competition-cooperation conceptual frameworks
TRANSCRIPT
-
8/17/2019 Competition-Cooperation Conceptual Frameworks
1/12
The competition–cooperation paradox in inter-rm relationships: Aconceptual framework
Devi R. Gnyawali a,⁎, Ravi Madhavan b, Jinyu He c, Maria Bengtsson d
a Pamplin College of Business, Virginia Polytechnic Institute and State University (Virginia Tech), Blacksburg, VA 24060, USAb Katz Graduate School of Business, University of Pittsburgh, 208 Mervis Hall, Pittsburgh, PA 15260, USAc Department of Management, Hong Kong University of Science and Technology, Clear Water Bay, Kowloon, Hong Kong d Umeå School of Business and Economics, Umeå University, S-901 87 Umeå, Sweden
a b s t r a c ta r t i c l e i n f o
Article history:
Received 26 August 2014
Received in revised form 27 May 2015
Accepted 16 July 2015
Available online 11 December 2015
With a focus on inter-rm relationships involving the simultaneous pursuit of competition and cooperation, we
develop a conceptual framework that explicates key paradoxical conditions, paradoxical tension, and
performance implications of tension in such relationships. We propose felt tension as the actual manifestation
of the paradox and offer insights on critical capabilities necessary to understand and manage the paradox. Our
paper extends the paradoxliterature in the inter-organizational contextand providesa set of conceptsand prop-
ositions designed to stimulate systematic empirical research on the competition–cooperation paradox.
© 2015 Elsevier Inc. All rights reserved.
“The test of a rst-rate intelligence is the ability to hold two oppos-
ing ideas in mind at the same time and still retain the ability to
function.” (F. Scott Fitzgerald).
Many inter-
rm relationships such as strategic alliances and buyer–
supplier transactions involve the simultaneous pursuit of competition
and cooperation (Chen, 2008; Gnyawali & Madhavan, 2001). Such rela-
tionships, often referred to as “coopetition” (Bengtsson & Kock, 2000;
Brandenburger & Nalebuff, 1996; Gnyawali & Park, 2011; Padula &
Dagnino, 2007), are inherently paradoxical as they involve parties
with different identities, motives, and goals that engage in projects
aimed at simultaneously creating common value and realizing greater
private benets from that value (Khanna, Gulati, & Nohria, 1998).
When a rm engages in collaboration with a close rival, the paradox of
simultaneous competition and cooperation becomes most prominent.
Scholarly attempts to investigateparadoxical conditions in coopetition
are very limited. Lado and colleagues (Lado, Boyd, & Hanlon, 1997)
viewed the simultaneous pursuit of competition and cooperation strate-
gies as a paradox and suggested that syncretism between competition
and cooperation leads to higher rents than in either/or situations. Chen
(2008: 290) argued that “competition and cooperation are among the
most noted paradoxical organizational phenomena” and urged a more
holistic view of competition and cooperation. While these and other
related papers (e.g. Bengtsson & Kock, 2014; Gnyawali & Park, 2011)
highlight key paradoxical conditions and suggest the importance of
paradox-based theorizing, little research has systematically addressed
the nature of the paradox or discussed the implications for managing
the paradox. Further, while managers confront theparadox of coopetition
on a regular basis, the eld lacks a coherent framework to help managers
understand and manage the paradox. Hence, there is a compelling need
to develop a theoretically sound framework that enriches scholarlyunderstanding of paradox in inter-rm relationships, stimulates future
research, and guides management practice on this intriguing and
important phenomenon. Accordingly, we address the following research
questions: (a) How does the competition–cooperation paradox manifest
itself in the focal rm's inter-rm relationships? And (b) How can this
paradox be managed effectively?
We build on the burgeoning literature on paradox (e.g. Cameron &
Quinn, 1988, chap. 1; Lewis, 2000; Smith & Lewis, 2011; Smith &
Tushman, 2005), on the interplay of cooperation and competition
(e.g. Chen, 2008; Gnyawali & Madhavan, 2001; Lado et al., 1997), and
on behavioral strategy (e.g. Eggers & Kaplan, 2013; Gavetti, 2012) to
offer insights on how paradoxes emerge, are manifested, and get
managed in inter-rm relationships. Following Smith and Lewis
(2011: 383), we dene paradox as “contradictory yet interrelated
elements that exist simultaneously and persist over time”. We suggest
that in the context of coopetition, a paradox emerges both from the in-
herent dualities that exist due to the simultaneity of cooperation and
competition and from contradictory views or priorities of the partners
engaged in these relationships. These contradictions and dualities
serve to increase tension, which in turn could inhibit the effectiveness
of the rms' responses and ultimately the outcomes of the inter-rm
relationship. We develop the construct of felt tension as the locus of
this powerful paradox and identify factors that lead to different degrees
of felt tension and subsequently to differential responses to the
associated challenges. We further suggest that rms experiencing the
Industrial Marketing Management 53 (2016) 7–18
⁎ Corresponding author.
E-mail addresses: [email protected] (D.R. Gnyawali), [email protected]
(R. Madhavan), [email protected] (J. He), [email protected] (M. Bengtsson).
http://dx.doi.org/10.1016/j.indmarman.2015.11.014
0019-8501/© 2015 Elsevier Inc. All rights reserved.
Contents lists available at ScienceDirect
Industrial Marketing Management
http://dx.doi.org/10.1016/j.indmarman.2015.11.014http://dx.doi.org/10.1016/j.indmarman.2015.11.014http://dx.doi.org/10.1016/j.indmarman.2015.11.014http://-/?-http://-/?-http://-/?-mailto:[email protected]://dx.doi.org/10.1016/j.indmarman.2015.11.014http://www.sciencedirect.com/science/journal/00198501http://www.sciencedirect.com/science/journal/00198501http://dx.doi.org/10.1016/j.indmarman.2015.11.014mailto:[email protected]://-/?-http://-/?-http://-/?-http://dx.doi.org/10.1016/j.indmarman.2015.11.014http://crossmark.crossref.org/dialog/?doi=10.1016/j.indmarman.2015.11.014&domain=pdf
-
8/17/2019 Competition-Cooperation Conceptual Frameworks
2/12
competition–cooperation paradox can effectively manage the situation
through the development of a unique set of capabilities. We explicate
the nature and role of such capabilitiesin analyzing the opposing forces,
in maintaining an appropriate level of felt tension, and in leveragingthe
opportunities and mitigating the challenges related to the competition–
cooperation paradox.
This paper contributes to the literature in several ways. First, it offers
a conceptual framework of paradox in inter-rm relationships by
unpacking the drivers, nature, and implications of paradoxical tensionwhen rms engage in simultaneous cooperation and competition with
each other. Given the centrality of inter-rm relationships to innovation
(e.g., Ahuja, 2000), a better understanding of paradox in the coopetition
context should contribute to the development of a paradox perspective
that could help understand innovation. Our theory helps to understand
howand whyparadoxes and tensionsemerge in inter-rm relationships,
an understanding of which is critical in order to advance future research
on paradox and coopetition.Second,we propose felt tension as theactual
manifestation of the cooperation–competition paradox in the inter-rm
context. Our construct of felt tension enables us to link the paradox view
with practical organizational issues and to illuminate the capabilities
needed to manage it. Third, we provide insights on the capabilities criti-
cal in dealing with such paradoxical relationships and how such capabil-
ities facilitate the understanding and management of the paradox.
1. Theoretical background
In order to introduce the building blocks of our theoretical frame-
work, we begin with an illustrative example of paradoxical inter-rm
relationships involving simultaneous competition and cooperation.
Despite their erce rivalry for many years, Samsung Electronics and
Sony Corporation formed a joint venture (called S-LCD) in 2004 to
develop and produce LCD panels for at screen TVs with initial invest-
ments of $1 billion each, subsequently doubling their investment and
further intensifying their cooperation (Gnyawali & Park, 2011). While
the venture was critical for both rms to penetrate and create domi-
nance in the at-screen TV industry, both rms experienced substantial
tension while initiating and managing the venture. Public reaction in
Japan included accusations that Sony was a traitor, and Sony had topull out of a government-backed LCD-panel development consortium
in order to address concerns that the condential technology would
fall into rival Samsung's hands (Dvorak & Ramstad, 2006). Internally,
Sony engineers and managers were worried that Samsung would even-
tually use Sony's TV expertise to beat Sony, while their counterparts at
Samsung were concerned that helping such a big and erce rival could
hurt Samsung (Gnyawali & Park, 2011). While all inter-rm relation-
shipsembody some degreeof paradox, those that by designentail simul-
taneous competition and cooperation, such as the relationship between
Samsung and Sony, are highly paradoxical, involve high levels of tension
(Das & Teng, 2000; Gnyawali & Madhavan, 2001; Lado et al., 1997) and
yet promise to deliver signicant innovation.
