Coopetition for growth among digital-first technology start-ups from emerging economies

Abstract

Coopetition or (cooperative competition), a term coined by Raymond J. Noorda in the 1980s, refers to the arrangement(short -term or long-term) between direct competitors to achieve common goa ls/projects or in certain business areas to create mutual benefits. These firms encourage each other to be more productive by working together while ensuring each other's competitive advantage. To achieve competitive advantage, firms exercise either of the four strategies - differentiation, cost leadership, defensive strategies and strategic alliances. The dynamics of businesses through alliances, be it with a firm in any other industry or within the same industry, vary in complexity due to a continuous tussle to capture more and more of the value created by them. The objectives of these al liances is majorly pooling resources to maximize output and gaining a competitive advantage against their competitors. Even more interesting is the fact that even competitors cooperate among themselves following a philosophy simi lar to alliances to maximize output. They enter into an agreement with the expectation that the isolated cooperation will lead to greater overall returns for each f irm. This can happen in two different ways - collusion or coopetit ion. Collusion is the phenomenon where competitors within the same industry come together to control the prices in the market artificially. Coopetition, on the other hand, is when two or more competitors competing against each other collaborate to benefitfrom both, competition and cooperation. However, coopetit ion as a philosophy has often been argued as not just beneficial for the growth, profitability and perpetuity, but also highly complex; reason being continuous variations in the degree of competitive and cooperative forces. It is critical to note that although these fi rms are collaborating for mutual benefits, yet they are rivals competing in the same market.