Cooperative competition in global industries: the strategic dimension

Abstract

Existing theories addressing cooperation among competitors suffer from the limiting assumption that such cooperation must be explained by the intent either to collude or to realize the potential for joint cost or risk reduction. Yet it is axiomatic that, in any competitive arena containing multiple players, any subgrouping of players can benefit by forming a coalition with the purpose of directing competitive energies away from one another and toward nonparticipants in their coalition. Previous treatments, however, rarely examined the use of alliance relationships to shape competition in order to influence who competes with whom. As we argue, this omission is due in part to the restricting effects of regulatory policies on cooperation among competitors in their domestic markets. Widespread cooperation among (groups of) competitors within a single industry is generally found only in global industries. This article builds a strategic-competition model reflecting strategic motivations underpinning alliances among competitors in global markets. Based on the model, the article develops a series of propositions for future research.