stakeholder-Oriented Value Creation in Coopetition

56

The coopetition literature implies that the adaptation of a collaboration style is beneficial to

resolve all types of tensions (Bradford et al., 2004). For instance, role tension arises when the

partners’ objectives derive from the objective of the coopetitive agreement (Bengtsson & Kock,

2003). Thus, before engaging in coopetition, the alignment of the firms’ strategic objectives

represents a crucial act in the cooperation process (Bengtsson & Kock, 2003; Chen, 2008).

Afterwards, common goals are pursued independently in competition (Bengtsson & Kock,

1999). In this context, the adaptation of a collaboration style helps coopetition partners to align

common objectives (Tidström, 2014). Additionally, the network literature and the stakeholder

literature predict higher firm performance when competitors integrate their stakeholder interests

and strategic goals, instead of having conflicting views toward stakeholders’ objectives (Dyer

& Singh, 1998; Freeman, 1984; Freeman et al., 2007). In conclusion, the adaptation of a

collaboration style can mitigate role tensions in coopetition and thus, facilitates the alignment

of the strategic goals of the coopetition partners and the stakeholders involved.

Knowledge tension arises when a partner overly restraint its knowledge that is important for

the coopetitive agreement (Tidström, 2014). In order to mitigate knowledge tension, an

adequate information system helps to maintain the interchange of data and ensures effective

communication (Friedman & Barnes, 1992). Besides, the adaptation of a collaboration style

can moderate knowledge tensions by adopting a problem-solving attitude and increases the

information flow throughout the coopetition agreement.

Another type of tensions concerns the interplay between power and dependence (Osarenkhoe,

2010). For instance, a dominant firm can use its power on a smaller partner against its interests,

which leads to a specific dependency. When the dominant firm receives valuable resources, the

firm may disengage from the agreement that constitutes an imbalance of power and dependency

in the whole partnership. Consequently, the imbalance of power between the firms may lead to

a loss of competitive advantage (Luo, 2007). In turn, the adaptation of a collaboration style can

assist in counteracting on an imbalance of a power and dependence tension by monitoring and

reacting on conflicts between partners that can influence the whole coopetition partnership.

The third type of tension relates to opportunism (Lado et al., 1997; Osarenkhoe, 2010), which

is described as the exploitation of a partner’s resources by pursuing self-interest and using guile

(Tjosvold et al., 2010). As delineated in the game theory subsection (3.1.2.), especially in multi-

partner coopetition, opportunistic behavior is tempting because of the harm allocation, difficult

Stakeholder-Oriented Value Creation in Coopetition

57

detection, and lack of controllability (Zeng & Chen, 2003). Therefore, trust and commitment

represent essential components for mitigating opportunistic behavior (Chin et al., 2008). Trust

serves as a mediator for conflicts (Anderson & Narus, 1990), and commitment encourages the

maintenance of a valued relationship (Morrman et al., 1992). Therefore, the adaptation of a

collaboration style is essential for managing opportunism tension in coopetition. Moreover,

trust and commitment positively influence a collaboration style to prevent opportunism and

encourage common intentions that consider all of the partners’ interests.

4.4. Importance of Socio-Environmental Value

The socio-environmental value represents a public good and plays a significant role in

stakeholder-oriented value creation in coopetition. The stakeholder literature indicates that a

firm should merge its economic, social, and environmental responsibilities through its

stakeholders (Freeman et al., 2010). Similarly, the sustainability literature contains suggestions

for business firms in the global economy to intervene in its systems and processes by social and

environmental engagement (Hart & Milstein, 2003). From this contextual perspective, Susniene

and Vanagas (2006) emphasize that other stakeholders enclose business firms in the network,

whose behavior is partly influenced by how the firms treat their stakeholders.

