6.1. Introduction

According to Walley (2007), the origin of the term “coopetition” is not clear¹. Albert (1999) considered that the notion of coopetition emerged in 1991, but many authors state that the concept was originated by Ray Noorda, founder and manager of Novell society, who coined the term in the 1980s.

The concept of coopetition is relatively complex and demands several levels of analysis, which we have already explored in the general introduction of our book. [DAG 07] suggested approaching the concept of coopetition from three perspectives: macroeconomic (country, the totality of firms), mesoeconomic (relationships between firms, manufacturer–supplier relationships) and microeconomic (firms, groups, individuals, within companies).

“Far from being a compact monolith, the coopetitive strategy is a multidimensional and multifaceted concept which assumes a number of forms and multiple levels of analysis, and for which it is all but easy to grasp its structure, processes and evolving patterns” [DAG 02].

The purpose of this chapter is to study coopetition in association with two concepts: alliances (dyadic level) and a specific form of inter-organizational networks related to business ecosystems. Although in the first phase of our work we studied coopetition in line with the cooperative logic of alliances and agreements, coopetition is increasingly associated with the notion of business ecosystem and constitutes one of its decisive elements. Building upon the ecological metaphor, business ecosystems are now a concept widely used by both the press and the academic world, after the concepts of alliances and networks blossomed in the 1980s and the 1990s.

6.2. Origins of the concept of coopetition

Strategic management has constantly been enriched by innovative concepts, and this phenomenon has accelerated in recent years. The abundance of concepts and terms reveals the increasing complexity of the context in which companies operate these days, as well as the difficulties encountered for making strategic decisions in an uncertain environment. Every decade is marked by the emergence of a new concept or tool whose “notoriety” can last shorter or longer (see Table 6.1). Even though strategic thinking has evolved thanks to the impulse of academics and professionals, “coopetition” can be considered as a relatively new concept.

6.3. The theoretical key factors of coopetition: borrowing from the theory of games

As we can deduce from Table 6.2, numerous works [BAG 01, DAG O2, DOW 96, GNY 01, GUL 98, GUL 00, HAK 02, LAD 97] have been devoted to the emergence and development of coopetition, here described as a situation in which competitors simultaneously compete and cooperate [BEN 03]. The first authors to have introduced the notion of coopetition are [BRA 95, BRA 96], who borrowed numerous contributions from game theory [DAI 07].

Game theory is generally used to either analyze market structures or study the behavior of various players (states, institutions, regulatory authorities, companies, etc.) who have to formalize their negotiation processes: coalition or rivalry. In this framework of analysis, games are situations of strategic interdependence (with two or more players) in which different (and even opposing) interests confront each other. There are two categories of games: non-cooperative and cooperative games (Nash). Non-cooperative games are zero-sum games, with individualist actors playing on their own interest, whereas cooperative games are non-zero-sum games, understanding is sought, which explains coalition enforcement and alliance forging.

The first memorable “intrusions” of game theory into strategic management were the works of [DIX 91, DIX 99, MIL 92, MAC 92] and [BRA 95, BRA 96, BRA 97]. The latter were convinced about the utility of game theory for analyzing strategic management:

“The essence of business success lies in making sure you’re playing the right game. How do you know if it’s the right game? What can you do about it if it’s the wrong game? To help managers answer those questions, we’ve developed a framework that draws on the insights of game theory. After 50 years as a mathematical construct, game theory is about to change the game of business.” [BRA 96]

When we analyze the “real world”, players are interdependent firms (or countries): the behavior of any of them produces an impact on others and the best course of action for one firm depends on the strategies adopted by the other firms. The attitude of each firm will be determined according to the forecasts that the firm has made anticipating the actions of rival firms. This situation corresponds to a game characteristic for the interdependence between the interests of the different agents (players), which can be conducive to situations of conflict or cooperation. That is the reason why [BRA 96] largely drew on this theoretical corpus to analyze the concept of coopetition. [BRA 96] adopted the mechanisms of game theory (cooperative games) to analyze:

