Balancing Opportunistic Behavior in Times of Coopetition – A Case Study of German Automotive Suppliers

Publication Type:

Conference Paper

Source:

Gerpisa colloquium, Paris (2013)

Keywords:

competition, Cooperation, Coopetition, German Automotive Supply Industry, Opportunistic Behavior, Principal-Agent-Theory, Social-Exchange-Theory, Transaction-Cost-Theory

Abstract:

While in the past, cooperations in the automotive industry mostly took place in the vertical dimension of the supply chain, today it is ascertainable that a growing number of cooperations arise at the horizontal level and thus between direct competitors. Almost all known automotive suppliers cooperate with direct competitors, for example the automotive suppliers Edscha (Germany) and TIMS (Japan), Leoni and Rosenberger (both Germany) or Johnson Controls (USA) and Pricol (India). The large number of examples in the supplier industry indicates that automotive suppliers attempt to combine resources and competences with direct competitors to ensure competitive advantages and firm performance. But in this context the paradox of coopetition, i.e. the simultaneous cooperation and competition of at least two companies, occurs (Brandenburger & Nalebuff 1996; Walley 2007; Wilhelm 2011). The concomitance of cooperation and competition leads to opportunism among the involved collaboration parties, which in turn, is supposed to be one of the main threats of the success of cooperations in the automotive industry as well as other business sectors (Bengtsson et al. 2010; Das & Rahman 2010; Rokkan et al. 2003). But conversely, opportunism can stimulate competition and finally entails competitive advantages for at least one collaboration party. Insofar, in coopetition settings the consideration of opportunistic behavior is crucial, because strong (low) opportunism can either have a positive (negative) effect on competitive behavior or a negative (positive) effect on cooperative actions. While prior research focuses mainly on preventing opportunistic behavior to promote cooperative behavior and to minimize competitiveness within collaboration parties (Wang et al. 2013; Wu et al. 2007; Luo 2007: Carson et al. 2006), the purpose in case of the coopetition paradox is rather to find a balance of opportunism between coopera-tive and competitive actions. Although the balance between competition and cooperation is important, existing literature to coopetition is widely restricted to the definition or terminology (Mariani 2007). An operational design of coopetition is still missing (Bonel & Rocco 2007). Thus, coopetition still offers a great research potential.

Against this background and to fill this research gap, we analyzed the process as well as the efficiency and effectiveness of different organizational measures to balance opportunistic behavior in situations of coopetition in the field of the automotive supply industry. In a first step, we extracted different organizational measures from prior theoretical approaches. Therefore, possible organizational measures from the Transaction-Cost-Theory (e.g. Williamson 1985), the Principal-Agent-Theory (e.g. Ross et al. 1997) and the Social-Exchange-Theory (e.g. Das & Teng 2002) were derived as a theoretical basis to scrutinize opportunism. In a second step, we conducted an examination of ten German automotive suppliers within coopetition settings to investigate the process as well as the efficiency and effectiveness of the extracted theoretical measures. For this purpose, we used a case study design according to Eisenhardt & Graebner (2007) and Yin (1984). Besides internal and external documents, we conducted interviews with corporate representatives. Based on these cases, we derived propositions, which organizational measures balance opportunistic behavior in a coopetition setting. Our analysis reveals that widely discussed hard measures in the literature, such as formal contracts are inefficient and ineffective in balancing opportunistic behavior. Rather, soft measures, which in fact can positively and negatively influence the interpersonal relation of the involved corporate representatives, are promising to balance opportunism in settings of coopetition.

The analysis and its results will be summarized in the conference paper. Based on the derived propositions, further examinations of organizational measures and performance effects will be conducted in quantitative studies.

Full Text:

While in the past, cooperations in the automotive industry mostly took place in the vertical dimension of the supply chain, today it is ascertainable that a growing number of cooperations arise at the horizontal level and thus between direct competitors. The large number of examples in the supplier industry indicates that automotive suppliers attempt to combine resources and competences with direct competitors to ensure competitive advantages and firm performance. But in this context the paradox of coopetition, i.e. the simultaneous cooperation and competition of at least two companies, occurs. The concomitance of cooperation and competition leads to opportunism among the involved collaboration parties, which in turn, is supposed to be one of the main threats of the success of cooperations in the automotive industry as well as other business sectors. But conversely, opportunism can stimulate competition and finally entails competitive advantages for at least one collaboration party. Insofar, in coopetition settings the consideration of opportunistic behavior is crucial, because strong (low) opportunism can either have a positive (negative) effect on competitive behavior or a negative (positive) effect on cooperative actions. Thus, the purpose in case of the coopetition paradox is rather to find a balance of opportunism between cooperative and competitive actions. Against this background we analyzed the process as well as the efficiency and effectiveness of different organizational measures to balance opportunistic behavior in situations of coopetition in the field of the automotive supply industry. In a first step, we extracted different organizational measures from prior theoretical approaches. Therefore, possible organizational measures from the Transaction-Cost-Theory, the Principal-Agent-Theory and the Social-Exchange-Theory were derived as a theoretical basis to scrutinize opportunism. In a second step, we conducted an examination of ten German automotive suppliers within coopetition settings to investigate the process as well as the efficiency and effectiveness of the extracted theoretical measures. Our analysis reveals that widely discussed hard measures in the literature, such as formal con-tracts are inefficient and ineffective in balancing opportunistic behavior. Rather, soft measures that ensure a context of cooperative and competitive actions, are promising to balance opportunism in settings of coopetition.

Copyright© Gerpisa
Concéption Tommaso Pardi
Administration Géry Deffontaines

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