The coopetition research, on the other hand, implies that the value net model of coopetition

(section 3.1.2.) shows where coopetition partners can detect socio-environmental issues and

create socio-environmental value and thus, fostering on stakeholder-oriented value creation. In

addition, the value net model considers a broad stakeholder view, including primary and

secondary stakeholders (Freeman et al., 2010). Especially, suppliers and customers of

coopetition partners may represent potential stakeholders for creating socio-environmental

value in coopetition. Coopetition partners can pursue socio-environmental initiatives by

reducing their resource intensity or focusing on the reduction of waste. Moreover, socio-

environmental value can be achieved when coopetition partners pursue a positive-sum logic in

the appropriation process (Volschenk et al., 2016). Following a resource-based perspective, the

analysis of different stakeholder relationships can help to assess the resources of coopetition

partners and detect deficiencies that could be complemented through cooperation (Markiewicz

& Adamus, 2012). Although the coopetition partners cannot obtain socio-environmental value,

Volschenk et al. (2016) suggest that it can be leveraged to enhance wealth and prosperity for

interdependent mutual stakeholders. Considering the arguments mentioned above, coopetition

partners that pursue the incentive to find solutions for socio-environmental issues may have an

increased likelihood of encouraging stakeholder-oriented value creation.

Stakeholder-Oriented Value Creation in Coopetition

58

The value that is created in coopetition cannot be created by each firm in isolation but requires

the mutual contribution of idiosyncratic resources (Volschenk et al., 2016). How stakeholders

perceive stakeholder value depends on the suitability of the value in the stakeholders’ utility

function (Harrison & Wicks, 2013).

Real goods and services can be perceived as transparent vehicles of value, which can be

addressed to create socio-environmental value (Porter & Kramer, 2011). Additionally, in

coopetition, organizational justice indicates to have a positive effect on the creation of socio-

environmental value, because when multiple stakeholders are involved in the value creation

process, the actors’ interdependence implies a significant influence on the relationship and

outcome (Ekeh, 1974). The affiliation between organizations also suggests encouraging socio-

environmental value creation. This can be explained by the fact that positive relations between

organizations promote common interests (Putnam, 2000) and encourages collective actions for

a common good (Hartman & Phillips, 2011). For instance, in coopetition, competitors in an

industry can establish voluntary sustainability standards in order to preserve public resources

(Potts et al., 2014). Despite the rivalrous value in coopetition, public benefits include societal

and environmental factors. Thus, public benefits, such as the reduction of carbon dioxide

emissions, represents socio-environmental value (Volschenk et al., 2016). Coopetitive actions

can either destroy or create value for society and involved firms (Volschenk et al., 2016).

Considering only economic value in coopetition has been criticized for leaving additional

hidden value aside, which goes beyond financial benefits (Harrison & Wicks, 2013).

Consequently, disregarding socio-environmental impacts in coopetition are viewed as sub-

optimal (Freeman, 1984; Harrison & Wicks, 2013; Volschenk et al., 2016).

In order to increase the awareness and importance for socio-environmental value, business

firms that engage in coopetition should acknowledge and internalize the concept of ubiquity.

Certain stakeholder groups are essential for the growth of sustainability (for example, the poor

or natural environment) but are viewed as less salient than others (Hart & Milstein, 2003).

Several non-governmental organizations constitute a vital voice channel for sustainability-

related stakeholders, which affect business concerns (Heikkurinen & Bonnedahl, 2013). Thus,

an increased perception of the natural environment as a primordial stakeholder may lead to a

higher probability that coopetitors create socio-environmental value in coopetition.

Conclusion

59

5. Conclusion The thesis is built on and extends the understanding of stakeholder-oriented value creation in

coopetition. The objective of this thesis was to answer the research question “How can

coopetition be managed and balanced to foster stakeholder-oriented value creation?”. In order

to provide an appropriate answer, the analysis of the theory was split into three parts. The aim

of the first part was to clarify the meaning of stakeholder-oriented value creation in a

sustainability context. The second part intended to provide a comprehensive analysis of a

coopetitive perspective in order to find different factors that are essential for the dynamic

management and balance of coopetition. Finally, the third part included the connection of both

research streams, which has provided a closer examination on stakeholder-oriented value

creation in coopetition. For this purpose, a game theoretical and resource-based lens was

applied. The results suggested that high inter-organizational proximity, the adaptation of

syncretic rent-seeking behavior, the adaptation of a collaboration style for conflict

management, and the endeavor to create socio-environmental value increases the probability to

foster stakeholder-oriented value creation in coopetition.