• – the value created by vertical chains², which involve suppliers, firms and customers;
• – the value created by a specific actor: “defined as the value created taking in to account all the players in the vertical chain, minus the value created by all the players except the one in question” [BRA 96];
• – the creation of asymmetries between firms: [BRA 96] introduced the concept of “complementors³” and suggested incorporating these actors to a new model, as shown in Table 6.2. They insisted on the need to create and capture value. The Value Net represents the interdependencies among all the players whose strategies can evolve. In order to face changing situations, the different firms can play varied roles, for example, they can switch from complementor to competitor and thus turn the context into one of coopetition.

“Along the vertical dimension of the Value Net, there is a mixture of cooperation and competition […]. Along the horizontal dimension, however, managers tend to see only half the picture. Substitutors are seen only as enemies. Complementors, if viewed at all, are seen only as friends. Such a perspective overlooks another symmetry. There can be a cooperative element to interactions with substitutors” [BRA 95].

“The vertical dimension designs the company’s suppliers and customers (two of the five forces identified by Porter) and “along the horizontal dimension are the players with whom the company interacts but does not transact. They are its substitutors and complementors. Substitutors are alternative players from whom customers may purchase products or to whom suppliers may sell their resources […]. Complementors are players from whom customers buy complementary products or to whom suppliers sell complementary resources […]. The Value net describes the various roles of the players. It’s possible for the same player to occupy more than one role simultaneously” [BRA 95].

As we will see in the last section of this chapter, the classic examples of “complementors” are those of firms whose products need to be combined with others in order to be used: hardware and software.

6.4. From coopetition to inter-organizational networks

Coopetition has often been studied within the framework of interorganizational networks, whose forms and modes vary widely. In this section, we will introduce two cases: the case of clusters and a more recent form that refers to business ecosystems [DAI 10a, DAI 10b, DAI 11].

The notion of “business ecosystem” is currently used not only in academic literature, but also in specialized economic press and by firms. The interpretations can be multiple, according to the context. Besides, the notion of “ecosystem” is adopted in a broad sense by many authors. We will refer to the “innovation ecosystem” as the set of actors involved in the process, their interactions, framework conditions and public policies in favor of research and innovation [SNR 09]. [LAR 08] described growth ecosystems, clusters and so on. As we can see, the concept of ecosystem is currently used in very different contexts.

A firm should not be considered as a single-sector structure, but as an entity belonging to a business ecosystem. It is a “coalition” of various stakeholders coming from different worlds and who share the same interests and values in view of achieving a common goal, be it the adoption of a new technological standard or, in a broader sense, the commitment toward a major innovation process. These innovations can obey an entrepreneurial logic:

“which crosses a variety of industries. In a business ecosystem companies coevolve capabilities around a new innovation: they work cooperatively and competitively to support new products, satisfy customer needs, and eventually incorporate the next round of innovations” [MOO 93].

[PEL 04b, PEL04c] also valued the contribution of this form of organization in an increasingly complex and changing context. In line with Moore’s work, [IAN 04] also resorted to the biological metaphor in order to describe business ecosystems. They considered that three conditions determine the success of ecosystems: productivity, “robustness” (the ability to resist shocks and to adapt to a changing environment) and the possibility of creating niches and opportunities for new firms. It is interesting to mention that the increase in productivity and the creation of new firms had already been employed for explaining the competitive dynamics of clusters, as [LAR 08] recalls.

Business ecosystems reunite a number of features:

• – actors are heterogeneous and these may be firms (suppliers, producers, etc.), institutions, groups of interest, shareholders and so on. They may simultaneously belong to one or more ecosystems;
• – business ecosystem actors come from different sectors of activity. This feature is reinforced in a context where several industries converge: IT, telecommunications and media, which are now restructuring around ICT and the Internet [GOS 98, ISC 09]. The traditional notion of industry loses importance;
• – the competitive logic is based on the dynamics of coopetition, with the emergence of one or several leaders whose position can be modified according to the evolution of resources and skills belonging to the firms involved.