The literature on paradox underscores the prevalence of tensions
and suggests that managing paradox requires developing the capabilityto deal with tension (Lewis, 2000). The salient tensions,
i.e., “contradictory yet interrelated elements experienced by organiza-
tional actors” (Smith & Lewis, 2011: 389) could spur vicious cycles
due to individuals' cognitive and behavioral drive for consistency and
due to organizational inertia. On the other hand, they could also poten-
tially lead to a virtuous cycle when the organization has paradoxical
cognitive frames and ability to engage in paradoxical information
processing (Smith & Tushman, 2005). Furthermore, this literature
highlights that contradictions and dualities are important characteris-
tics of paradox that create tension, thus necessitating strategies to re-
spond to these characteristics. These insights from the mainstream
paradox literature serve as critical building blocks for our theory.
Compared to commonly discussed organizational paradoxes such as
learning, belonging, and organizing (Lewis, 2000; Smith & Lewis, 2011),
paradoxes stemming from inter-rm relationships, especially those
involving simultaneous cooperation and competition, demonstrate
unique characteristics. First, the contradictions in the coopetition para-
dox stem from the situation faced by two organizations with distinct
identities, goals, and motives. Both sides have to understand each
other's perspectives and develop a shared perspective that transcends
their differences. Second, the coopetition context involves several
unique dualities such as working together with a competitor to create
common bene
ts while competing vigorously in realizing largerindividual gains. These contradictions and dualities persist at varying
degrees depending on the intensity of the simultaneous pursuit of
competition and cooperation. Third, because of these contradictions
and dualities, the source and nature of tension are unique in the inter-
rm context and therefore approaches to deal with the tension and to
generate benecial outcomes would also be unique. These unique con-
ditions provide a rich and appropriate context to apply the paradoxlens
in inter-rm coopetition relationships.
As Lewis (2000: 761) points out, “Paradoxical tensions are
perceptual—that is, cognitively and socially constructed polarities that
mask the simultaneity of conicting truths… signify two sides of the
same coin. Yet actors' perceptions often obscure this relatedness.” The
cognitive nature of paradoxical tension necessitates the need to inte-
grate insights from cognition research to understand and manage the
competition–cooperation paradox. We therefore build on the behavior-
al strategy literature with its focus on capabilities and cognition.
Founded on the core ideas of bounded rationality (March & Simon,
1958), routines (Nelson & Winter, 1982), capabilities (Zollo & Winter,
2002), and cognition (Barr, Stimpert, & Huff, 1992), this literature sug-
gests that a rm's routines andshared cognitionplay a critical role in de-
termining the managers' perceptions and rm behaviors (Gavetti,
2012). Eggers and Kaplan (2013) suggest a reciprocal connection be-
tween cognition and capabilities and stress the critical role of managers
in accurate perception and leveraging of capabilities. Thus, both the un-
derstanding (or analytical) part and theleveraging (or executional)part
of capabilities are critical. As we develop later, this distinction provides
us the basis for unpacking the capabilities to manage the paradox.
2. A conceptual model of paradox in inter-rm relationships
Fig. 1 depicts the model we develop in this paper. The selection of
the constructs and the development of the conceptual model are driven
by several key considerations from the literatures highlighted above.
First, the constructs ought to represent the competition–cooperation
paradox and should match with the core concepts discussed in the par-
adox literature. This consideration led to the selection of contradictions
and dualities, which are central in the paradox literature ( Lewis, 2000;
Smith & Lewis, 2011), as the key paradoxical conditions in relationships
that involve simultaneous competition and cooperation. Second, be-
cause tension is underscored in the literature on both paradox (Smith
& Lewis, 2011) and strategic alliances involving competition and
cooperation (Das & Teng, 2000), our constructs and theory need to
incorporate tension. The constructs of dualities, contradictions, andfelt tension explain the manifestation of the paradox (research question
[a]). Third, because our goal is both to illuminate paradoxical situations
and tensions and to explicate ways of addressing them, our theory
needs to offer cognitive and behavioral explanations on how paradoxi-
cal tensions could be understood and managed in coopetition. This con-
sideration led to the focus on analytical capability to understand the
paradox and executional capability to manage it (research question
[b]). Finally, we incorporated performance in the model as our theory
aims to provide explanations on why and how rms differ in beneting
from coopetition.
Our conceptual model suggests that paradox in relationships
involving simultaneous competition and cooperation is driven by criti-
cal dualities and contradictions, which are key sources of felt tension.
Felt tension is the actual state of cognitive and emotional stress
8 D.R. Gnyawali et al. / Industrial Marketing Management 53 (2016) 7 –18
-
8/17/2019 Competition-Cooperation Conceptual Frameworks
3/12
experienced by the focal organization. It consists of strain (discomfort
with respect to the paradoxical situation) and con ict (friction or
discord that manifests between partners). Specically, we propose
that dualities give rise to strain and that contradictions lead to conict.
While some degree of felt tension (either strain or manifest conict)
will always exist in all inter-rm relationships (Das & Teng, 2000),
coopetition relationships are particularly prone to high degrees of ten-
sion due to strong dualities and contradictions. Further, we propose
that rms that possess paradox management capabilities could keep
thefelt tension at a reasonable level (through their analytical capability)
and create positive effects of felt tension on performance (through their
executional capability).
2.1. Dualities and contradictions in inter- rm relationships
What makes coopetition especially challenging is that it requires
companies to manage incongruities in a number of areas. We proposethat there are two sets of key incongruities—dualities and
contradiction—which are two of the dening elements of a paradox
(Smith & Lewis, 2011). Dualities are non-partner-specic forces that
exist within a unied whole (Smith & Lewis, 2011: 387) and stem
from engagement of activities that are opposing in nature (e.g., value
creation and appropriation) but are pursued simultaneously in
coopetition (Brandenburger & Nalebuff, 1996). Contradictions are
partner-specic and stem from interactions with partners that are
different. The two sides of a duality are inseparably linked to each
other (such as the Chinese concept of Ying and Yang), while contradic-
tions emerge from therms' comparisons of “we” versus “them”. Using
Sony as an example, dualities exist because Sony is engaged in
coopetition (regardless of who the partner is), but contradictions exist
because Sony is engaged in a coopetition relationship with Samsung,
which has itsunique rm characteristics and strengths. Table 1 provides
a comparative summary on dualities and contradictions. We discuss
below the nature of dualities and contradictions before developing
propositions linking them to felt tension.
2.1.1. Dualities
We suggest that three critical dualities are inherent in relationships
that simultaneously embody competition and cooperation: (a) value
creation versus value appropriation (Brandenburger & Nalebuff,
1996), (b) separation versus integration (Bengtsson & Kock, 2000),
and (c) bridging versus bonding (Bengtsson & Johansson, 2011).Value creation versus value appropriation is the most commonly
discussed duality in the literature on coopetition (Brandenburger &
Nalebuff, 1996). Firms collaborate to create a larger pie or more com-
mon benets and at the same time compete to realize a bigger private
share of that pie (Hamel, 1991; Khanna et al., 1998). Mutual commit-
ments and creation of synergy through resource combinations are crit-
ical in creating a larger pie, but the focus on getting a bigger portion of
the pie could limit value creation in the rst place. A related aspect of
Fig. 1. A conceptual model of paradox in coopetition.
Table 1
Differences between the two constituent parts of paradox in coopetition: dualities and contradictions.
