Literature Overview on the Field of Co-opetition

Co-opetition is a perspective on business relationships which highlights the ambivalence of competition and cooperation. Game theory is regarded as the mathematical tool for solving co-opetition related problems. The major step for introducing "co-opetition" into public discussion and economic research has been made by Brandenburger and Nalebuff in 1996. However they target a non-professional readership. A multitude of publications has followed, where the authors mostly focus on specific aspects of the problem and investigate particular industries. This paper gives a comprehensive literature overview on the field of co-opetition

Endogenous network formation in patent contests and its role as a barrier to entry

In a setting of R&D co-opetition we study, by using an all-pay auction approach, how collaboration affects strategic decisions during a patent contest, and how the latter influences the possible collaboration network structures the firms can hope to form. The all pay auction approach allows us to 1) endogenize both network formation and R&D intensities and 2) take heterogeneous and private valuations for patents into account. We find that, different from previous literature, the complete network is not always the only pairwise stable network, even and especially if the benefits from cooperating are important. Interestingly, the other possible stable networks all have the realistic property that some firms decide not to participate in the contest. Thus, weak cooperation through network formation can serve as a barrier to entry on the market for innovation. We further show that there need not be any network that survives a well known refinement of pairwise stability, strong stability, which imposes networks to be immune to coalitional deviations.patent game, networks, R&D cooperation, all-pay auction

Asymmetric R&D Alliances and Coopetitive Games

In this paper we show how the study of asymmetric R&D alliances, that are those between young and small firms and large and MNEs firms for knowledge exploration and/or exploitation, requires the adoption of a coopetitive framework which consider both collaboration and competition. We draw upon the literature on asymmetric R&D collaboration and coopetition to propose a mathematical model for the coopetitive games which is particularly suitable for exploring asymmetric R&D alliances.Comment: arXiv admin note: substantial text overlap with arXiv:1106.354

Strategies and tactics of Chinese contract manufacturers and western OEMs (2001-2011)

As policy makers seek to draw lessons from the growth of Chinese manufacturing, we need to better understand the evolving strategies adopted by Chinese manufacturers since the economic reforms of the 1980s. Focusing on the apparel and electronics sectors, we look at how Chinese manufacturers sought to move to higher value-adding parts of the supply chain in different ways during the period 2001–2011 and how their western OEMs responded. As a first step towards understanding the co-evolving strategies and tactics of Chinese contract manufacturers and western OEMs, we use a simple game-theoretic framework of contract manufacturer and OEM strategies to look at the actual tactics many Chinese contract manufacturers adopted. Our findings are that Chinese contract manufacturers ended up co-operating, competing, or co-opetiting (i.e., cooperating and competing at the same time) with western OEMs. Also, western OEMs used their position in the supply chain to devise counter-measures, possibly ending with win–win solutions for both sides

Value Creation through Co-Opetition in Service Networks

Well-defined interfaces and standardization allow for the composition of single Web services into value-added complex services. Such complex Web Services are increasingly traded via agile marketplaces, facilitating flexible recombination of service modules to meet heterogeneous customer demands. In order to coordinate participants, this work introduces a mechanism design approach - the co-opetition mechanism - that is tailored to requirements imposed by a networked and co-opetitive environment

Co-Opetition and Prelaunch in Standard-Setting for Developing Technologies

Firms faced with the decision of whether to standardize or not prior to introducing a new network technology face a tradeoff: Compatibility improves the technology's chances of consumer acceptance, but it also means having to share the resulting profits with other sponsors of the standard. In this paper, we show that even prior to market introduction of a new technology, the timing of decisions is important and that firms have to weigh up the cooperative and competitive elements of pre-market choices. We also show that the option to precommit to a technology before it is fully developed (as has been the case with the Compact Disc) can be profitable for network technologies.Standardization, compact disc, preemption, war-of- attrition

Competing Complements

In Cournot's model of complements, the producers of A and B are both monopolists. This paper extends Cournot's model to allow for competition between complements on one side of the market. Consider two complements, A and B, where the A + B bundle is valuable only when purchased together. Good A is supplied by a monopolist (e.g., Microsoft) and there is competition in the B goods from vertically differentiated suppliers (e.g., Intel and AMD). In this simple game, there may not be a pure-strategy equilibria. In the standard case where marginal costs are weakly positive, there is no pure strategy where the lower quality B firm obtains positive market share. We also consider the case where A has negative marginal costs, as would arise when A can expect to make upgrade sales to an installed base. When profits from the installed base are sufficiently large, a pure strategy equilibrium exists with two B firms active in the market. Although there is competition in the complement market, the monopoly Firm A may earn lower profits in this environment. Consequently, A may prefer to accept lower future profits in order to interact with a monopolist complement in B

Strategic Coopetition of Global Brands: A Game Theory Approach to ‘Nike + iPod Sport Kit’ Co-branding

Co-branding can be implemented by establishing an agreement of strategic coopetition that allows companies to compete and cooperate simultaneously in order to obtain competitive advantages through operational synergy. With this type of agreement, brands enter markets sharing loyal customers they would be unlikely to reach individually. The main advantages associated with implementation of this form of strategic coopetition are the possibility of jointly communicating brand image, reputation and credibility in a global market where consumers tend to have homogeneous preferences and convergent lifestyles. The strategic coopetition between two global brands, Apple and Nike, through development of the ‘Nike+iPod Sport Kit’ product, serves as a benchmark to illustrate the benefits associated with implementation of coopetitive cooperation agreements. From application of the game theory, simulation of a game of strategic coopetition provided results that confirm global brands obtain benefits, albeit not in equal measure, in terms of adding value to the brand image at a world level.Co-branding; Coopetition; Global brands; Growth of brand value.

A Game-Theoretic Model to Analyze Value Creation with Simultaneous Cooperation and Competition of Supply Chain Partners

There is a rising trend in supplying chain management to employ simultaneous cooperation and competition (coopetition) among supply chain partners as an efficient strategy to create value. There exist, however, few models which analyze coopetitive situations mathematically. Cooperative game theory is the common tool in analyzing cooperative situations. However, the term “cooperative” in “cooperative game theory” is absolutely misleading since it ultimately leads to competition analysis and ignores the internal structure of the cooperation. Coopetition, however, results in structural transformations in players. Therefore, we require a mathematical modeling approach which takes into account the internal structural changes due to cooperation among competitors. In so doing, in this paper we propose, we assume that those parameters of each firm’s profit function are subject to transformation by cooperation as a function of cooperation level so as to determine the right level of cooperation and production of firms while considering technical cooperation between them. Furthermore, we demonstrate the results of applying the idea to a supply chain situation where two similar suppliers participate. We conclude that under intuitive conditions coopetition strategy is superior to the pure competitive relationship between the suppliers in terms of profitability which validates the previous empirical results mathematically