Other variables are used for describing ecosystems, but some of these are not very specific – among them, we can refer to the emergence of a “community of strategic destiny” [GUE 04, PEL 04a]. Behind this expression, the principle of co-evolution is put forward: firms are envisioned as interdependent entities, which must take into account their respective evolution. On the basis of the works of [MEC 97], however, [TOR 03] reminded us that the “principle of co-evolution is not idiosyncratic to the theory of business ecosystems”.

According to certain authors, ecosystems are most likely the only mode of organization based on coopetition. Consequently, Moore [MOO 93] highlighted the phenomenon of coopetition inherent to ecosystems. More recent articles have emphasized this specificity [GUE 09, PEL 05].

“The logics of cooperation and competition are anchored in the “culture” of business ecosystems and constitute one of its founding dynamics” [PEL 04a].

However, numerous works have focused on the emergence and development of coopetition understood as a situation [BAG 01, DAG 07, DOW 96, GNY 01, GUL 98, GUL 00, HAK 02, LAD 97, NAL 96], in which rival firms simultaneously compete and cooperate [BEN 03], but this research explicitly refers to ecosystems [DAI 10a].

Coopetitive practices can be observed for other types of ancient interorganizational networks, as in the case of districts or clusters. [MEN 05] recalled, for example, that this is the case of districts:

“But within a district both cooperative and competitive relations develop simultaneously, and these can be of great intensity. Imitation practices or even downright pillage sometimes constitute permanent (and tacitly accepted) operative rules in the district (Paniccia, 1998, directly refers to “poaching”). However, in the literature about districts, research has focused more on cooperative relations at the heart of the district rather than on interfirm competitive (or rivalry) relations (Boari et al. 2004)”.

In the analysis of clusters, Porter always stressed the coexistence of rivalry and cooperation between the actors involved:

“Geographic concentrations of interconnected companies, specialized suppliers, service providers, firms in related industries, and associated institutions (for example, universities, standards agencies, and trade associations) in particular, are fields that compete but also co-operate” [POR 00].

Cooke and Huggins (2002) also emphasized this dimension:

“Clusters are geographically proximate firms in vertical and horizontal relationships, involving a localized enterprise support infrastructure with shared developmental vision for business growth, based on competition and cooperation in a specific market field” [COO 02].

The cluster intended to use both the virtues and advantages of competition and cooperation [RAI 01]. The same argument was deployed in a note that the Ministry of Economy, Industry and Employment (2008) drew up referring to the European policy on clusters:

“We share the premise of “cluster memorandum”: “strong clusters emerge and flourish best in open markets where coopetition exists within and between clusters”. Healthy emulation is fundamental for encouraging the most powerful and performing clusters. Emulation applies not only to the actors of the same cluster (in order to stimulate the innovation process), but should also be encouraged in a context of strong cooperation between the actors.”

6.5. Coopetition and dyadic relations

As we pointed out in the previous section, the concept of coopetition has been employed in the context of inter-organizational networks, whether these be districts, clusters or business ecosystems. However, it has also been applied in the so-called dyadic relations.

According to [DAG 02], there are basically four types of coopetition:

• – simple dyadic relationship (alliance, R&D consortium with only two partners);
• – complex dyadic relationship (alliance in the automotive sector: several partners, different cooperation fields – R&D, component production);
• – simple network (coopetition between several firms at a certain level of the value chain);
• – complex network (industrial districts, clusters, business ecosystems).

In fact, simple dyadic relationships involving two firms refer to strategic alliances, as they were defined in Chapter 1.

There are numerous examples (see Chapter 9). Let us analyze the case of French TV channels of the 2000s. At the end of the 1990s, the environment changed: technological advances brought about the explosion of the digital technology, the Internet and the growing interest of telecommunications groups in audiovisual industries. As a consequence, the most relevant audiovisual groups engaged in a complex game of alliances incorporating players from other sectors (telecommunications, the Internet).