Paradox
Dualities Contradictions
Description Generalized forces present in inter-rm relationships that
involve the pursuit of seemingly opposite ends
Partner-specic forces that stem from divergence between partners
Primary source Engagement in activities that are opposing in nature Engagement with partners that are different
Relationship between the parts and
the whole
Opposites exists within a unied whole Differences persist, cannot be unied but are somewhat overlapping
Illustration
The size of the space between Yin and Yang is an indicator of
degree of challenge
Larger overlapping space means less contradictions
Illustrative dimensions Value creation and appropriation, bridging and bonding,
separation and integration
Divergence in economic interests, strategies, and identities between
partners
Key t ask Develop a holistic p erspective to int egra te t he opp osit es Ac cept the d iff erenc es and b alance the interest s
Primary consequence Strain due to challenges in (a) seeing holistically and
(b) integrating the opposing activities
Conict due to (a) underlying differences in strategies, identities, etc.
and (b) challenges of balancing the interests
9D.R. Gnyawali et al. / Industrial Marketing Management 53 (2016) 7 –18
-
8/17/2019 Competition-Cooperation Conceptual Frameworks
4/12
this duality is the simultaneous need to share knowledge for joint value
creation and to protect core competencies and resources in order to re-
alize more private benets. While collaboration with external partners
is a key means to access external knowledge and pursue innovations
(e.g., Ahuja, 2000), collaborating rms could unintentionally expose
valuable technological assets that competitors can utilize opportunisti-
cally. The more a rm sees these as irreconcilable tasks, the more chal-
lenging coopetition would be for the rm.
The second duality of separation versus integration derives from theprofound incompatibility between the competition and cooperation
logics of interaction inherent in coopetition engagements (Bengtsson
& Kock, 2000). In dealing with these incompatible situations, rms
might pursue the temporal or spatial separation of competition and co-
operation activities or develop a more integrative perspective by recon-
ciling them (Chen, 2008). And even if separation is pursued, integration
is still needed to link the different parts together. For example, when
twormscollaborate in R&D but compete in the market, theknowledge
received in their competitive interaction needs to be integrated in their
collaborative endeavors, as market knowledge is important for their
R&D activities. While integration would be most benecial (Lado et al.,
1997), the incompatibility between the two different logics of interac-
tions makes the task of integration challenging.
Thethird duality is bridging versus bonding , which essentially means
working closely with competitor-partners in order to create value but
not become too close and be vulnerable. Bridging through weak ties be-
tweendisconnected entities provides access to new and non-redundant
information and resources, and the informational and control advan-
tages in bridging can improve the focalrm's competitive performance
(Burt, 1992) but bridging can make the partners wary of each other.
Conversely, deep bonding (Coleman, 1988) could help minimize coordi-
nation costs and foster deeper exchanges and mutual pursuits
(Krackhardt, 1992; Szulanski, 1996). Some level of bonding is necessary
in order to mutually create value, but if bonding becomes too dominant,
therm might become over-embedded (Uzzi, 1997). Forexample, man-
agers at Ericsson described that Ericsson and Sun. over the years became
very close and grew mutually, but that became a big problem when a
major competitor of Ericsson, Oracle, acquired Sun. (Bengtsson &
Johansson, 2011). A related issue is the challenge of maintaining an ap-propriate level of breadth and depth in coopetition relationships. Time
and resource constraints make it dif cult to maintain both. Pursuit of a
deep relationship with a particular partner may constrain the breadth
(having multiple partners), or vice versa.
Just like Yin and Yang, each duality has two unique elements but
they need to be seen in a holistic way (Lewis, 2000; Smith & Lewis,
2011). It is important to emphasize that the effective pursuit of
coopetition calls for seeing the two elements of each duality both
separately (to realize the full potential of each aspect) and jointly (to
make appropriate tradeoffs). For example, value appropriation cannot
be maximized if little value is created in the rst place, and value
creation will be compromised if rms have major concerns with regard
to value appropriation.
2.1.2. Contradictions
Contradictions emerge due to interactionsbetween partners that are
different from each other. Di Domenico and colleagues (Di Domenico,
Tracey, & Haugh, 2009) suggest that in inter-organizational settings,
contradictions often exist in goals, priorities, and business logics. We
suggest that as competing rms come together through cooperation,
several contradictions become salient: divergent economic interests,
different strategies and approaches, and identity differences. Divergence
of economic interests is about the underlying (both expressed and unex-
pressed) economic motives of partners in a particular relationship.
Shared goals would bring the partners together (Gnyawali & Park,
2011), and yet the partners may have different economic motives be-
hind the relationship. For example, while the focal rmmay want to in-
troduce new products from a technology that is jointly developed, its
partner may instead want to license the technology to others. Difference
in strategies and approaches, the second contradiction, is about differ-
ences between rms in their prior commitments and future priorities.
Pre-commitments to particular technologies (Ghemawat, 1991) may
lock partners into opposing trajectories. For example, managers at
Ericsson's multimedia division described how they moved toward
“open solutions” and “best of breed solutions” whereas they believed
that the new owner of Sun. (a long time partner of Ericsson), Oracle,
wanted to keep as much as possible within its own hierarchy(Bengtsson & Johansson, 2011). Similarly, partners may hold different
mental models about the industry's future, which predispose them to
different strategies and investments. Partners also differ in their tempo-
ralorientation (Das & Teng, 2000). Onerm might be short-termorient-
ed, favoring quick results, whereas the other can be long-term oriented
putting more efforts into investing in and building the relationship.
Such differences maycreate conicts and could evenleadto the dissolu-
tion of the relationship if not managed well (c.f. Barkema & Vermeulen,
1997; Das & Teng, 2000).
The third contradiction, difference in identities, is about the partners'
views of themselves as distinct from each other (Whetten, 2006).
Because identity is distinctive, enduring, and broadly shared by organi-
zational members (Whetten, 2006), a rm's identity deeply inuences
what it does and how it does (Cornelissen, Haslam & Balmer, 2007).
Deeply held beliefs and values relating to who they are and how
they should act determine goals, priorities, and related behaviors
(e.g. Ashforth, Harrison, & Corley, 2008). Competitor rms are more
likely to differ in their identities than non-competitor rms do, and
these differences in turn signicantly affect the coopetitive partners'
preferences and commitments to each other and consequently their be-
havior toward each other (Livengood & Reger, 2010).
3. Felt tension
Felt tension is the actual or experienced state of cognitive and
emotional stress inside an organization due to its engagement in
coopetition. Scholars have acknowledged the role of tension in inter-
rm relationships and emphasized the importance of understanding
the nature and the effects of tension (Das & Teng, 2000; Zeng & Chen,2003). Consider our example of Sony, which had a deep-rooted tradi-
tion of innovating on its own with little engagement with outsiders
(Chang, 2008). Its decision to engage in coopetition with Samsung led
to Sony being labeled as “traitor” by Japanese media, and it had to deal
with the new reality of working together with a erce rival. While
these two competing giants in the electronics industry had very
different strategic and technology priorities, they had to set aside their
differences and work together. The paradoxical situation of cooperating
with a erce rival while maintaining the existing level of vigorous com-
petition led to increased tension inside a company that had a strong
inward-looking culture.
A reviewof literature that examines tension in coopetition (present-
edin Table 2) indicates a lack of clear conceptualization of theconstruct.
Research shows that different types of tensions occur at different levels(Fernandez, Le Roy, & Gnyawali, 2014; Raza-Ullah, Bengtsson, & Kock,
2014). At thenetwork level, role tension develops asrms play different
and changing roles in relation to each other ( Johansson,2012). Different
types of organizations in the network, such as customers (Lacoste,
2012) and suppliers (Wilhelm, 2011) affect the tension in different
ways. Fernandez et al. (2014) provide illustrations of how tension in
coopetition develops at multiple levels: individual, inter-unit, and
inter-organization. Given that an organization consists of individual
members, the feeling of tension starts with individuals, and aggregates
to group, unit, and overall organization levels in a manner that is similar
to howemotions becomecollective (Huy, 2012). Themajority of studies
in coopetition discusses tension arising from inter-rm conditions.
Fernandez et al. (2014) through their in-depth case study spanning
multiple levels of a coopetition relationship show that different sources
10 D.R. Gnyawali et al. / Industrial Marketing Management 53 (2016) 7 –18
-
8/17/2019 Competition-Cooperation Conceptual Frameworks
5/12
of tension exist at different levels. While we acknowledge that the feel-
ingof tension often startswith individuals,our conceptualization of ten-
sion is at the organizational level for two reasons. First, as Huy (2012)suggests individual and team feelings spread beyond these levels and
become organizational. Second, our other constructs and the overall
theory are at the organizational level.
