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Research Policy 40 (2011) 650663

Contents lists available at ScienceDirect

Research Policy
journal homepage: www.elsevier.com/locate/respol

Co-opetition between giants: Collaboration with competitors for technological


innovation
Devi R. Gnyawali , Byung-Jin (Robert) Park 1
Department of Management, Virginia Polytechnic Institute and State University, Blacksburg, VA 24061 (0233), USA

a r t i c l e

i n f o

Article history:
Received 1 June 2009
Received in revised form
24 November 2010
Accepted 13 January 2011
Available online 12 February 2011
Keywords:
Co-opetition
Innovation
S-LCD
Co-opetition capability
Case study

a b s t r a c t
We investigate why and how co-opetition (simultaneous pursuit of collaboration and competition)
between large rms occurs, evolves, and impacts the participating rms and the industry. We develop
a multi-level conceptual framework by combining literature-based conceptual arguments and insights
from an in-depth study of an exemplar case of co-opetition between Samsung Electronics and Sony Corporation. Our study demonstrates that co-opetition is challenging yet very helpful for rms to address
major technological challenges, to create benets for partnering rms, and to advance technological
innovation. We also show that co-opetition between giants causes subsequent co-opetition among other
rms and results in advanced technological development. Moreover, co-opetition capabilities of rms
play an important role in enhancing common benets as well as in gaining proportionately larger share
of the benets.
2011 Elsevier B.V. All rights reserved.

1. Introduction
Scholarly attention to co-opetition, which we dene as a
strategy embodying simultaneous cooperation and competition
between rms (Bengtsson and Kock, 2000; Gnyawali et al.,
2008) has increased with its practical signicance (Brandenburger
and Nalebuff, 1996; Dagnino and Padula, 2002; Luo, 2004;
Walley, 2007). Co-opetition is more critical in high technology contexts because of several challenges such as shrinking
product life cycles, need for heavy investments in research and
development, convergence of multiple technologies, and importance of technological standards (Garud, 1994; Gnyawali and
Park, 2009; Gomes-Casseres, 1994). Because competing rms
possess relevant resources and face similar pressures, collaboration with competitors enables rms to acquire and create
new technological knowledge and use the knowledge in pursuit of innovations (Quintana-Garca and Benavides-Velasco,
2004; Ritala et al., 2009). Despite its increased importance, limited research has systematically examined why and how rms
engage in co-opetition and how co-opetition impacts innovation. This paper aims to address this critical gap by focusing
on the following questions: (a) what factors drive co-opetition
in the context of technological innovation? and (b) how does

Corresponding author. Tel.: +1 540 231 5021; fax: +1 540 231 3076.
E-mail addresses: devi@vt.edu (D.R. Gnyawali), bjpark@vt.edu (B.-J. Park).
1
Tel.: +1 540 231 2749; fax: +1 540 231 3076.
0048-7333/$ see front matter 2011 Elsevier B.V. All rights reserved.
doi:10.1016/j.respol.2011.01.009

co-opetition impact the participating rms and the industry?


We address these questions in two phases. First, we review relevant literature to develop conceptual arguments regarding drivers,
dynamics, and consequences of co-opetition. Second, we discuss
our study of a unique and exemplar case of co-opetition between
giants, i.e., a joint venture called S-LCD between two rivals Samsung Electronics and Sony Corporation to develop and manufacture
at-screen LCD TV panels. The case study was instrumental in
illuminating critical factors relevant to the drivers, dynamics, and
outcomes of co-opetition described in the conceptual discussion.
By blending the conceptual arguments and the ndings from the
case study, we develop a multi-level conceptual framework of coopetition that consists of multiple drivers, dynamics, and outcomes.
Our framework also underscores the role of rms co-opetition
capability in creating common benets by the partners as well as
in leveraging the benets by the individual rms.
This paper contributes to both co-opetition and innovation literatures. First, it enriches our understanding of why and how
co-opetition between giants could be driven by factors at multiple levels, how the co-opetition relationship evolves, and how the
leading rms co-opetition might impact the participating rms and
the industry as a whole. Second, we demonstrate that co-opetition
between leading rms often helps the rms to achieve better outcomes in terms of market shares, technological development, and
technological standards in the industry. We also articulate why coopetition may not generate benets for participating rms unless
the rms possess necessary capabilities to anticipate and manage