Probably the most emblematic example of this approach concerns the relationships established between TF1 and M6. Let us briefly recall some of the contextual elements. First, it is interesting to look at the capitalist relations between these different groups. Surprisingly enough, the connections are far more significant than we might think a priori. These connections can be illustrated by the combination of two satellite bundles, which were in direct competition by the end of 2005⁴: CanalSat, until then operated by Canal+ and TPS, belonging to TF1. The four main players in private television were directly or indirectly involved in this operation. In what specifically concerns the relationships between TF1 and M6, the analysis deserves further exploration. Although the two channels were direct competitors, their endeavor to increase audience, market shares and advertising revenues caused the relationships between themselves to be far from non-existent. Quite the opposite: the creation of TF6 in 2000⁵, of which both groups owned 50% of the shares, is only an indicator of the “rivalry-cooperation” kind of relationship that these two groups maintained.

6.6. Coopetition and technological platforms

Coopetition has also been analyzed from the perspective of platforms, a term that first appeared in the specialized literature in the late 1980s [EIS 08, EIS 06, BAL 09, GAW 09a and GAW 09b]. Today, many industrial sectors are inspired by this platform logic. Platforms have long existed, but all of the latest techniques and tools for processing information have profoundly facilitated their access and functioning, in the same way that they have modified their value creation mechanisms and business models, heavily relying on data [BRO 07, BRO 09, VAN 16]. Platforms have been considered as market categories, two-sided markets [ROC 04, EIS 08, HAG 07a and HAG 07b] or modular technological architectures [BAL 09, FRA 03, GAW 02, GAW 08].

Hub firms (or Keystones) generally resort to platform strategies that allow them to benefit from contributions made by other network players. It seems to us that the most innovative aspect of ecosystems is precisely associated with this notion of platform. Many “industries” obey a platform logic [DAI 09]. [IAN 04] illustrated this idea in the following terms:

“Whether we are talking about payment methods or about software, keystone strategies demand the efficient sharing of value within a dispersed ecosystem of organizations. The mechanism for this sharing is usually embodied in platforms such as Wal-Mart’s Retail Link, TSMC’s design tools and libraries, Li&Fung’s supply chain system, or Microsoft’s .NET”.

Firms having access to such platforms play a key role in guaranteeing the coordination of actors and in promoting the creation of values. A platform is composed of several physical and/or software modules linked together by interfaces [GAW 02, GAW 08, BAL 00]. These platforms provide access to resources. According to their nature, platforms can be open or closed, which will influence the kind of value that can be created within the ecosystem. In the first case, the design is based on the use of open and public standards that facilitate the interoperability between platforms. In the second version, design is associated with the use of proprietary regulations that limit the compatibility between platforms. One of the examples that best illustrates this opposition in the “mobile ecosystem” is that of Android (Google) versus iPhone (Apple).

Chapters 1 and 3 showed that open-innovation practices progressively developed before coopetitive strategies emerged, particularly in the case of operators in the late 2000s. While the notion of platform refers to technical elements, it equally incorporates a relational dimension, which is fundamental between the different actors constituting an ecosystem. Following the ecosystem typology of [IAN 04]: we can identify the niche players, the “dominators”, the “hub landlords” and the keystones.

“In general, becoming a platform leader requires a compelling vision of the future as well as the ability to create a vibrant ecosystem by evangelizing a business model that works both for the platform-leader wannabe and the potential partners” [GAW 08].

We now have a better understanding of the nature of the relational practices adopted by keystones with their various partners within the ecosystem and, specifically, how their coopetitive strategies work.

6.7. Conclusion

A binary outlook of the economic world based on an irreconcilable opposition between competition and cooperation is outdated. Despite the existence of strong rivalry dynamics, we are increasingly witnessing a logic of coopetition which combines both polarities in many sectors.

As we have shown in this chapter, resorting to the classical determinants of alliances is no longer the best means for apprehending the logic of coopetition. New organizational forms (such as business ecosystems and/or platforms) have favored the development of coopetitive practices and reflected the astonishing complexity of the links between increasingly interdependent firms.