Attacking your partners: Strategic alliances and competition between partners in product markets

Abstract

Research Summary: This study contributes to the literature on strategic alliances by examining the impact of collaboration on competition between partners in product markets. We integrate the alliance learning and social network perspectives to examine how different combinations of exploratory and exploitative alliances between a firm and its partner influence the firm’s competition against its partner in product markets. Using a longitudinal dataset collected in the U.S. pharmaceutical industry (1984–2003), we find an inverted U‐shaped relationship between relative exploration (i.e., the proportion of exploratory alliances in the collaborative portfolio between a firm and its partner) and the firm’s competition against its partner. This relationship is negatively moderated by firms’ relational and structural embeddedness, but positively moderated by their positional embeddedness. Managerial Summary: This study examines how different combinations of exploratory and exploitative alliances between two firms affect their competition in the product market. Using a 20‐year dataset collected in the U.S. pharmaceutical industry, we find that the proportion of exploratory alliances (i.e., joint development of critical innovations) in the alliance portfolio between a firm and its partner increases the firm’s competition against its partner, up to a tipping point at which such competition starts to decline. Given a certain combination of the two types of alliances, such competition is stronger if the firm has more alternative allies than its partner but weaker if the firm and its partner have previously collaborated or share common allies in their networks.

The dark side of coopetition: when collaborating with competitors is harmful for company performance

“…In 2018, the Strategic Management Journal published a special issue on coopetition (edited by Hoffmann et al, 2018). In this special issue, several articles examined the complexities of the relationship between coopetition and company performance, including some of the tensions associated with the interplay between cooperation and competition (Arslan, 2018;Cui et al, 2018;Hannah and Eisenhardt, 2018). Consequently, there is all the more reason that research should be directed towards not just the non-linear (quadratic) relationship between coopetition and company performance, but also, the underlying mechanisms behind this link (extending Luo et al, 2007;Ang, 2008;Crick, 2019).…”

“…However, even if the firms involved are highly-collaborative, they are still their rivals (Park et al, 2014;Arslan, 2018;Cui et al, 2018). According to Tidstrom (2014), if firms engage in coopetition, they risk yielding tensions with their competitors, such as conflict and power imbalances.…”

Resource congestion in alliance networks: How a firm's partners’ partners influence the benefits of collaboration

“…Finally, a third assumption relates to the window over which an alliance portfolio is defined. Consistent with the approach taken in a number of recent alliance studies (e.g., Bos, Faems, & Noseleit, 2017;Cui, Yang, & Vertinsky, 2018;Tyler & Caner, 2016;Van de Vrande, 2013;Yang, Lin, & Peng, 2011), I use a 5-year window to recognize that alliances continue beyond just the year in which they were established, but that they are at the same time finite in their lifespan.…”

Does competitive aggressiveness negatively moderate the relationship between coopetition and customer satisfaction performance?

“…This means that these dimensions need to be carefully balanced to avoid any harmful performance consequences (Bouncken et al, 2018;Fernandez & Chiambaretto, 2016;Ritala & Hurmelinna-Laukkanen, 2013). Yet, if competitive aggressiveness is prominent, companies are likely to possess rivalrous instincts that unbalance these paradoxical forces because the cooperative aspects of coopetition are outweighed by firm-level competitive actions (Ang, 2008).With lower-levels of competitive aggressiveness, owner-managers might be more trusting of their competitors (and vice-versa), as there could be a smaller chance of such rivals exhibiting hostile behaviours that reduce their ability to satisfy their customers' wants and needs (Cui et al, 2018;Tidstrom, 2009). With higher-levels of competitive aggressiveness, small businesses might lack the competencies todistinguish between these paradoxical forces, as well as there being tensions within such coopetition partnerships (as noted by Arslan, 2018;Crick & Crick, 2021;Tidstrom, 2014).…”