D.R. Gnyawali, B.-J. Park / Research Policy 40 (2011) 650663

challenges and opportunities in co-opetition. Finally, we articulate


unique dynamics of co-opetition between giants and explain how
it changes the dynamics in the industry. Our ndings show that coopetition between giants causes subsequent co-opetition among
other rms, which changes the competition structure in the industry and results in advanced technological development. We suggest
that co-opetition between big rivals can be instrumental not just to
push technological advancements but also to provide consumers
with better products and lower prices.
2. Co-opetition for technological innovation
In this section, we provide an overview of the co-opetition
literature and discuss why co-opetition is important for technological innovation. We then discuss key drivers and outcomes of
co-opetition between leading rms (giants). The conceptual foundation laid in this section provides the basis for the case study
described in the next section.
2.1. Role of co-opetition in innovation
Based on the core idea of the dynamic interplay between collaboration and competition (Chen, 2008; Gnyawali and Madhavan,
2001; Gnyawali et al., 2006; Lado et al., 1997), co-opetition is
considered a unique strategy that capitalizes on the benets
of collaboration and competition (Brandenburger and Nalebuff,
1996; Bengtsson and Kock, 2000) and necessitates management
approaches that can address the tension caused by the interplay. Increased popularity of co-opetition is evident by the fact
that over 50% of collaborative relations (strategic alliances) are
between rms within the same industry, that is, among competitors (Harbison and Pekar, 1998).
While elements of both competition and collaboration are
essential for the conceptualization of co-opetition, scholars have
used a wide variety of denitions and perspectives in examining co-opetition (Yami et al., 2010). Some denitions are focused
and others are rather broad. Brandenburger and Nalebuff (1996)
adopt a broad view of co-opetition and dene it as relationships
in a value-net in which two competitors (e.g. computer manufacturers) can be complementors through their cooperation with
a third rm (e.g. software producers). Co-opetition is viewed by
them as the sum of many different relationships and the cooperative and competitive parts are divided between different actors
(Bengtsson et al., 2010). On the other hand, Bengtsson and Kock
(1999, 2000) narrowly dene co-opetition as simultaneous collaboration and competition between two rms and the different
parts of the relationship are divided between activities. For example, competitors cooperate within activities far from the customer,
while competing in activities that are close to customer interaction (Bengtsson and Kock, 2000). Gnyawali et al. (2008) provide a
framework that explains how co-opetition occurs very intensely
(when a dyad engages in simultaneous collaboration and competition) and much less intensely (when several rms engage in some
forms of collaboration and competition at different time periods).
They suggest that the most intellectually intriguing and managerially challenging form of co-opetition is dyadic inter-rm. Along the
same lines, Bengtsson and Kock (1999) suggest that scholars should
more narrowly dene co-opetition in order to deeply understand
co-opetition and its implications. Accordingly, we adopt a focused
denition of co-opetition, i.e., simultaneous pursuit of collaboration and competition between a pair of rms.
Although co-opetition is considered a win-win strategy, rms
struggle with a dilemma between the need to work together in
order to create value and the temptation to be opportunistic in
order to appropriate a greater share of the created value (Lavie,

