Value Creation and Value Appropriation in Innovative Coopetition Projects

Paul  Chiambaretto; Jonathan  Maurice; Marc  Willinger

doi:10.37725/mgmt.v23i2.4622

Paul Chiambaretto MRM-Montpellier Business School and i3-CRG, Ecole Polytechnique, CNRS, Montpellier, France;
Jonathan Maurice TSM-Research, Toulouse Capitole University, CNRS, France;
Marc Willinger CEE-M, University of Montpellier, CNRS, INRA, SupAgro, Montpellier, France

DOI: https://doi.org/10.37725/mgmt.v23i2.4622

Keywords: Coopetition, Value creation, Value appropriation, Innovative coopetition projects, Game theory

Abstract

This article provides a formal model of the value creation-appropriation dilemma in coopetition for innovation, that is, alliances among competing firms. The model determines the levels of cooperation that maximize the profit of each firm in an innovative coopetition agreement regardless of the number of firms and their respective budget endowments dedicated to the coopetitive project. We answer the following questions: within an innovative coopetition agreement, will the partners cooperate more or less when their budget endowments change? What is the impact on profit? When is it profitable to accept a new partner into the agreement? What happens to the remaining firms when a partner withdraws from the agreement? We show that when the coopetitive budget of the focal firm increases, the focal firm allocates a larger part of this budget to value creation activities and increases its profit. In contrast, when a partnering firm increases its coopetitive budget, the focal firm reduces its budget for value creation activities to maintain a sufficient budget for value appropriation activities. We also show that the addition of a competitor with a large coopetitive budget to the innovative coopetition agreement decreases the cooperation of the focal firm but increases the profit of the initial partnering firms. In contrast, the exit of a partnering firm with a large coopetitive budget from the agreement intensifies the cooperation among the remaining firms but reduces their profit.

Downloads

Download data is not yet available.

Author Biographies

Paul Chiambaretto, MRM-Montpellier Business School and i3-CRG, Ecole Polytechnique, CNRS, Montpellier, France;

Paul CHIAMBARETTO is an Associate Professor of Strategy and Marketing at Montpellier Business School and Associate Researcher at Ecole Polytechnique. His main research topics include inter-organizational relationships (such as alliances, alliance portfolios and coopetition). Over the years, he has developed a strong expertise in the air and rail transportation industries. His research has been published in ranked journals, such as Research Policy, Long Range Planning, Industrial Marketing Management, International Studies of Management and Organization, M@n@gement, etc. He is also one of the co-editors of the Routledge Companion to Coopetition Strategies. He has been a visiting researcher in several foreign institutions, such as the University of Oxford (UK), Concordia University (Canada) and Umea University (Sweden).

Jonathan Maurice, TSM-Research, Toulouse Capitole University, CNRS, France;

Jonathan MAURICE is an Associate Professor of Management Accounting at Toulouse School of Management, Toulouse Capitole University and member of TSM Research. His research focuses on management control systems and environmental accounting. He is particularly interested in the influences of management control systems on behaviors within and between organizations and how accountants address uncertainty regarding ‘environmental’ accounting numbers. He uses various research methods, such as case studies, interventionist research, meta-analyses, surveys and experiments. He recently published articles regarding the paradox of accounting innovation adoption, such as the ABC costing method, and the reliability of environmental accounting provisions. His ongoing projects investigate the influence of interactive management control tools on cooperation in a horizontal network of organizations and the implementation of an accounting and budgeting risk management system in the public sector.

Marc Willinger, CEE-M, University of Montpellier, CNRS, INRA, SupAgro, Montpellier, France

Marc WILLINGER is a Professor of Economics at the University of Montpellier (UM) and member of the Center for Environmental Economics of Montpellier (CEE-M). His main research area is experimental and behavioral economics. His research mainly relies on laboratory and field experiments to study risk taking and social preferences in the context of social dilemma and asymmetric information. His current research interests include the local adaptation to a risky environment and trading behavior in experimental asset markets with a focus on socially responsible investments.