In previous research tension is often equalized with contradictions
and dualities inherent in the coopetition paradox (Fernandez et al.,
2014; Lacoste, 2012; Tidström, 2014; Wu, 2014), or viewed as a result
of competition (Pellegrin-Boucher, Le Roy, & Gurău, 2013). We under-
score theneed to examinetension as a core construct and argue that con-
tradictions and dualities serve as critical antecedents of felt tension. We
also note that a few attemptshavebeenmade in previous research to dis-
tinguish tension from the paradox. Raza-Ullah et al. (2014), for example,
show that tensionresultsfrom cognitive appraisal of paradoxthat engen-
ders ambivalent emotions. Lado et al. (1997) argue thatthe paradoxleads
to constructive conicts.We suggest that felt tension has two related components: strain and
conict. These two components are in line with the distinction between
latent and salient paradoxical tensions suggested by Smith and Lewis
(2011) in that latent tension (or strain) is embedded in coopetition and
salient conictis experienced throughinteractions. Strain is often internal
(felt discomfort with respect to a paradoxical situation)and mental,while
conict is often external (expressed in the interaction and relation be-
tween partners). We propose below that in coopetition the dualities or
the challenges of comprehending and dealing with incompatible issues
primarily lead to strain, and contradictions or differences between part-
ners primarily lead to conict.
3.1. Effects of dualities on felt tension
As noted earlier, dualities are inherent in any coopetition relationship
and are correlated with the intensity of a rm's engagement in
coopetition. We suggest that intensied dualities increase strain through
bothcognitiveand behavioral reasons. Cognitively, it is highlychallenging
to comprehend opposing situationsin a dualityand to discern the interre-
latedness between multiple dualities. The perceived incompatibility in
the various dualities could lead to cognitive dissonance (Festinger,
1957), and the task of balancing the dualities could create complexities,
both of which can induce high tension (Das & Teng, 2000).
Thetask of balancingboth withina duality(such as value creation ver-
sus appropriation) and between the various dualities can cause a high
level of strain for multiple reasons. The rst logic relates to issues stem-
ming from within a duality. Potential gains are high if both sides of a du-
ality are relatively high and are in balance (Park, Srivastava, & Gnyawali,
2014). Strong competition to extract higher benets from a coopetition
relationship can lead to a stalemate (Miller & Chen, 1994). The balancing
act of keeping both sides of a duality at a high level is inherently dif cultdue to the conicting demands of each duality on the roles of individuals
and organizationalunits. Second, as the multiple dualities are interwoven
with each other, lack of balance in one duality could have negative impli-
cations on the other dualities. High focus on bonding (vis-à-vis bridging),
for example, leads to over-embeddedness (Uzzi, 1997) and to recyclingof
known information rather than to new pursuits for value creation. If ties
between partners aretoo strong thepartners could becomeoverly similar
to each other, which could hamper value creation.
Third, the strategic importance of coopetition places additional cog-
nitive demands on the focalrm. Coopetition would be strategically im-
portant for the focal rm if coopetition pursuits are in its priority areas
and iftherm is highly dependent on the competitor-partner. Typically,
engagements aimed at pushing major technologies and setting techno-
logical standards, such as the Samsung-Sony coopetition (Gnyawali &Park, 2011), have high strategic signicance. The strategic importance
and the need to manage the conicting dualities may easily raise the
level of stress felt by the involving members of the rm and even lead
to dysfunctional behaviors. The on-going struggle to understand and
balance the competingpressures, as well as thesubsequent strain,starts
primarily at the individual level but is magnied when multiple individ-
uals and units face such situations. Individual challenges become orga-
nizational challenges when multiple individuals in the organization
face similar situations and use similar interpretations in responding to
them (Huy, 2011). This individual and collective strain intensies with
increased intensity of each duality, with increased challenges of dealing
with multiple dualities as the same time, and with high strategic stakes
in coopetition. Based on the above reasoning, we propose the following.
Proposition 1. Ceteris paribus, as the intensity of the dualities increases,the level of felt tension experienced by the focal rm increases primarily
through the development of strain.
3.2. Effects of contradictions on felt tension
Contradictions are incompatible inter-partner forces that coulddrive
the partner rms in different directions. The competitor-partners are
often wary of each other to begin with (Gnyawali & Madhavan, 2001).
While they nd their collaboration necessary for survival and growth,
the competitive challengesof reconcilingtheirstrategic and identity dif-
ferences are striking. More critically, the deep-rooted differences be-
tween the partners in terms of their identity would make them see
each other differently. These forces have important implications for
Table 2
Sources and types of tension coopetition.
Authors Sources of tension Types of tension
Das and Teng (2000) Competing forces in alliances Cooperation versus competition, rigidity versus exibility, and
short-term versus long-term orientation
Fernandez et al. (2014) Different sources of tension at different levels
Inter-organizational: differences in value expectations, goals, and
strategies
Intra-organizational: internal units competing and cooperating,
dif culty seeing past competitor as a partnerIndividual: differences in emotions, beliefs, identities
Units and organizations facing paradoxical forces such as competition
and cooperation, as well as value creation and appropriation
Individuals experiencing conicting beliefs and identities
Johansson (2012) Conicting expectations and demands in different roles (competitor
supplier or customer) in different activities
Balancing long-term relationships and short-term interactions, in
cooperation and competition
Lacoste (2012) Third party demands. The customer demands that suppliers cooperate
but at the same time make them compete
Value creation through collaboration and value appropriation through
price competition in value chain
Lado et al. (1997) Opposing dualities of cooperation and competition Managerial cognitive systems that embrace constructive conicts
Pellegrin-Boucher et al. (2013) The risk related to partners' competing intensions On-going competitive interactions
Raza-Ullah et al. (2014) The coopetition paradox (simultaneous cooperation and competition)
triggers emotions
Emotional ambivalence due to simultaneous positive and negative
emotions
Tidström (2014) Co ope ratio n and competition Ov erlappin g do mai ns, de livery, advertisi ng and coope ratio n
Wilhelm (2011)
Cooperation and competition and inuences of third party (supplier
association)
On-going competitive interactions and simultaneity of cooperation
and competition
Wu (2014) Cooperation and competition Inherent dif culty in pursing both cooperation and competition
11D.R. Gnyawali et al. / Industrial Marketing Management 53 (2016) 7 –18
-
8/17/2019 Competition-Cooperation Conceptual Frameworks
6/12
the partners' perceptions of the relationship as well as for their behav-
iors toward each other, likely engendering high levels of conict. First,
the genuine and deep differences in the two rms' beliefs and values
about who they are and how they should act in any situation would
lead to differences in their views of the same situation. Identity drives
information processing and behavior when faced with an ambiguous
and challenging situation (Livengood & Reger, 2010), and the vulnera-
ble situation of coopetition would therefore make identity more salient
in shaping the
rms' cognition and behaviors. Exactly when there is aneed to create a common locus, such identity differences are likely to
drive actual behaviors that make it dif cult to nd common ground.
Furthermore, deeper identity differences could also be a cause for
exacerbating the partners' differences in economic interests and
strategies.
Second, the economic interests (or goals for thecoopetition relation-
ship) of therms determine their strategies and priorities. Widerdiffer-
ences in their goals will make managers feel uncomfortable about what
to choose or focus on. The feeling of unease may simply escalate to a
point that prevents the managers from making sound decisions in a
relationship. Even if decisions are reached to satisfy both parties, such
decisions are likely to entail unusual discrepancies and may confuse
other employees of the rm.
Third, the need to deal with multiple contradictions might lead to
loss of strategic coherence. Effective pursuit of a strategy requires a
system of activities that support and reinforce each other ( Porter,
1996). To collaborate effectively with a competitor-partner, both
rms need to establish strategic objectives and operational proce-
dures that are aligned with each other. Yet, the new activities tai-
lored for the collaboration may not be compatible with the focal
rm's existing activity system, which has been established over
time. The task of implementing the conicting priorities and inco-
herent activities could demand signicant changes to the rm's rou-
tines and core competences (Nelson & Winter, 1982). Although such
changes may be perceived as necessary from a strategic point of
view, resistance from employees and other stakeholders can still
arise. This is not only because new ways of doing business pressure
themto alter those organizational routinesthat they are comfortable
following but also because their personal interests may be threat-ened when the rm's current “value system” needs to be
restructured (cf. Christensen, 1997). Thus, deeper-level identity
differences between the partners coupled with greater disagree-
ments on goals, strategic approaches and priorities, and lack of co-
herence in various activities could intensify the level of
contradictions in a coopetition relationship. As a result, the focal
rm would encounter higher levels of conict. Therefore, we pro-
pose that:
Proposition2. Ceteris paribus, as the level of contradictions in coopetition
increases, the level of felt tension experienced by the focal rm increases
primarily through the development of manifest con ict .