651

2007; Gnyawali and Park, 2009; Ritala and Hurmelinna-Laukkanen,


2009). Co-opetitive relationships thus involve high degree of interdependence with each other and are full of conict, and yet the
potential for payoff is also high. Therefore, it is important to
examine conditions in which rms engage in co-opetition, how coopetition evolves, and how rms can achieve positive outcomes
through co-opetition.
Another important inquiry is how co-opetition could impact
innovation. Innovation has long been seen as a source of competitive advantage (Abernathy and Clark, 1985; Ahuja and Katila,
2001; Schumpeter, 1942; Teece, 1996; Utterback and Suarez, 1993).
Research shows that alliance partners and network help rms to
access, acquire, and leverage important resources in pursuing innovation (Ahuja, 2000; Ahuja et al., 2008; Lei, 2003; Powell et al.,
1996; Sampson, 2007; Tether, 2002; Tsai, 2009). Collaborations
provide timely access to knowledge and resources that are otherwise unavailable, and rms can combine each others resources
in pursing innovation projects that involve high risks and require
heavy investments. Because the relational resources and advantages that stem from such relationships are important (Dyer and
Singh, 1998), rms actively pursue inter-rm alliances to create
new knowledge and capabilities so that they can enhance their
innovation outcomes (Sampson, 2007). Very limited research, however, has addressed how co-opetition impacts innovation. Jorde
and Teece (1990) argue that cooperation among competitors is
essential if innovating rms are to compete in todays global markets. Quintana-Garca and Benavides-Velasco (2004) empirically
show that collaboration with direct competitors is important not
only to acquire new technological knowledge and skills from the
partner, but also to create and access other capabilities based on
intensive exploitation of the existing ones. Considering that coopetition is popular in high-tech industries (Dagnino and Rocco,
2009; Gnyawali and Park, 2009), it is necessary to examine the
role of co-opetition in innovation in high-tech industries and under
what conditions rms might generate positive innovation performance in co-opetitive relationships.
Collaboration with competitors also raises public policy concerns with the potential for collaborating competitors to engage
in collusion that may hurt innovativeness as well as consumer
welfare. Collusion concern could be high when giants with strong
market power engage in co-opetition. To address this concern, Jorde
and Teece (1990) suggest that cooperation among competitors for
technological innovation might not necessarily be anticompetitive because of the potential to bring unique products, create new
markets, and develop integrative technologies that will ultimately
benet consumers. Ingram and Yue (2008) argue that the opportunity for cooperation between competitors should not be seen as
violating antitrust issues, but rather as a legitimate business practice. They argue that deating the taboo against the cooperation
between competitors also contributes to the policy makers decision when designing policies that aim at developing a more viable
business community (Ingram and Yue, 2008, p. 296). An important
need in the literature therefore is to examine if and when cooperation among competitors could promote competition and, in turn,
innovation as suggested by Teece (1992).
2.2. Drivers of co-opetition in high technology industries
As noted earlier, high technology industries seem to face unique
challenges and opportunities and therefore are more conducive to
co-opetition. Following Gnyawali and Park (2009) and other prior
research (Chen and Li, 1999; Palmberg and Martikainen, 2006;
Quintana-Garca and Benavides-Velasco, 2004; Sampson, 2007),
we identify key industry-level factors that drive co-opetition.
Gnyawali and Park (2009) argue that three major technological
challenges shorter product life cycles, convergence of multi-

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D.R. Gnyawali, B.-J. Park / Research Policy 40 (2011) 650663

ple technologies, and increasing R&D and capital expenditures


serve as important drivers for rms in high technology industries
to engage in co-opetition. As product life cycles are dramatically shrinking (Chen and Li, 1999) due to rapidly changing
customer preferences and speed and magnitude of technological
changes, rms need to speed-up their innovation efforts (Lynn
and Akgn, 1998). Technological convergence provides both risks
and opportunities to rms, which facilitates co-opetition. Convergence increases risks and uncertainty about market and technology
and pushes rms to reach out to other rms, including competitors, to share the risk and to access and combine a variety of
sophisticated technologies. Technological convergence also offers
companies (especially for leading rms) opportunities to set industry standards. Besides competing to develop new technologies,
companies try to shape emerging industry structures and standards
required to support their development and diffusion (Garud, 1994).
As technological standards and platforms lay the foundation for
new products and services (Lei, 2003), competitors cooperate with
each other to win battles for industry standards (Gomes-Casseres,
1994) and to create industry-wide norms (Mione, 2008). Finally,
R&D intensity (R&D expenditures as percent sales) is very high in
high technology sectors (BIS, 2009). Such high R&D costs provide
strong incentives for companies to cooperate with competitors that
have a large resource base. Creating a co-opetitive relationship is
an effective way to combine R&D expenses, expertise, and other
resources (Zineldin, 2004).
In addition to the industry and technological trends discussed
above, rm strategies and resources are likely to motivate giants
to engage in co-opetition. From the rm strategy perspective,
leading rms aspire to lead their industry and constantly pursue
technological innovations to establish industry standards and gain
competitive advantages (Ahuja et al., 2008; Lei, 2003). From the
resource/capability perspective, large rival partners have resources
and capabilities superior to many other potential partners in the
industry. Resources and capabilities of competitors are also likely
to be directly relevant because competitors confront common challenges. Superior and relevant resources and capabilities will be
critical for speeding up R&D process or pursuing industry (or technology) standards.
2.3. Dynamics of co-opetition between leading rms
Co-opetitive relationships are unstable (Park and Russo, 1996)
and dynamic in nature (Luo, 2007), which cause high level of
tension for rms. Leading rms pursuing co-opetition with rivals
confront a dilemma: the existence of attractive opportunities and
risks of misappropriation by the partner. That is, co-opetition
between leading players involves high levels of tension for various reasons. As Ingram and Yue (2008) note that competition
and cooperation derive from the same relationships to resources,
the very characteristics of partners that are critical for pursuing
opportunities may also cause competitive tension. Tension intensies because direct competitors may be aware of, motivated to
pursue, and be capable of confronting each other (Chen et al.,
2007). Also, rms competitive goals conict because of their aspirations to become market leaders. Any opportunistic behavior by
the competitor-partner could result in serious knowledge and market loss. These conditions coupled with potential for high payoff
from co-opetition simultaneously lead to instability in and reinforcement of the relationship. Such tension and instability also
underscore the need to have a more balanced partnership between
the partners and the importance of balancing competition and
cooperation by the rms.
The abovementioned conditions are illustrative of how coopetition forms and evolves over time and thereby help explain
the dynamics of co-opetition. In the co-opetition formation stage,