References

Adegbesan, J. A. & Higgins, M. J. (2011). The intra-alliance division of value created through collaboration. Strategic Management Journal, 32(2), 187–211. doi: 10.1002/smj.872

Ansari, S. (Shaz), Garud R., & Kumaraswamy, A. (2016). The disruptor’s dilemma: TiVo and the U.S. television ecosystem. Strategic Management Journal, 37(9), 1829–1853. doi: 10.1002/smj.2442

Bae, J. & Gargiulo, M. (2004). Partner substitutability, alliance network structure and firm profitability in the telecommunications industry. Academy of Management Journal, 47(6), 843–859. doi: urn:nbn:nl:ui:12-148536

Bengtsson, M. & Kock, S. (2000). “Coopetition” in business networks – To cooperate and compete simultaneously. Industrial Marketing Management, 29(5), 411–426. doi: 10.1016/S0019-8501(99)00067-X

Bengtsson, M. & Kock, S. (2014). Coopetition – Quo vadis? Past accomplishments and future challenges. Industrial Marketing Management, 43(2), 180–188. doi: 10.1016/j.indmarman.2014.02.015

Bengtsson, M., Raza-Ullah, T. & Vanyushyn, V. (2016). The coopetition paradox and tension: The moderating role of coopetition capability. Industrial Marketing Management, 53, 19–30. doi: 10.1016/j.indmarman.2015.11.008

Bouncken, R. B. & Kraus, S. (2013). Innovation in knowledge-intensive industries: The double-edged sword of coopetition. Journal of Business Research, 66(10), 2060–2070. doi: 10.1016/j.jbusres.2013.02.032

Brandenburger, A. M. & Nalebuff, B. J. (1996). Co-opetition: A revolutionary mindset that redefines competition and cooperation(Vol. 121). New York, NY: Doubleday.

Brandenburger, A. & Stuart, H. (2007). Biform games. Management Science, 53(4), 537–549. doi: 10.1287/mnsc.1060.0591

Buchanan, J., Tollinson, R. & Tullock, G. (1980). Toward a theory of the rent-seeking society. Texas, US: College Station.

Chiambaretto, P., Bengtsson, M., Fernandez, A.-S. & Näsholm, M. H. (2020). Small and large firms’ trade-off between benefits and risks when choosing a coopetitor for innovation. Long Range Planning, 53(1), 101876. https://doi.org/10.1016/j.lrp.2019.03.002

Chiambaretto, P. & Dumez, H. (2016). Toward a typology of coopetition: A multilevel approach. International Studies of Management & Organization, 46(2–3), 110–129. doi: 10.1080/00208825.2015.1093797

Chou, H.-H. & Zolkiewski, J. (2018). Coopetition and value creation and appropriation: The role of interdependencies, tensions and harmony. Industrial Marketing Management, 70, 25–33. doi: 10.1016/j.indmarman.2017.08.014

Cohen, W. M. & Levinthal, D. A. (1990). Absorptive capacity: A new perspective on learning and innovation. Administrative Science Quarterly, 35(1), 128. doi: 10.2307/2393553

Das, T. K. & Teng, B.-S. (2002). Alliance constellations: A social exchange perspective. Academy of Management Review, 27(3), 445–456. doi: 10.5465/amr.2002.7389937

D’Aspremont, C. & Jacquemin, A. (1988). Cooperative and non-cooperative R&D in duopoly with spillovers. American Economic Review, 78, 1133–1137.

Dorn, S., Schweiger, B. & Albers, S. (2016). Levels, phases and themes of coopetition: A systematic literature review and research agenda. European Management Journal, 34(5), 484–500. doi: 10.1016/j.emj.2016.02.009

Fernandez, A., Chiambaretto, P., Le Roy F., & Czakon, W. (2018). The Routledge companion to coopetition strategies. Abingdon: Routledge.

