Collaborating with your Rivals: Identifying Sources of Co-opetitive Performance

1. Collaborating with your Rivals: Identifying Sources of Co-opetitive Performance Farah Abdallah- PhD Student Prof. Anu Wadhwa Druid Conference – June 2009 EPFL-CdM-CET Odyssea CH-1015 Lausanne Tel. +41 693 00 08 Fax. +41 693 00 00 eMail: farah.abdallah@epfl.ch http://cet.epfl.ch

2. Introduction • Definition and Motivation • Co-opetition • Firms achieve superior performance by being simultaneously engaged in collaborative and competitive relationships. (Brandenburger and Nalebuff;1995) • ICTs are an enabler for the arise of co-opetition: Standard Setting Organizations (SSOs) • Objectives • How firms can improve their performance in co-opetitive networks with their rivals? • What is a co-opetitive performance? • What are the sources of co-opetitive performance?

3. Co-opetitive Performance • The quest for a definition for co-opetitive performance • Co-opetition: collaborating in creating a pie, and competing in splitting the pie => Existing definition of performance are not indicative of how well a firm perform in a co-opetitive context • The focus of the definition: • Co-opetitive relationship where collaboration occurs between rival firms in the same network at the technological and market levels • Literature on coopetitive performance argues: • Firms achieve greater performance through co-opetition;(Lado. Boyd et al. 1997) • A high level of coopetitive performance is associated with a high level of competition and a high level collaboration (Luo 2007; Chin, chan et al. 2008)

4. Coopetitive Performance Collaborative performance: Share of the value added by the firm to the total value created by the network of rivals of which the firm is a part of Competitive performance: The ratio of the value appropriated by the firm and the value added by it Competition Co-opetition Collaboration Monopoly

5. The sources of co-opetitive performance • A source of co-opetitive performance is a set of resources and capabilities that affect simultaneously the collaborative and competitive performance of a firm. • Strategy literature treated the sources of collaborative and competitive performances separately which leads to some paradoxical results • Our model identifies three potential sources of coopetitive performance: 1- network resources 2- absorptive capacity 3- relational capability

7. Conclusion • In this paper we propose a model which helps in detecting the firms which are deficiently co-opeting in their network, and identify the proper resources and capabilities that should be developed within the firm in order to enhance its co-opetitive performance. • Future Work: empirical survey to postal operators to tests the propositions Thank you !

8. Tushman & Anderson 1986 Technological discontonuity and organizational environment • Technology is defined as those tools, devices and knowledge that mediate between inputs and outputs (process technology) and or create new products or services (Rosenberg 1972) • Technology is a central force in shaping the environment: competition: (rise and fall of population) • Technological change can be • Pontaneous event driven by technological genius (Shumpeter) • A function of historical necessity and economic demand • Competitive uncertainty will be higher after a technological discontinuity (Uncertainty= The extend to which we can predict the environement) • Environmental munificience will behigher after technological discontinuity (Munificience= the extend the environment can suppport growth)

9. Tushman & Rosenkopf 1992Organizational determinants of technological change • The interaction of technological options with organization and interorganization dynamics that shapes the actual path of technolgical progress • Non-assembled products: Aluminium, paper/ technological progress occurs in process or material/ merits are in quality and efficiency • Simple assembled product: skis/ made through a set of interlinked steps that are sequentially ordered/ technical progress through process, material or product substitution/ merits in price/performance • Closed Assembled system: automobile and television some sbsystem are more central then other and are produced by a single organization/ technical progress at the subsystem or linkage level • Open systems the product is a function of networked compoents working together : railroads, computer

11. Tushman & Rosenkopf 1992Organizational determinants of technological change • Techology can be described as systems ranging from non-assembled closed systems to open systems. The greater the product compexity the greater the intrusion of organizational dynamics in technological evolution

13. Tushman & Rosenkopf 1992Organizational determinants of technological change • Towards a sociology of technological evolution • Under which conditions do organization dynamics affect the path of technical progress • They find that technologies eveolve through the combination of random and chance events, the direct action of organiaztion shaping the industry standards, and the competition between organiaztion

15. The sources of coopetitive performance • Network resources: complementary resources and primal position in the network • Proposition 1: A firm increases its collaborative performance (a) by bringing distinctive resources to the coopetitive network, and (b) by combining the complementary resources in the coopetitive network. • Proposition 2: A firm increases its competitive performance by occupying a central or/and structurally autonomous position in the coopetitive network.

16. The sources of coopetitive performance • Absorptive capacity: Zahra and George (2002) defined absorptive capacity of a firm as “a set of organizational routines and processes by which firms acquire, assimilate, transform, and exploit knowledge to produce dynamic organizational capability”(P185). Cohen and Levinthal (1990) defined the absorptive capacity as “a firm’s ability to recognize the value, assimilate and apply new knowledge” Dyer and Singh (1998) defined partner-specific ACAP as the firm’s “ability to recognize and assimilate valuable knowledge from a particular alliance” • Proposition 3: The greater the PACAP of a firm, i.e. its acquisition and assimilation capabilities, the greater the collaborative performance of the firm. • Proposition 4: The greater the RACAP of a firm, i.e. its transformation and exploitation capabilities, the greater the competitive performance of the firm.

17. The sources of coopetitive performance • Effective Relationship governance: Strong trustworthiness and contractual management capabilities A firm faces the challenge of employing governance mechanisms that achieve concurrently the objectives of (1) maximizing the value created while (2) minimizing the threat of opportunism. • Proposition 5: Firms developing effective governance mechanisms with their partners in the coopetitive network, develop more easily common goals and coordinate better, hence have a high collaborative performance. • Proposition 6: Firms developing effective governance mechanisms with their partners in the coopetitive network, reduce the threat of opportunism, by imposing costs on opportunistic actors and defining equity contracts, and hence have a high competitive performance.