5.1. Discussion and Theoretical Contribution The first contribution of the thesis outlines that there is a connection between inter-

organizational proximity and stakeholder-oriented value creation in coopetition (Bansal &

Roth, 2000; Chin et al., 2008; Driscoll & Starik, 2004; Knoben & Oerlemans, 2006; Steinmo

& Jakobsen, 2013). The following six types of proximity justify the connection of nearness

between the coopetition partners and the stakeholder-oriented value creation in coopetition.

(1) Social proximity increases trust and reputation, which is essential for relationship

development between the partners. (2) High cognitive proximity between business firms is

relevant for sharing a similar mindset about the coopetitive partnership and to mutually

encourage stakeholder-oriented value creation. Additionally, (3) robust institutional proximity

indicates an essential criterion for collective learning and the decrease of knowledge tension

(Knoben & Oerlemans, 2006; Tidström, 2014). (4) Close cultural proximity in coopetition also

facilitates stakeholder-oriented value creation. Bengtsson and Kocks (1999) point out that

common goals encourage closer proximity between the actors. Strategic goals are stipulated

mutually in cooperation, but are pursued independently in the competition (Bengtsson & Kock,

1999). Therefore, the development of a mutual organizational culture is essential for a

successful coopetitive partnership (Chin et al., 2008). (5) Technological proximity indicates a

vital factor of stakeholder-oriented value creation, assuming that the coopetitive agreement

Conclusion

60

includes the development of technological innovations. Last but not least, (6) close

geographical proximity enhances stakeholder interactions and is critical for knowledge

exchange and the development of trust because of short information paths and face-to-face

communications (Driscoll & Starik, 2004; Knoben & Oerlemans, 2006; Ponds et al., 2007).

Nevertheless, it is vital to take a critical look at inter-organizational proximity because great

proximity facilitates stakeholder-oriented value creation. Whereas too close inter-

organizational proximity, especially concerning technological proximity, may increase the

temptation for opportunistic behavior, and as a consequence, leads to value destruction in the

coopetition partnership. Therefore, it requires attention to find out to what extent inter-

organizational proximity is supportive and to which degree it may constitute a significant risk

of failure in coopetition.

The second contribution of the thesis highlights the fact that the adaptation of syncretic rent-

seeking behavior facilitates coopetition partners to foster stakeholder-oriented value creation

(Heikurrinen & Bonnedahl, 2013; Lado et al., 1997). Several arguments can assure this

statement. Syncretic rent-seeking represents a socially responsible behavior (Heikurrinnen &

Bonnedahl, 2013; Lado et al., 1997; Rusko, 2012) and thus, facilitates a comprehensive

stakeholder orientation. Additionally, syncretic rent-seeking behavior provides strategic

flexibility that may lead to an increase in the transparency between the coopetition partners in

order to identify salient mutual stakeholders. Expanding this idea, strategic flexibility may

encourage the actors to strategically looking ahead and reason backwards (Nalebuff et al., 1996)

by considering all elements of the PARTS-model in coopetition (Players, added values, rules

and tactics, scope) (Nalebuff et al., 1996) to increase the likelihood of stakeholder value

creation.

Syncretic rent-seeking provides suitable traits for stakeholder value creation that enables

competitive efficiency for innovation (North, 1990) and cooperative win-win situations, which

enhance growth and development (Nalebuff et al., 1996). On the cooperation side, the power

interdependence between the coopetition partners rests on functional factors regarding the value

chain. Stakeholder orientation in the value chain can, therefore, be directed to suppliers,

customers, the wider community, and the natural environment to solve sustainable issues. On

the competitive side, the power interdependence between competitors in the network can be

associated with the competitors’ strengths and positions (Bengtsson & Kock, 1999).

Conclusion

61

By adopting a syncretic rent-seeking behavior, coopetitors should also be aware of managerial,

input-based, transformational, and output-based competencies. Notably, in case of output-based

competencies, reputation and trust in coopetition can be increased not only by social proximity

(Maskell & Malmberg, 1999) but also by syncretic rent-seeking behavior (Lado et al., 1997).