Two important points are worth noting here: First, strain is likely to
lead to conict. When strain becomes too strong, the actors will take astance to escape from schizophrenia (e.g., by making a decision that is
not acceptable to the partner), which subsequently will lead to conict.
Second, while both strain and conict could arise from dualities and
contradictions, our propositions and related arguments are focused on
the primary effects. Development of these points is beyond the focus
of the current initial attempt to address the coopetition paradox, but is
a worthy topic for future study.
3.3. Effects of felt tension on coopetition performance
We dene coopetition performance as the actual returns or out-
comes that the focalrm generates from a coopetitionrelationship. Suc-
cess in technological pursuits and innovations is an important outcome
in coopetition (Gnyawali & Park, 2011). Note that the focus is on the
marginal gain driven by, and directly attributable to, the coopetition
relationship; it is not the overall rm performance.
We propose that felt tension has a curvilinear inuence on
coopetition performance. Anchoring our proposition is the core idea
that felt tension is linked in complex ways to the retention and alter-
ation of routine behaviors mainly because a reasonable level of strain
and conict has the potential to stimulate organizational changes to
help the
rm to reach equilibrium again. At low levels of felt tension, in-dividuals and organizations are prone to routinized behavior, relying
primarily on standard operating procedures, heuristics and automatic
processing (Nelson & Winter, 1982). Low tension could also mean that
the tension is not salient (Smith & Lewis, 2011), i.e., implying the lack
of realization or acceptance of the opposites. At medium levels of felt
tension, alert perception and conscious processing take over in a
coopetition relationship. As a result, automated routines are suspended,
and consciousdecision-making replaces standard operating procedures,
and innovative solutions are identied. At high levels of felt tension,
the individuals and the organization are likely to revert to routine be-
havior and automatic processing because computational capacity gets
swamped by the felt tension, leading to little or no improvement on
organizational outcomes unless the organization has the capability to
understand and manage high tension.
The positive effects of felt tension occur due to the active and mind-
ful search for superior and innovative solutions to challenges related to
coopetition. Suspension of the automatic response mode and mindless
routines liberates individuals and organizations to engage in conscious
and deliberate explorations. Such mindful search may promote greater
intentionality, increase the range of solutions considered, and reduce
blind spots. Thepartners could benet from the searchfor creative solu-
tions for common problems (Fernandez et al., 2014). The intentionality
and conscious deliberation help to overcome complacency and organi-
zational inertia and stimulate innovation.Mindful engagementand con-
structive debate about contentious issues force each party to articulate
and clarify their own positions and to stress-test their own models of
the world. Such robust dialog serves to enhance the rigor of analysis,
and canbe especially valuable in coopetition situations wherein thejux-
taposition of competinganalytical models and roadmaps can help to re-duce ambiguity about the future.
At the same time, felt tension is not without its downsides. As felt
tension increases, more of the individual's and the organization's capac-
ity is devoted to processing the stressrather than to performing creative
tasks. Also, increase in strain and conict can engender mistrust and
compromise the quality of communication. In turn, ineffective commu-
nication leads to poor coordination, reduced quality of decisions and
slower decision speeds. Furthermore, opportunities to share knowledge
productively and to create new synergistic advantages may be missed.
Negative emotions could divert managerial attention from task- and
process-related issues, and such emotional anxiety and organizational
inertia could spur the vicious cycle (Smith & Lewis, 2011).
In sum, both the absence and the predominance of felt tension rep-
resent negative territories for coopetition performance. As felt tensionlevel increases to the mid-point of the range (the sweet spot), positive
effects outweigh the negative effects. The alertness, mindful search,
and robust debate stimulated by healthy felt tension levels serve to im-
prove mutual understanding necessary to effectively engage in
coopetition and thereby to generate innovative outcomes through
coopetition. However, as the felt tension goes beyond the sweet spot,
extra time and resources would be spent in the attempt to manage
the conict. At precisely those moments that coopetition partners
should be communicating more and addressing critical issues, the chan-
nels shut down. This is possibly why a recent empirical study (Park
et al., 2014) shows that pursuit of moderate to high levels of competi-
tion and cooperation generates higher performance than does pursuit
of extremely highlevels of both. Thus, in the extremely high felt tension
regions, the negative effects override the positives.
12 D.R. Gnyawali et al. / Industrial Marketing Management 53 (2016) 7 –18
-
8/17/2019 Competition-Cooperation Conceptual Frameworks
7/12
Proposition 3. An inverted U -shaped relationship exists between felt
tension and coopetition performance with low felt tension and high felt
tension being associated with low coopetition performance and mid-level
felt tension evidencing the best coopetition performance.
The subjective nature of felt tension suggests that competitors-
partners, although facing the same set of dualities and contradictions,
can feel asymmetric pressure or uneasiness, thus likely demonstrating
different responses and outcomes. The key contingency for such asym-
metry is each competitor-partner's paradox management capability,which consists of both analytical and executional capacities.
4. Paradox management capability and its moderating role
Paradox management capability refers to a rm's capacity to per-
ceive and analyze key issues and challenges in inter-rm relationships
and to devise appropriate managerial responses. Among the four ap-
proaches (mere acceptance, temporal separation, spatial separation,
and synthesis) to dealing with paradox (Poole & van de Ven, 1989),
our focus here is mostly on the last one (synthesis and integration).
We suggest that integration of the opposites of competition and cooper-
ation and the resulting dualities and contradictions could be managed
more effectively if rms have adequate analytical and executional
capabilities. Analytical capability helps in the accurate assessment of the paradoxical situation and the executional component helps in the
design and implementation of actions that address the paradox.
We propose that both components play distinct roles in coopetition,
and that the analytical component shapes the development of the
executional component (Eggers & Kaplan, 2013). To add clarity to the
overall construct of coopetition capability before we elaborate on its
analytical and executional components, we provide some illustrative
elements and their effects in Table 3. As illustrated in the table,
coopetition capability helps to enhance helpful aspects and minimize
harmful aspects as rms engage in coopetition.
4.1. Analytical capability
Analytical capabilityrefers to therm's capacity to obtaina clear andaccurate understanding of the coopetition situation, including how spe-
cic contradictions and dualities differentially impact the relationship.
Firms with high analytical capability would be adept at mapping out
contradictions and dualities in coopetition and in understanding possi-
ble implications. Analytical capability is analogous to Cameron and
Quinn's (1988, chap. 1) concept of ‘ Janusian thinking’. In Janusian think-
ing, two contradictory thoughts are held to be true simultaneously and
resolution of apparent contradiction leads to major breakthrough in in-
sights. Smith and Tushman's (2005: 526-27) discussion of paradoxical
cognition—consisting of paradoxical cognitive frames and cognitive
processes—provides a concrete basis to explicate analytical capability.
Paradoxical cognitive frames are “mental templates in which managers
recognize and accept the simultaneous existence of contradictory
forces.” Such frames enable the cognitive juxtaposition of opposing
forces, the recognition of dualities and potential synergies, and the em-
bracing of tensions. Such paradoxical frames create a foundation for
cognitive processesthat can handle inconsistencies. Cognitive processes
are ways in which managers think about and respond to information.Smith and Tushman (2005) suggest that paradoxical cognitive process-
es enable the handling of inconsistencies. They further suggest that it is
the combination of cognitive frames and processes that allow decision
makers to effectively embrace contradictions,rather than to avoid them.
Paradoxical frames and information processing allow managers to
sense and interpret conicting cues in the environment, assess critical
dualities and contradictions, and understand the complexity of issues
involved in the paradoxical inter-rm relationships. In other words,
the cognitive frames or mental models would enable managers to see
and sense what ought to be sensed (Barr et al., 1992; Huff, 1990;
Porac, Thomas, & Baden-Fuller, 1989), as well as to process conicting
information. Further, high analytical capability entails a rm's capacity
to tell the difference between dualities and contradictions in
coopetition, which is critical in developing effective responses.