rms will actively seek a way to reduce the hazards of opportunism.


Transaction cost economics suggests that adopting an equity joint
venture structure mitigates the hazards of opportunism because
incentives are more closely aligned (Oxley, 1997; Sampson, 2004).
Narrowing the scope of cooperation is an alternative to reduce the
risk of partner opportunism (Oxley and Sampson, 2004). Mutual
commitment of partners top management to co-opetition would
be an important factor in dealing with opportunism.
Participating rms need for value creation and appropriation
and balance of competition and collaboration lead to dynamism
in co-opetition. Value creation occurs through cost sharing,
economies of scale, standard setting, and use of relational-specic
routines. Luo (2007) implies that rms will get more opportunities to create greater common value and benet from it when the
industry or the business segment is growing. Leading rms can even
create new markets. Being able to balance competition and cooperation is critical to maintain stability in relationships (Das and Teng,
2000). Dynamics of co-opetition would be thus shaped by industry and partner conditions as well as rms capabilities to pursue a
win-win approach, manage the tension, and balance the relationships. We explicitly discuss the role of rm capability in Section
4.4.
2.4. Outcomes of co-opetition between leading rms
We suggest that the outcomes of co-opetition between leading rms should be analyzed at multiple levels (focal rm, dyadic
or combined, and industry levels) to explore the effects of value
creation and appropriation and address the concern of scholars
and policy makers on the industry impact of co-opetition. Further, participating rms capability to manage co-opetition could
be important for rms to generate benets from co-opetition.
Value creation and value appropriation are central to co-opetition
(Brandenburger and Nalebuff, 1996). Cooperation is based on the
expectation to enlarge and/or protect the size of value through
joint efforts, but competition is driven by the desire to capture a
bigger proportion of the value privately. Private benets depend
on the distribution of common benets and the effects go beyond
the collaboration boundary. Common benets are distributed based
on the resource dependency; the partners who bring the more
critical resources to the relationship can appropriate a higher percentage of the benets (Pfeffer and Salancik, 1978). By learning
from partners, rms can facilitate their own product/technological
development and leverage the knowledge across related businesses
within the rms. Such effects may be intensied by competition in
co-opetition relationships. When competing rms cooperate, they
have a strong incentive to benchmark each other and prepare for
the consequences of competition (Tsai, 2002). Capability of rms
to effectively manage co-opetition would be helpful in generating
higher common benets and in appropriating a greater share of
such benets. A rm possessing the mindset and experience relevant for co-opetition may be able to handle conicts, create greater
value, and appropriate bigger private benets.
We suggest that co-opetition between leading rms in hightech industries, especially in the upstream aspects of a value chain
such as R&D and technological innovation, leads to a strong positive
impact on the industry. Co-opetition between major players may
promote innovation through competition. Teece (1992) argues that
complex forms of cooperation are usually necessary to promote
competition. We note that co-opetition between leading rms
may cause subsequent co-opetition among other rms because
many followers typically imitate and respond to industry leaders
actions. Thus, co-opetition between giants may change competitive dynamics to more intensied form of competition and leads to
group-to-group competition. Co-opetition can also enable rms to
overcome the appropriability (spillover) problems (Teece, 1992).