For instance, the participation in certification contests (Rao, 1994; Spence, 1973) may increase

a firm’s legitimacy towards stakeholders while trustworthiness between the partners decreases

opportunistic behavior (Barney & Hansen, 1994).

However, a critical view rests on syncretic rent-seeking because it may fail to enhance a firms’

position when the costs of the coopetition partnership predominate the generated benefits (Lado

et al., 1997). The more partners are involved in a multi-faceted coopetition, the more expensive

is the partnership and, hence, requires an appropriate management. Additionally, syncretic rent-

seeking behavior can only be effective when there is congruence between the strategic goals of

all the partners involved.

The third contribution of the thesis emphasizing the significance of adopting a constructive

collaboration style for managing conflicts in multi-faceted coopetition (Rusko, 2011; Tidström,

2014). From a game-theoretical perspective, such as rent-seeking behavior, the collaboration

style strives for managing conflicts constructively and seeks to generates win-win solutions,

benefiting all involved partners (Lado et al., 1997; Tidström, 2014). Besides, identical to the

value net model of coopetition (Nalebuff et al., 1996), a collaboration style widens the

coopetitors’ perspective that integrates the own and the interests of the coopetition network,

which in turn, fosters horizontal and vertical stakeholder relationships of a focal firm.

The results also indicate that a collaboration style mitigates all shapes of tensions (Bradford et

al., 2014) including role tension, knowledge tension, power and dependence, and opportunism

(Bengtsson & Kock, 2003; Chin et al., 2008; Lado et al., 1997; Osarenkhoe, 2010; Tsai, 2002).

In this context, the coopetition partners pursue an integrative approach, which fosters effective

conflict management. Notably, in multi-partner coopetition, the social dilemma approach

(Section 3.1.2.) outlines the importance to prevent opportunism. Such as the drivers

(competencies) for syncretic rent-seeking behavior, trust and commitment serve as two key

requirements to enhance a collaboration style in order to discourage opportunism and also to

promote collective intentions in the coopetition network.

Conclusion

62

As a fourth contribution, the thesis extends the contextual perspective on socio-environmental

value in conjunction with stakeholder-oriented value creation in coopetition. Although socio-

environmental value is construed as inaccessible for coopetition partners (Voslchenk et al.,

2016), it suggests an increase of wealth and prosperity for interdependent mutual stakeholders

that are essential for a firm’s success. The results of the thesis reveal that by focusing on the

creation of socio-environmental value, it will increase a firm’s performance in the long term,

which is associated with increased growth and development in the stakeholders’ network.

Coopetition partners need to acknowledge that a collaboration between competitors create

value for the whole market (Della Corte & Aria, 2016), especially when the coopetition partners

internalize the concept of ubiquity (Driscoll & Starik, 2004). The perception of the natural

environment as a primordial stakeholder supports the orientation towards the creation of socio-

environmental value. Besides, references can be drawn to cognitive proximity that it relates to

intrinsic value that matters in case of sharing similar ideas, approaches, and actions (Bansal &

Roth, 2000). Another vital aspect refers to the integrity of socio-environmental value in

stakeholders’ utility function (Harrison & Wicks, 2013). Organizational justice and affiliation

between organizations represent supportive indicators that can encourage socio-environmental

value creation and thus, encourage collective actions for a common good (Hartman & Phillips,

2011).

5.2. Managerial Implications The thesis provides several implications for management. This section outlines the main aspects

of the results and theoretical contributions in the frame of industry initiatives for sustainability.

Moreover, it entails suggestions what competitors in an industry need to consider for

establishing a coopetitive partnership in order to create stakeholder-oriented value creation.

The cognitive proximity between industry competitors matters for voluntary sustainability

standards in case of having common perceptions, shared values, interpretations and evaluation

of the world (Bansal & Roth, 2000; Giovannucci & Ponte, 2005; Wuyts et al., 2005). These

common perceptions and shared values can be associated with the ethical responsibility

concerning sustainability issues (Carroll, 1991). In order to establish a sustainable industry

initiative in multi-faceted coopetition, the partners should establish an ethical philosophy

defined in advance (Giovannucci & Ponte, 2005).