Fernandez, A.-S. & Chiambaretto, P. (2016). Managing tensions related to information in coopetition. Industrial Marketing Management, 53, 66–76. doi: 10.1016/j.indmarman.2015.11.010

Fernandez, A.-S., Le Roy, F. & Gnyawali, D. R. (2014). Sources and management of tension in co-opetition case evidence from telecommunications satellites manufacturing in Europe. Industrial Marketing Management, 43(2), 222–235. doi: 10.1016/j.indmarman.2013.11.004

Gans, J. & Ryall, M. D. (2017). Value capture theory: A strategic management review. Strategic Management Journal, 38(1), 17–41. doi: 10.1002/smj.2592

Garfinkel, M. R. & Skaperdas, S. (2007). Economics of conflict: An overview. In T. Sandler & K. Hartley (Eds.), Handbook of defense economics (pp. 649–710). Amsterdam: Elsevier.

Gast, J., Hora, W., Bouncken, R. B. & Kraus, S. (2018). Challenges and merits of coopetitive innovation. In A. Fernandez, P. Chiambaretto, F. Le Roy & W. Czakon (Eds.), The Routledge Companion to Coopetition Strategies (pp. 283–297). Abingdon: Routledge.

Gnyawali, D. R. & Park, B.-J. (2011). Co-opetition between giants: Collaboration with competitors for technological innovation. Research Policy, 40(5), 650–663. doi: 10.1016/j.respol.2011.01.009

Gnyawali, D. R. & Ryan Charleton, T. (2018). Nuances in the interplay of competition and cooperation: Towards a theory of coopetition. Journal of Management, 44(7), 2511–2534. doi: 10.1177/0149206318788945

Grünfeld, L. A. (2003). Meet me halfway but don’t rush: Absorptive capacity and strategic R&D investment revisited. International Journal of Industrial Organization, 21(8), 1091–1109. doi: 10.1016/S0167-7187(03)00076-6

Gueguen, G. (2009). Coopetition and business ecosystems in the information technology sector: The example of Intelligent Mobile Terminals. International Journal of Entrepreneurship and Small Business, 8(1), 135–153. doi: 10.1504/IJESB.2009.024109

Haavelmo, T. (1954). A study in the theory of economic evolution. Amsterdam: North-Holland Publishing Company.

Heidl, R. A., Steensma, H. K. & Phelps, C. (2014). Divisive faultlines and the unplanned dissolutions of multipartner alliances. Organization Science, 25(5), 1351–1371. doi: 10.1287/orsc.2014.0898

Hirshleifer, J. (1989). Conflict and rent-seeking success functions: Ratio vs. difference models of relative success. Public Choice, 63, 101–112.

Hirshleifer, J. (1991). The paradox of power. Economics and Politics, 3, 177–200.

Hora, W., Gast, J., Kailer, N., Rey-Marti, A. & Mas-Tur, A. (2018). David and Goliath: Causes and effects of coopetition between start-ups and corporates. Review of Managerial Science, 12(2), 411–439. doi: 10.1007/s11846-017-0273-9

Kamien, M. I. & Zang, I. (2000). Meet me halfway: Research joint ventures and absorptive capacity. International Journal of Industrial Organization, 18(7), 995–1012. doi: 10.1016/S0167-7187(00)00054-0

Lado, A. A., Boyd, N. G. & Hanlon, S. C. (1997). Competition, cooperation, and the search for economic rents: A syncretic model. Academy of Management Review, 22(1), 110–141.

Lavie, D. (2007). Alliance portfolios and firm performance: A study of value creation and appropriation in the U.S. software industry. Strategic Management Journal, 28(12), 1187–1212. doi: 10.1002/smj.637

Lazzarini, S. G. (2007). The impact of membership in competing alliance constellations: Evidence on the operational performance of global airlines. Strategic Management Journal, 28(4), 345–367. doi: 10.1002/smj.587

Le Roy, F. & Czakon, W. (2016). Managing coopetition: The missing link between strategy and performance. Industrial Marketing Management, 53, 3–6. doi: 10.1016/j.indmarman.2015.11.005

Le Roy, F. & Fernandez, A.-S. (2015). Managing coopetitive tensions at the working-group level: The rise of the Coopetitive Project Team. British Journal of Management, 26(4), 671–688. doi: 10.1111/1467-8551.12095

Le Roy, F., Fernandez, A.-S. & Chiambaretto, P. (2018). From strategizing coopetition to managing coopetition. In A. Fernandez, P. Chiambaretto, F. Le Roy & W. Czakon (Eds.), The Routledge Companion to Coopetition Strategies (pp. 36–46). Abingdon: Routledge.

