Abstract
This study examines the strategic choices of two rival manufacturers between competition and coopetition. A complex relationship exists between these two firms, who manufacture substitutive products. In addition, each of these firms has an option to purchase (or sell) a key component from (or to) the other. We develop a benchmark competition model and two coopetition models in which the manufacturers compete for end-customer demand while simultaneously collaborating on component production through wholesaling (wholesaling coopetition) or licensing (license coopetition). By comparing the equilibria of the competition model and two coopetition models, we find that the optimal strategy for coopetition is determined by not only the degree of product substitution but also the inter–firm power relationship in the negotiation of a cooperation contract (i.e., wholesale price and license fees) and the difference in production efficiency between the two manufacturers. Our research comprehensively examines how the external, relationship-specific, and internal factors affect firms’ optimal strategy selection and suggests a broad set of decision outcomes. Our study provides important managerial implications that can be utilized as strategic guidance for firms to pursue coopetition in various business environments.
Original language | English |
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Pages (from-to) | 1446-1464 |
Number of pages | 19 |
Journal | Production and Operations Management |
Volume | 28 |
Issue number | 6 |
DOIs | |
Publication status | Published - Jun 2019 |
Bibliographical note
Funding Information:We thank Professor Chelliah Sriskandarajah (the department editor), the senior editor, and two referees for their valuable suggestions, which have improved the study significantly. This study was partially supported by the National Natural Science Foundation of China (Grants 71432003 and 91646109).
Publisher Copyright:
© 2019 Production and Operations Management Society
Keywords
- competition
- license coopetition
- production
- supply chain
- wholesaling coopetition
ASJC Scopus subject areas
- Management Science and Operations Research
- Industrial and Manufacturing Engineering
- Management of Technology and Innovation