Social proximity provides further implications for the establishment of industry initiatives for

sustainability. Potts et al. (2014) point out that an increasing number of organizations getting

Conclusion

63

involved in standard-setting and implementation processes. Social nearness among industry

competitors is essential in order to enhance their productivity in knowledge exchanges (Hotho

et al., 2012), which encourages intra-industry knowledge creation and transfer (Dagnino, 2009).

In addition, the findings imply that vital players in an industry more likely consider industry

initiatives for sustainability by adopting syncretic rent-seeking behavior that can lead to an

increased market position, reduced risks and costs by distribution, speed up innovation and

strengthen growth and development (Hart & Milstein, 2003; Lado et al., 1997). However, the

appropriateness of establishing industry initiatives depends on specific situational conditions

of coopetition.

Furthermore, a concentrating situation does not provide sufficient conditions for industry

competitors to establish voluntary sustainability standards with a high sustainable impact

because the small firms still need to develop a more impactful scale in a global environment.

However, the dispersing situation, connecting situation, and networking situation (in section

3.4.1.) represent more functional conditions to implement sustainability standards in global

coopetition (Luo, 2007).

In a dispersing situation, by pursuing a solidification tactic, coopetition partners can use their

market power through differentiation, economies of scale, or innovation (Luo, 2007). Although

it involves a small number of rivals, a dispersing situation implies to encourage the

implementation of voluntary sustainability standards in many foreign markets.

Concerning a connecting situation, firms such as Mach-One in the plasma television industry

or Tata Motors in the automobile industry, represent examples for successful coopetition by

having joint research and development, shared marketing and the establishing industry

standards. However, both strategic tactics in connecting situations are also suitable for initiating

voluntary sustainability standards by applying a responsive or a beyond responsive approach

(Heikkurinen & Bonnedahl, 2013; Luo, 2007). The position tactic refers to exploiting available

and distinctive resources, which can be pursued by applying a responsive approach. In contrast,

the differentiation tactic relates to the creation of product innovation or technical standards that

can be pursued by applying a beyond responsive approach (Heikkurinen & Bonnedahl, 2013;

Luo, 2007). The findings also indicate that the adaptation of syncretic rent-seeking behavior

promotes a stakeholder-oriented value creation in pursuing a differentiation and position tactic

in a connecting situation.

In the networking situation, rivals can pursue a sponsorship tactic, which allows them to form

a platform for common grounds and cooperative opportunities (Luo, 2007). For instance, in the

Conclusion

64

tire industry, Michelin made a multilateral agreement to its competitors for providing a new

service innovation that leads to a new industry standard (Dagnino, 2009). However,

interestingly, the “pax system” failed because of missing attention from other stakeholders in

the network, such as car manufacturers and service stations (Adner, 2012). Correspondingly,

voluntary sustainability standards demonstrate a potential pre-competitive platform in an

industry that brings competitors and other stakeholders together. The findings imply that the

adaptation of syncretic rent-seeking behavior enhances a sponsorship tactic in a networking

situation and claims the facilitation of establishing industry initiatives for sustainability.

Additionally, Competitors need to consider the adaptation of a collaboration style for conflict

management to support the establishment of industry initiatives for sustainability in terms of

the search for consensus and mutual business opportunities among vital players in an industry

(Giovannuci & Ponte, 2005). Especially in a multi-faceted coopetition, the adaptation of a

collaboration style indicates a significant factor for managing the complexity of the partnership

that includes the dismantling of conflicts constructively and the maintenance of a cooperative

environment with additional stakeholders (Gross-Guerrero, 2000; Tidström, 2014). Moreover,

the adaptation of a collaboration style promotes communication and relationship development

in multi-faceted coopetition and is fruitful for solving any types of occurring tension in

coopetition (Bradford et al., 2004).