We suggest that a high level of analytical capability is key to reduc-
ing felt tension: faced with the same kinds of contradictions and duali-
ties, a rm with a higher level of analytical capability will experience
less tension, mainly due to reduced misperceptions and increased accu-
racy in understanding the situation. Analytical capability enables man-
agers to realize that both cooperation and competition are benecial
and therefore make it easier to see and accept the dualities. A rm
with high analytical capability also has a more accurate sense of the
challenges ahead and could identify a greater range of countermeasures
necessary to manage the contradictions. Social cognition research
has long recognized that different actors perceive the same reality dif-
ferently (e.g., Bruner, 1957). Accordingly, in the context of a dyadic
coopetition relationship, the same set of dualities and contradictions
may lead to different levels of felt tension experienced by the
competitor-partners due to two critical roles of cognitive frames andinformation processing: (1) each rm's awareness of the nature of
dualities and the scale of contradictions and (2) each rm's perception
of these antecedent conditions. These two forces work in unique ways,
which both mitigate and intensify the effects.
As highlighted in competitive dynamics literature (e.g., Chen, 1996;
Smith, Ferrier, & Ndofor, 2001), awareness of another competitor's stra-
tegic move is a prerequisite for a rm's competitive response. Similarly,
without full awareness of the dualities and contradictions in coopetition,
the focal rm only partially experiences the strain and conict derived
Table 3
Coopetition capability: illustrative elements.
Capability elements Enhancing helpful aspects Reducing problematic aspects
Parado x management Increases ability to engage in active, mindful search; leads to
greater creativity and innovation due to capability to nd
integrative, synergistic solutions; leads to increased
stimulation in nding solutions between contrasting forces
Reduces mistrust, miscommunication, risk of
paralysis in decision making
Core protection Greater sense of security leads to greater willingness to share
knowledge; higher creativity
Serves as a safety net and therefore reduces feeling
of vulnerability and chances of errors
Relationship management
- Motivating the partner (unilateral commitment,
setting aside small issues for the larger good)
- Enabling the partner
Leads to trust building
Partner sees long-term benets and upsides and commits more
Working with strong partner enhances innovativeness
Reduces mistrust
Reduces feeling of vulnerability of the partner
Reduces mishaps due to lack of capabilities
Supporting capabilities (such as HR system that hires
people with coopetition mindset, trains for such mindset,
and matches people to situations, culture of fast decision
making, leadership with paradoxical cognition)
People with a coopetition mindset (who have the cognitive
frames and cognitive processes to understand and handle
paradox) are more effective and ef cient in decision making
Fast decision-making helps to achieve quick adaptation
Paradoxical cognitive frames and processes help to
reduce confusion, stalemates, and shocks
Paradoxical mindset and cognitive frames help to
understand and diffuse challenges
Leadership integrates divergent thoughts into a
holistic view
13D.R. Gnyawali et al. / Industrial Marketing Management 53 (2016) 7 –18
-
8/17/2019 Competition-Cooperation Conceptual Frameworks
8/12
from the dualities and contradictions. This is because coopetition entails
a high degree of strategic novelty and complexity, which constitutes a
serious test of the rm's capacity to process information and anticipate
future scenarios. If the rm has previously experienced coopetition, it is
more likely to have the cognitive ability to comprehend the complex
interplay between competition and cooperation and to sense the
existence of dualities and contradictions. Having the cognitive frames
and information processing ability to sense and understand the dualities
and contradictions in coopetition could increase felt tension. By contrast,weak analytical capability may predispose the rm to miss (or ignore)
dualities and contradictions that have the potential to generate strain
and conict. Simplistic cognitive processes could result into selective
perception (Dearborn & Simon, 1958) or selective imperceptions
(Beyer et al., 1997:718), which can incline managers to neglect impor-
tant cues that do not relate to their roles. As a result, it can be dif cult
to fully understand and appreciate the actions and priorities of others,
thus increasing strain and manifest conicts. In other words, limited
vision may prevent the rm from recognizing likely challenges and
thus from experiencing intensied stress. Therefore, a rm's analytical
capability can help it to more accurately sense the dualities and contra-
dictions in coopetition and therefore moderate the effects of dualities
and contradictions on felt tension.
Analytical capability also affects the rm's perception of dualities
and contradictions in detail once it senses their presence. Even when
two rms have the same level of awareness of the same set of dualities
and contradictions, they may not feel the same level of tension because
the difference in their analytical capabilities can affect the extent to
which each rm perceives the contradictions as cognitively, strategical-
ly, or organizationally challenging. Particularly, the ability to perceive
the difference between dualities and contradictions may lead the rm
to develop a more holistic understanding of the competitive–collabora-
tive situation (as opposed to either/or) and at the same time enable the
rm to actively seek ways of managing contradictions. However, the
rm with lower level of analytical capability is more likely to “panic”
or feel disoriented, as it does not have suf cient knowledge about the
situation and ways of reducing activity incoherence. Development of
more complex, holistic, and accurate mental models of the coopetition
situation will help avoid vicious circles and spur virtuous circles of paradox response (Smith & Lewis, 2011). Thus increased understanding
or analytical capability is likely to help keep the felt tension at a moder-
ate level for given levels of dualities and contradictions. Accordingly, we
propose that:
Proposition 4. A rm's analytical capability moderates the relationship
between antecedents (dualities and contradictions) and felt tension such
that for a given level of dualities and contradictions , greater analytical
capability will help keep the felt tension at moderate levels .
4.2. Executional capability
Executional capability refers to the focalrm's ability to manage thetension in a coopetition relationship productively. Building on Eggers
and Kaplan (2013), we suggest that routines are the foundations of
executional capability and identify three critical elements of such
capability: the ability to develop the routines themselves, to implement
processes of constructing and assembling routines into capability, and
to utilize the routines and the capability. A rm's exposure to, and
prior experience in dealing with, complex organizational issues and
moreparticularly coopetitionrelationships are instrumental in develop-
ing and leveraging appropriate routines. Since successful and recent ex-
periences get encoded more than old and unsuccessful ones (Eggers &
Kaplan, 2013; Levinthal & March, 1993), recent experience in dealing
with paradoxical relationships will help in creating routines and
bundling them to turn them into capabilities. Illustrative routines in
inter-rm relationships include the process of identifying and screening
potential partners (Gulati, 1999), organizing and managing partner-
ships (Ireland, Hitt, & Vaidyanath, 2002), and creating and sharing
knowledge (Dyer & Singh, 1998). Leveraging involves timely utilization
of the routines for the right purpose, recombining old and new routines
to rene the capability, and exaptation (renement of routines created
elsewhere to suit the inter-rm situation) (Eggers & Kaplan, 2013).
Routines could be developed and used in a specic coopetition relation-
ship as well as in many coopetition relationships. They could be
developed in non-coopetition situations as well and modi
ed for thecoopetition context.
We suggest that strong executional capability enables the rm to
effectively manage complex inter-rm relationships and mitigate the
negative effects and enhance the positive effects of felt tension in
threeprimary ways:effectivemanagementof eachcoopetitionrelation-
ship, creating greater value from broader coopetition pursuits, and
leveraging gains from coopetition. We address each in turn below.
When therm has developed routines and processes to identify and
evaluate partners, i.e., due diligence routines, it becomes easier to
engage with partners that are facing complementary challenges and
needs. The mutual need and overlapping interests will help bring the
partners together for a common agenda and commit more relevant re-
sources to the relationship to realize high potentials gains. The focal
rm's ability to fully engage the coopetition partner (through knowl-
edge sharing and bonding) is likely to engender greater commitment
from the partner as well. Capable partners over time develop informal
rules of the game, which enhance mutual adjustments and players'
co-evolution as the situation changes. For example, as Samsung and
Sony realized potential gains from each other's capabilities and at the
same timesaw thepotential to shape theat panel TV industry, they in-
creased their commitment through additional investments and pursuit
of a newer generation of the LCD technology.
Second, as the rm engages in more coopetition relationships, it
could combine the routines developed from each tie and enhance its
coopetition capability and utilize that in subsequent relationships. The
greater the availability and usefulness of the routines, the more likely
it is that the rm will be able to manage current and potential tensions.
Finally, as the rm engages in multiple relationships and is able to
achieve mutual commitments and appropriate resource allocationsfrom multiple coopetition partners, it is able to realize greater gains
from these relationships. While rms with limited executional capabil-
ity would feel continued tension that could lead to a vicious cycle, rms
with strong capability would thrive in coopetition and realize the virtu-
ous cycle (Smith & Lewis, 2011). Finally, the focal rm's capabilities in
managing coopetition effectively are likely to help it in leveraging
coopetition outcomes more effectively than the partner could. Please
note that this particular point is not about “taking advantage of ” the
partner, but is about utilizing specic outcomes from a coopetition
relationship (new technological innovations for example) and using in-
ternal competencies to generate greater economies of scope internally.
