Co-opetition Without Borders

The concept of “co-opetition” — particularly collaboration with rivals involving jointly developing technologies — is inherently paradoxical. After all, as one 2007 working paper states, “Why would anyone voluntarily share with a competitor the very knowledge that could be the basis for future competitive advantage?” That paradox becomes even more acute when considering co-opetition with rivals from overseas, in which barriers of culture, trust and legal scriptures enhance the risks associated with sharing intellectual property rights.

The way forward, say the paper’s authors, could be to adapt the methods used to protect proprietary knowledge. International teams, for example, have different knowledge-sharing requirements than domestic collaborations. “Firms dealing with international co-opetition partners rely on formal methods like patents,” say the authors, in contrast to informal methods like secrecy and long lead times.

Anja Schmiele and Wolfgang Sofka, research fellows in the Department of Industrial Economics and International Management at the Centre for European Economic Research, known as ZEW, in Mannheim, Germany, use German government-funded data from the Mannheim Innovation Panel, a survey conducted by ZEW. From the responses on innovation activity in 2002–2004, the authors were able to study 956 German manufacturing companies and their innovation activities.

Although proprietary knowledge could be given away, the practice of co-opetition continues to hold sway as companies realize that development costs and risks can be shared, even with rivals. In the sample, 74 companies were cooperating with domestic rivals, 47 with foreign companies and 19 companies were bold enough to engage in co-opetition domestically and abroad.

In Internationalizing R&D Co-Opetition: Dress for the Dance With the Devil, Schmiele and Sofka explain how companies engage in co-opetition across borders. “While informal appropriability mechanisms may be sufficient in the home environment, they move toward formal ones (patents) in an international context,” the authors write. “Apparently this provides them with the means to make the relevant knowledge visible, traceable and defendable.”

The international context adds uncertainty to the co-opetition process. So legal forms of IPR protections, such as patents, copyrights and trademarks, help make the terms of the cooperation more explicit and discrete. Indeed, Schmiele points out, “firms will tend to rely on formal forms of IPR [protections] when they cooperate since secrecy is not the most suitable strategy when working together. In addition [formal methods] are defendable in court and signal the knowledge that is possessed by a company.&