MacDonald, G. & Ryall, M. D. (2004). How do value creation and competition determine whether a firm appropriates value? Management Science, 50(10), 1319–1333. doi: 10.1287/mnsc.1030.0152

Okura, M. & Carfi, D. (2018). Coopetition and game theory. In A. Fernandez, P. Chiambaretto, F. Le Roy & W. Czakon (Eds.), The Routledge companion to coopetition strategies (pp. 139–146). Abingdon: Routledge.

Padula, G. & Dagnino, G. (2007). Untangling the rise of coopetition: The intrusion of competition in a cooperative game structure. International Studies of Management and Organization, 37(2), 32–52. doi: 10.2753/IMO0020-8825370202

Panico, C. (2017). Strategic interaction in alliances. Strategic Management Journal, 38(8), 1646–1667. doi: 10.1002/smj.2610

Park, B.-J. (Robert), Srivastava M. K., & Gnyawali, D. R. (2014). Walking the tight rope of coopetition: Impact of competition and cooperation intensities and balance on firm innovation performance. Industrial Marketing Management, 43(2), 210–221. doi: 10.1016/j.indmarman.2013.11.003

Ritala, P. (2012). Coopetition strategy – When is it successful? Empirical evidence on innovation and market performance. British Journal of Management, 23(3), 307–324. doi: 10.1111/j.1467-8551.2011.00741.x

Ritala, P. (2018). Coopetition and market performance. In A. Fernandez, P. Chiambaretto, F. Le Roy & W. Czakon (Eds.), The Routledge companion to coopetition strategies (pp. 317–325). Abingdon: Routledge.

Ritala, P. & Hurmelinna-Laukkanen, P. (2009). What’s in it for me? Creating and appropriating value in innovation-related coopetition. Technovation, 29(12), 819–828. doi: 10.1016/j.technovation.2009.07.002

Ritala, P. & Hurmelinna-Laukkanen, P. (2013). Incremental and radical innovation in coopetition – The role of absorptive capacity and appropriability. Journal of Product Innovation Management, 30(1), 154–169. doi: 10.1111/j.1540-5885.2012.00956.x

Ritala, P. & Hurmelinna-Laukkanen, P. (2018). Dynamics of coopetitive value creation and appropriation. In A.-S. Fernandez, P. Chiambaretto, F. Le Roy & W. Czakon (Eds.), The Routledge Companion to Coopetition Strategies (pp. 58–67). Abingdon: Routledge.

Ritala, P. & Tidström, A. (2014). Untangling the value-creation and value-appropriation elements of coopetition strategy: A longitudinal analysis on the firm and relational levels. Scandinavian Journal of Management, 30(4), 498–515. doi: 10.1016/j.scaman.2014.05.002

Robert, M., Chiambaretto, P., Mira, B. & Le Roy, F. (2018). Better, faster, stronger: The impact of market-oriented coopetition on product commercial performance. M@n@gement, 21(1), 574–610.

Rouyre, A. & Fernandez, A.-S. (2019). Managing knowledge sharing-protecting tensions in coupled innovation projects among several competitors. California Management Review, 62(1), 95–120. doi: 10.1177/0008125619885151

Tidström, A. (2014). Managing tensions in coopetition. Industrial Marketing Management, 43(2), 261–271. doi: 10.1016/j.indmarman.2013.12.001

Vandaie, R. & Zaheer, A. (2014). Surviving bear hugs: Firm capability, large partner alliances, and growth. Strategic Management Journal, 35(4), 566–577. doi: 10.1002/smj.2115

Wu, Q., Luo, X., Slotegraaf, R. J. & Aspara, J. (2015). Sleeping with competitors: The impact of NPD phases on stock market reactions to horizontal collaboration. Journal of the Academy of Marketing Science, 43(4), 490–511. doi: 10.1007/s11747-014-0396-3

Yang, H., Zheng, Y. & Zhao, X. (2014). Exploration or exploitation? Small firms’ alliance strategies with large firms. Strategic Management Journal, 35(1), 146–157. doi: 10.1002/smj.2082