Coopetition for innovation - the more, the better? An empirical study based on preference disaggregation analysis

Abstract Companies rely widely on coopetition, that is, cooperation with competitors, to foster their innovation. However, despite its increasing popularity, the impact of coopetition on innovation remains unclear. Different theories predict different results, and empirical evidence suggests that coopetition can either improve or reduce innovation performance, or even make no impact. The lack of consensus makes further exploration of this important relationship essential. Our study attempts to shed new light on the impact of sourcing from competitors on innovation, using a data-driven exploratory model that needs no prior specification of the direction and form of this relationship. We use a recently developed analytical method based on the preference disaggregation approach to analyze data from a sample of 112 firms operating in the petroleum, chemical, and pharmaceutical industries. We find that sourcing from competitors fosters the innovation performance of firms with financial constraints (small firms receiving no financial support from the government for innovation). In contrast, our results show that sourcing from competitors has a non-linear negative impact on large and small firms receiving such financial support, and that sourcing from competitors is much riskier for small firms in this category. Our findings contribute to the coopetition for innovation literature by highlighting that the relationship between sourcing from competitors and innovation performance depends on firm characteristics, i.e., size and financial capability. Our use of a preference disaggregation method confirms its value when studying relationships between variables where the conceptual and empirical evidence leaves this relationship unclear.