For the preservation of public resources, the findings suggest that competitors in different

industries need to acknowledge the importance of socio-environmental value. Socio-

environmental issues can be addressed by focusing on products and markets, a new

determination of productivity in the value chain, or by the empowerment of enabling cluster

developments (Porter & Kramer, 2011). To establish industry initiatives for sustainability,

business firms can create socio-environmental value by implementing certifications for

products or services, label definitions, or the setting of codes of conduct (Giovannucci & Ponte,

2005). Despite the fast-growing market value in private sectors, sustainable practices infer from

societal demands. Societal demands are outlined in international announcements for sustainable

development goals and are associated with, for instance, poverty, climate change, or

environmental degradation (Handl, 2012; United Nations, 2015). Moreover, societal demands

relate to global grand challenges that require coordinative actions between multiple

stakeholders to enhance global partnerships (George et al. 2016). Therefore, the creation of

Conclusion

65

socio-environmental value indicates a crucial factor for both the stakeholder-oriented value

creation in coopetition and the establishment of voluntary sustainability standards.

Finally, the managerial implications suggest on a policy level that attention is needed from the

government in order to support industry initiatives for sustainability that are essential for a

country’s economic wealth. By providing political commitment to detect systemic issues and

encourage the course of development, competitors in different industries can be empowered to

establish memberships of respective institutions and increasingly collaborate with different

stakeholders to establish industry initiatives for sustainability.

5.3. Limitations and Future Research

The purpose of the thesis is to build bridges among the existing coopetition and stakeholder

literature to develop a multidimensional framework in order to describe stakeholder-oriented

value creation in coopetition. However, several limitations need to be considered. In addition,

the detected findings need further theoretical and empirical evidence to prove its importance

compared to the existing literature.

The methodology of a conceptual literature review was used to find opportunities and

restrictions for creating stakeholder-oriented value in coopetition. In this context, one has to

regard that the outcome of this study may not be fully objective because other sources of

information to further validate the generated findings are still missing. This may be a potential

field for future research.

Moreover, the multidimensional framework of stakeholder-oriented value creation in

coopetition is probably not exhaustive and might include additional dimensions. Therefore,

future research can investigate more into relational aspects of cooperative networks and have a

closer examination on competitive dynamics in order to identify further categories of

stakeholder-oriented value creation in coopetitive relationships.

Another limitation is that the thesis might have constraints in providing a sufficient analysis of

opportunities in order to prevent opportunism in strategic alliances. For that reason, future

research can further investigate strategic alliances and collective real options (Smit &

Trigeorgis, 2006) in conjunction with stakeholder-oriented value creation in coopetition.

The thesis also explains stakeholder-oriented value creation in global coopetition. Further

studies could explicitly investigate in, for example, triadic relationships in coopetition. In that

case, future research can focus on multi-partner alliances and generalized exchanges (Thorgren,

Wincent, & Eriksson, 2011) in order to promote stakeholder-oriented value creation.

Conclusion

66

In addition, empirical studies can also include observations and qualitative research of different

industry settings in coopetition. In this context, additional insights are required to examine

different industries with increasing societal demands that promote the establishment of

sustainability initiatives. Some of the industry constellations may involve a dispersing,

connecting, or networking situation that provides conducive circumstances for establishing

voluntary sustainability standards.

Expanding the idea of stakeholder-oriented value creation, the results of this master thesis can

be used to conduct an experiment of a coopetitive partnership that focuses on stakeholder-

oriented value creation. With this experiment, additional research can be conducted to

determine a precise strategy and the specific objectives needed for a successful implementation.

The novel multidimensional framework of stakeholder-oriented value creation in coopetition

provides a different point of view in order to find solutions by establishing a creative

environment and collaborative platform for coopetition partners and additional stakeholders.

This is the reason why the emerging field of stakeholder-oriented value creation in coopetition

is ripe for further development. It can draw upon theoretical and empirical investigations,

including a broad range of different industries, social and environmental concerns, economic

conditions, cultural differences or upon the balance of created social and environmental

advantages and invested costs. Those factors can be included in future studies to explain the

long-term success of a sustainability-related coopetition partnership that fosters on stakeholder-

oriented value creation.

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Affidavit

I hereby declare that this Master’s thesis has been written only by the undersigned and without

any assistance from third parties. I confirm that no sources have been used in the preparation

of this thesis other than those indicated in the thesis itself.

This Master’s thesis has heretofore not been submitted or published elsewhere, neither in its

present form, nor in a similar version.

Innsbruck, May 29th, 2019