As the rm's capabilities become stronger, its partners see the focal
rm as a more desirable partner, which in turn will provide the rm
with greater bargaining power to shape the relationship.The creation of routines and development of capability over time
make the rm more prepared and better able to handle coopetition re-
lationships by reducing the negative effects of tension and any chances
of critical behavioral failures (Gavetti, 2012). Therefore, when a rm's
executional capability is high, it is likely to minimize the negative stress
and conict and increase eustress (or positive stress) both internally
and in the coopetition relationship and generate greater returns from
coopetition. We therefore propose that:
Proposition 5. A rm'sexecutional capability is likely to positively moder-
ate the inverted-U shaped relationship betweenfelt tension and coopetition
performance such that as executional capability increases the positive
performance effect of felt tension will become more positive and the
negative effect will become less negative.
14 D.R. Gnyawali et al. / Industrial Marketing Management 53 (2016) 7 –18
-
8/17/2019 Competition-Cooperation Conceptual Frameworks
9/12
4.3. Analytical capability increases executional capability
Our central argument in this proposition is that a better understand-
ing of the coopetition situation,including of the dualities and contradic-
tions and their effects, helps the rm to develop and use appropriate
executional capabilities that are relevant to the context. This effect oc-
curs through the processes of capability building and capability leverag-
ing as suggested by Eggers and Kaplan (2013). In terms of capability
building, clearer perceptions of the situation and awareness of differentoptions provide early signals regarding the nature of routines and pro-
cesses necessary to deal with a specic coopetition relationship as
well as in therm's broader approach to coopetition. Such understand-
ing will likely help drive the allocation of resources to effectively man-
age coopetition relationships. The earlier such understanding emerges,
the more time the rm has in order to deploy and rene its executional
capability. An understanding of the difference between dualities and
contradictions helps the rm to nd the right approaches for the differ-
ent drivers of felt tension and develop the most appropriate measures
for dealing with different issues of coopetition. In other words, the abil-
ity to foresee specic sources of felt tension increases the ability to de-
velop systems and processes to address effectively the sources and
their effects. For example, the more a rm understands an opportunity
and can frame it to induce partner effort (an example of analytic capa-
bility), themore likely that it canmotivate thepartner forextra commit-
ment and can utilize its routines to realize greater gains. Strong
analytical capability also provides a cognitive lens to interpret and com-
bine coopetition experiences into routines and rene them. Capability
leveraging involves making use of a capability for the right purpose,
recombining and renewing capabilities, and exaptation or use of a capa-
bility created for a different purpose (Eggers & Kaplan, 2013). Clearer
assessment of the coopetition situation will help determine which
kind of routines would be more effective in addressing the specic con-
tradictions involved in different coopetition relationships. This in turn
will channel the rm's efforts in utilizing existing capabilities, in
recombining current coopetition routines, and in identifying and
rening routines developed elsewhere that could be modied for
coopetition pursuits. Essentially, as Eggers and Kaplan (2013) suggest,
the cognitive component or the analytical capability helps to developand rene routines, combine various relevant routines to develop
strong capabilities, and leverage them. The analytical capability helps
to better understand the paradox, which is essential in order to develop
various ways to manage the paradox (Smith & Lewis, 2011). We
therefore propose that
Proposition 6. The greater the analytical capability of the focal rm, the
greater its executional capability.
While we discussed above the dominantcause-effectow (analytical
to executional), we acknowledge that executional capability is likely to
inuence analytical capability as well. A visionary view thatprompts ac-
ceptance of the need for coopetition, coupled with a sophisticated un-
derstanding of what it takes to succeed in coopetition, can stimulatethe rm to simultaneously develop strong capability both in analyzing
coopetition situations and in executing coopetition strategies. Further,
we should notethat analyticalcapability is a necessarybut not suf cient
condition for the development of executional capability because under-
standing a situation does not necessarily lead to action ( Gavetti, 2012).
Therefore, the standard ceteris paribus condition applies in all proposi-
tions developed above.
A natural question at this point would be how to empirically exam-
ine coopetition capabilities. Chen and Miller's (2015) recent multidi-
mensional framework, contrasting three prototypical views of
competitive dynamics—viz., rivalrous, competitive-cooperative, and
relational—offers one way to conceive of and examine coopetition-
specic capabilities. In a coopetition relationship, the aim is competitive
advantage rather than appropriation; the mode is to cooperate or co-
opt, rather than to attack or to retaliate. Most importantly, the toolkit
is political as well as economic; and the time horizon is intermediate
as against relatively short-term in a purely rivalrous relationship. In
coopetition, Chen and Miller (2015)suggest, there is an emphasis on in-
telligence, e.g., understanding the priorities of potential partners. Such a
perspective points to many specic examples of strategy skills that
going to coopetition capability. For instance, a strong competitive intel-
ligence systemendows the company with an accurate understanding of
the competitivelandscapeand speci
c partnerpro
les, thus providingagood starting point for more fruitful negotiations and more productive
partner selection and governancechoices. Similarly, a good understand-
ing of antitrust law and practice (e.g., Federal Trade Commission, 2000)
can help the company to assess howfar to take the cooperation without
running afoul of the law. Appropriate organization structures that iso-
late competitive and cooperative processes, so as to limit unintended
knowledge transfer (Hamel, Doz, & Prahalad, 1989), may be another el-
ement of coopetition capability.
5. Discussion and implications
This paper is motivated by both theoretical and managerial consid-
erations. The literature on paradox has grown substantially, and yet
we know little about paradoxes in inter-rm relationships, especially
those thatinvolve simultaneous pursuit of competition and cooperation
(Das & Teng, 2000; Gnyawali, He, & Madhavan, 2006; Gnyawali &
Madhavan, 2001). While coopetition “has become an integral part of
many companies'daily agenda” (Bengtsson& Kock, 2014: 180), suchre-
lationships are inherently challenging to manage (Gnyawali & Park,
2011; Padula & Dagnino, 2007), and managers lack guidance in under-
standing and managing such complex relationships. To ll these critical
gaps, we develop a theory of paradox in coopetition that builds on the
core elements of the literatures on paradox and on inter-rm
coopetition. Our theory identies key drivers of the paradox, explicates
the distinction between the antecedent conditions and felt tension and
explains their relationships, and discusses the critical role of paradox
management capability in handling the tension and in creating greater
gains from coopetition. Central to our theory is the premise that rms
vary in their felt tension and internal ability to understand and managethe many contradictions and dualities in coopetition. Although our
model is generally applicable in a wide variety of contexts involving
the simultaneous pursuit of competition and cooperation, it is most ap-
plicable in contexts involving intense forms of coopetition where two ri-
vals engage in a joint venture (such as Samsung and Sony).
Johnston and Selsky (2006) suggest three foci of the paradox litera-
ture: paradoxical state or condition, representation or construction of
paradox with a focus on tension, and management of paradox. Our con-
ceptual framework combines elements from these aspects in an attempt
to develop a theory of paradox in the novel context of coopetition. In
terms of the paradoxical condition, we identied important dualities
and contradictions and discussed their implications. We argued that
contradictions are forces that pull partners in opposite directions
while dualities are critical balancing acts fundamental in coopetition.We articulated two important aspects of tension—strain and
conict—that createcriticalchallenges andneed to be managed. We fur-
ther drew a conceptual distinction between the fundamental sources of
tension—the contradictions and dualities—and the felt tension experi-
enced by the rm.
Thethird aspectthat relates to our conceptual framework is the con-
struct of coopetition capability and its importance in managing the
coopetition paradox. The critical role of paradox managementcapability
is illustrated by F. Scott Fitzgerald's oft-quoted statement presented in
our epigraph: only the “rst-rate intelligence” has the ability to hold
two opposing ideas and still be able to function. Implicitly, all partners
face the same conditions, but some are able to cope better by
being able to understandand manage the tension generated by the fun-
damentally opposing forces. As an illustrative analogy, imagine a truck
15D.R. Gnyawali et al. / Industrial Marketing Management 53 (2016) 7 –18
-
8/17/2019 Competition-Cooperation Conceptual Frameworks
10/12
attempting to cross two adjacent bridges on a country road; the truck
crosses one without incident but the other bridge buckles. Clearly, the
load imposed by the truck wasthe same in both cases, but the two brid-
ges varied in their capacity to bear the load. Thedistinction between an-
tecedent conditions and tension as noted earlier was crucial to the task
of identifying the building blocks of paradox management capability, in
that while the inherent dualities and contradictions—and their
associated potential tension—may be given, therm may be able to de-
velop its own ability to handlethese conditions. Firms with strong capa-bilities would be able to reliably and repeatedly understand the tension
and manage the tension level generated by a given set of dualities and
contradictions and therefore succeed in dealing with them.
