The Effect of Strategic Alliances Between Key Competitors on Firm Performance

Abstract

Cooperation between competing firms (or coopetition) has been under increasing research interest during the last decade. It is generally proposed that coopetition can be a beneficial strategy that can enable gaining a competitive advantage. Current contributions linking coopetition with actual firm performance, however, are few. In order to address this issue, we conduct an empirical study in the global information and communication technology sector to examine the effect of strategic alliances between key competitors on the performance of a single firm. Our results indicate that a high relative number of strategic alliances among a group of firm’s key competitors contributes negatively to firm performance. This implies that firms should be aware of the risks that are included in cooperating with too many of their most direct competitors.