The yin and yang nature of coopetition activities: non-linear effects and the moderating role of competitive intensity for internationalised firms

Abstract

PurposeThis paper draws upon the Yin and Yang concept of Chinese philosophy within a Western context to examine coopetition, namely, the interplay between cooperation and competition. Although coopetition activities should positively affect company performance, earlier research involving this relationship has typically been linear in nature and without moderating factors. Consequently, underpinned by resource-based theory and the relational view, the purpose of this investigation is to examine the non-linear (inverted U-shaped) link between coopetition and company performance under the moderating role of competitive intensity.Design/methodology/approachCollection of survey data involved a sample of 101 internationalising wine producers in New Zealand. Following a check of the statistical data for all major assessments of reliability and validity (together with common method variance), testing the research hypotheses and control paths took place through hierarchical regression. Furthermore, 20 semi-structured interviews helped explain the underlying mechanisms behind the quantitative results.FindingsCoopetition had a non-linear (inverted U-shaped) relationship with market performance. Surprisingly, competitive intensity yielded a negative moderation effect. The mixed methods results highlighted that firms must strike an effective balance between the paradoxical forces of cooperativeness and competitiveness across their product-market strategies.Originality/valueThis investigation contributes to the existing literature by developing and testing a conceptual framework examining the nature of the relationship between coopetition activities and market performance – using non-linear (inverted U-shaped) and moderating effects. It addresses a debate between two schools-of-thought concerning the impact of competitive intensity on the coopetition paradox. Additionally, this study helps to explain the coopetition construct through the Yin and Yang concept to highlight how the paradoxical forces of cooperativeness and competitiveness can create harmful outcomes for organisations if they do not manage them effectively (across domestic and international markets).

Internationalizing the Coopetition Construct: Quadratic Effects on Financial Performance Under Different Degrees of Export Intensity and an Export Geographical Scope

“…Eighth, to test for endogeneity bias (as explained later), a measure for industry experience (INDS) was included in the survey as an instrumental variable. This construct was measured by using a sliding ratio scale regarding the number of years that the respondent has worked in the worldwide wine sector (Crick and Crick 2021). Ninth, an informant quality tool (INQ) was operationalized with three items using a seven-point Likert scale ranging from 1 = “Very strongly disagree” to 7 = “Very strongly agree” (see Hultman, Robson, and Katsikeas 2009; Katsikeas, Samiee, and Theodosiou 2006).…”

“…First, the conceptual framework was refined to test the association between coopetition and financial performance. Second, an instrumental variable, namely, industry experience, was selected (following Crick and Crick 2021) as a construct that is likely to be directly related to coopetition, but is indirectly related to financial performance. The reason is that if decision makers possess knowledge about how to succeed within their markets, they can use it to engage in more effective (performance-enhancing) coopetition strategies (see Bouncken and Kraus 2013; Estrada and Dong 2020).…”

“…Grounded in the two previously described theoretical lenses (Barney 2018; Dyer, Singh, and Hesterly 2018; Lavie 2006), the current study’s conceptual framework (Figure 1) included three research hypotheses and three main control paths. 1 First, coopetition was expected to have a quadratic relationship with financial performance (Crick and Crick 2021; Luo, Rindfleisch, and Tse 2007). Second, export intensity and export geographical scope were anticipated to positively moderate this nonlinear (inverted U-shaped) association (Chetty and Wilson 2003; Felzensztein, Deans, and Dana 2019).…”

“…With “too little” coopetition, decision makers may experience difficulties operating within their markets, because resource constraints might prevent them from creating value for their customers (Gnyawali and Charleton 2018). Even so, engaging in “excessive” coopetition could result in several problematic side effects, such as experiencing tensions (conflict, power imbalances, and opportunistic behaviors), losing critical intellectual property, and having their points of difference diluted (Crick and Crick 2021; Ritala and Hurmelinna-Laukkanen 2013; Tidstrom 2014). It follows that the coopetition paradox is a somewhat fragile notion, and it is often difficult for companies to judge how to best navigate these activities (Czakon and Czernek 2016; Czakon et al 2020; Hoffmann et al 2018).…”

“…With regard to coopetition, both resource-based theory and the relational view highlight the importance of managing high-quality interfirm partnerships to leverage resources and capabilities effectively and foster amicable professional networks (Dyer, Singh, and Hesterly 2018; Lavie 2006). If firms are competing for predominately domestic markets, the coopetition paradox may be challenging to manage (Crick and Crick 2021; Felzensztein, Deans, and Dana 2019). As an illustration, if firms sell their products to domestic establishments (e.g., restaurants, hotels, bars), the number of customers is likely to be limited.…”