Fernandez et al. (2014) illustrated how tension arises at multiple
levels and how tension is managed through separation and integration
at different levels. With a focus on the organizational level, we have
linked the construct of tension, coopetition capability, and coopetition
outcome. We explicitly illustrated how the development of the ability
to understand the paradox (analytical capability) and to deal with the
paradox (executional capability) help enhance coopetition outcomes
by maintaining tension at a moderate level. In the discussion of
coopetition capability, we have explained that the analytical capability
consists of a sharedmindset (cognitive framesand information process-
ing). Shared mindset could be developed by the senior managers (such
as the CEO and top management team) and other key employees who
directly deal with coopetition. Executional capability consists of rou-
tines,interface of routines andcognition, and useof theroutines in deal-
ing with coopetition. In Table 3, we provide illustrations of how such
capability can help enhance helpful aspects and minimize harmful as-
pects while dealing with coopetition and subsequently enhance
coopetition outcomes.
6. Contributions
Our paper builds on and contributes to three important streams of
literature: paradox, inter-rm relationships, and behavioral strategy.
In terms of contributions to the paradox literature, we identify a partic-
ular type of paradox—competition and cooperation—and dig deeper to
understand the nature of paradoxical conditions, how these conditionslead to paradoxical tensions, and how they impact outcomes. The con-
cepts of contradictions and dualities have been key dening features
of paradox (Lewis, 2000; Smith & Lewis, 2011), but little is known
about how they are similar or different and what gives rise to them in
the inter-rm context. With a focus on competition–cooperation, we
have provided a concrete basis to understand both contradictions and
dualities in the inter-rm context. We have stipulated that the contra-
dictions are partner-specic but dualities are inherent in the phenome-
non of coopetition. This distinction helps to understand the specic
characteristics of the competition–cooperation paradox at the inter-rm level, which has not been discussed before. This distinction is also
important to understand unique tensions stemming from contradic-
tions and dualities and manage the paradox. The clarication of such
paradoxes is especiallyrelevant to innovation through the juxtapositionof different concepts (Koestler, 1964).
While the literature has clearly stressed the existence of and chal-
lenges stemming from tension in inter-rm relationships (e.g. Das &
Teng, 2000), this central concept has remained ambiguous. Further,
much of the literature sees tension as negative (Das & Teng, 2000) and
searches for solutions to minimize tension (Bengtsson & Kock, 2000),
but the literature is often silent about how to manage it. Therein lie
two of our core contributions to the coopetition literature. First, we
clearly spell out the nature of tension by identifying its two constituent
elements (strain and conict), by explaining specic factors that lead to
such tension (dualities and contradictions), and by articulating how
tension impacts performance. Second, we offer a compelling explana-
tion of how tension can also be helpful by increasing alertness and
mindfulness and by questioning existing routines. We suggest that
efforts solely focused on reducing tension may not be fruitful because
some level of tension is necessary and productive. Instead, we call for
the development of capabilities that will help to understand better the
drivers, nature, and consequences of tension. Our development of the
constructs of analytical and executional capability provides an initial
basis to better understand, accept, and act upon tension.
We also contribute to the literature on behavioral strategy, speci-
cally on the role of cognition and capabilities. Our theory offers insights
on why and how behavioral failures occur in inter-organizational rela-tionships. We suggest that behavioral failures (Gavetti, 2012) could
occur at both low and high levels of tension, but for different reasons.
Low perceived tension limits alertness, consciousness, and understand-
ing of the complexity, whereas high tension leads to the use of existing
heuristics and routines and justication of their use. The former reects
a lack of readiness, and the latter reects a lack of willingness to ques-
tion the complexity of the situation. Further, our conceptualization of
the paradox management capabilities suggests ways to avoid behavior-
al failures at high levels of tension and effectively manage the moderate
to high levels of tension in order to generate superior outcomes. Firms
that consciously recognize the need for changing and/or creating rou-
tines to address thedemands from differentcontradictionsand dualities
and are effective in doing so would likely thrive in their co-opetitive re-
lationships. Incidentally, our discussionof the analytical capability helps
to address rationality bounds (limits to understanding) and of the
executional capability to address plasticity bounds (limits to action),
as articulated by Gavetti (2012).
7. Implications for future research
Future research could delve deeper into the coopetition paradox in
several important ways, and we illustrate a few of them here. First,
while we have theorized about the nature and effects of contradictions
and dualities, we have not explored the interrelationships between
them due to space constraints. It is possible that some contradictions
can make certain dualities more prominent or intense, and vice versa.
Identifying and exploring such prominentand mutually reinforcing ele-
ments would be important as they mayhave more critical consequences
on strain, conict, or even both. Future research could explore possiblemechanisms through which such mutually reinforcing effects might
occur. Second, the challenges and tension in inter-rm relationships
generallystart at the individual level andmanifest at the team and orga-
nizational levels. The capabilities for pursuing such relationships are
also likely to exist at multiple levels, andindividuals' skillscould interact
with the organization's routines to form organizational capabilities. Op-
portunities exist for organizational behavior researchers to investigate
systematically the psychological and emotional aspects of individual
and team strain and conict and for strategy scholars to explore further
the dualities and contradictions and their rm-level implications. Such
research could then be integrated through a dialog between the two
groups of scholars to develop a ner-grained understanding of these
important multi-level phenomena.
Third, with respect to the relationship between the analytical andexecutional capabilities, we focused on the positive effect of the former
on the latter, but it is also possible that the executional capability also
helps to augment theanalytical capability. Futureresearchcould further
unpack this relationship and examine conditions under which one
could be a cause for the other in both positive and negative ways. It
would be interesting to delve deeper into specic mechanisms through
which paradox management capabilities are developed and how path
dependence inuences the development of such capability. Forth, by
building on the foundation established in this paper, researchers could
also identify and examine other contingent or independent factors that
inuence the links discussed in this paper. For example, how does the
focalrm's felt tension and capability interact with those of its partners?
Research could also delve into the feedback effects of capabilities and
performance on the antecedent conditions (contradictions and
16 D.R. Gnyawali et al. / Industrial Marketing Management 53 (2016) 7 –18
-
8/17/2019 Competition-Cooperation Conceptual Frameworks
11/12
dualities). The current model leaves open the possibility of incorporating
such dynamic effectsover time, butin theinterestof parsimony, we have
not developed these aspects here. Examination of such questions would
help to develop a more nuanced understanding of the nature and impli-
cations of these critical capabilities.
Fourth, a crucial implication of our model that shapes future
research is the implicit asymmetry between partners in a coopetition
relationship. Various aspects of asymmetry have been studied in the
broader literature on inter
rm collaboration —
e.g., learning races(Hamel, 1991), differential performance outcomes based on asymmet-
ric capabilities (Inkpen & Beamish, 1997), and superior stock perfor-
mance for rms with higher specic learning capability relative to
partners (Yang, Zheng, & Zaheer, 2015). Despite the weight of evidence
that asymmetries matter in partnership outcomes, coopetition re-
searchers are yet to focus on this promising topic. Thus, partners may
have differing levels of coopetition capability, as reected in greater or
lesser levels of felt tension. According to our model, the partner with
higher levels of analytical and executional capability will be able to
manage the sources of tension better, and will thus experience proper
levels of felt tension. That partner will then be able to not only fulll
its partnership role better, but also to focus on extracting private bene-
ts (Khanna et al., 1998) from the partnership. On the other hand, given
therightset of intentions, thestronger partner canalso help to strength-
en the cooperation—e.g., by being proactivein repairing therelationship
in the event of conict, or by helping the weaker partner to learn faster.
The locus of asymmetry can also have important consequences—e.g.,
asymmetry in analytical capability may have different implications
than asymmetry in executional capability. How asymmetry affects the
coopetition relationship is a promising research issue, including
nuances such as the conditions under which asymmetry can lead to
positive or negative outcomes.
Finally, empirical tests of the conceptual model (or its parts) could
be performed using a combination of methods. Previous empirical re-
search on tension is dominated by case studies focusing on the contra-
dictions inherent in coopetition; not on felt tension. Th