D.R. Gnyawali, B.-J. Park / Research Policy 40 (2011) 650663

Teece (1992, p. 12) points out that coupling to competitors often


promotes innovation because the set of rms receiving the benets is likely to include a greater portion of rms which have incurred
R&D costs. Finally, co-opetition is more likely to promote price
decline and better products in the market. Co-opetition between
giants may let consumers enjoy multi-feature products at reasonable price due to economies of scale, pulling of complementary
resources to develop more integrative technologies, reduction of
duplication efforts, as well as intensied competition.
So far, we have reviewed the relevant literature and developed
conceptual arguments regarding the drivers, dynamics, and outcomes of co-opetition between leading rms. Now we turn to an
exemplar case to illuminate and expand conceptual arguments.
After a thorough discussion of the case, we will propose a multilevel conceptual model by blending the literature-based conceptual
arguments and ndings from the case.
3. In-depth case study
Case-based exploratory methods are best suited for investigating new and poorly understood phenomena (Eisenhardt, 1989)
that have multiple and complex elements (Dodgson et al., 2008)
and that evolve over time (Langley, 1999). Since co-opetition is a
multi-faceted and paradoxical phenomenon, a thorough case study
spanning multiple years would provide a good understanding of the
drivers, dynamics, and consequences of co-opetition. Accordingly,
we conducted an in-depth study of an exemplar case with the goal
of providing richer and deeper insights on the phenomenon to bring
key dimensions to light (Yin, 1984).
3.1. Research design and case selection
The research design employed an exploratory approach in order
to provide meaningful insights on the drivers, dynamics, and outcomes of co-opetition between powerful large players. With the
goal of an exemplar case, we chose a much publicized joint venture between two major and large rivals in the electronics industry
Samsung Electronics and Sony Corporation spanning a seven
year period (20032009).
For many years, Samsung Electronics key mission was to unseat
Sony Corporation as the worlds top electronics maker (Dvorak
and Ramstad, 2006), and both Sony and Samsung competed vigorously in many product-market segments. Despite their erce
rivalry, the two rms established a joint venture (called S-LCD) in
April 2004 to develop and produce 7th generation (motherglass
size of 1870 mm 2200 mm) liquid crystal display (LCD) panels
for at screen TVs. The initial investment was US$1 billion from
each rm, and they tripled their investment and moved on to
the 8th generation technology within a few years. Samsung contributed its technological strengths in the LCD technology while
Sony contributed its technological strengths and brand recognition
in television.
We believe that the co-opetition between these giant and erce
rivals is probably the best exemplar case to understand co-opetition
and its impact. These two rms are largely matched in their size
and resources (refer to Table 1 for details) and they have overlapping products and markets worldwide. In 2003 when they agreed
to establish S-LCD, the annual revenue of Samsung Electronics was
US$54.1 billion and that of Sony was US$67.2 billion and global
brand rankings were 25th and 20th respectively. They have been
competing in various product markets, such as TV, computer, video,
audio, and handset, as well as in various geographic markets in the
US, Europe, and Asia. This highly matched resources and capabilities, as well as a past history of competition, make SamsungSony
co-opetition an intriguing case.

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Table 1
Comparison between Sony Corporation and Samsung Electronics.
Resources

Total assets (US$ million)


Sales (US$ million)
Operating income (US$ million)
Net income
R&D investment (US$ million)
R&D intensity (%)
Number of patents registered in US
Global brand (ranking)

Samsung
Electronicsa

Sony Corporation

2003

2008

2003

2008

32,751
54,114
5,258
4,978
2,900
5.36
1,306
25

83,771
96,495
4,799
4,686
5,489
5.69
4,237
21

83,786
67,178
1,188
790
4,590
6.83
1,513
20

126,260
77,688
(2,289)
(1,027)
4,998
6.43
1,723
25

Source: Annual Reports of Sony and Samsung Electronics, USPTO, Business Week.
a
Samsung Electronics data is based on consolidated nancial statements. In 2008,
Samsung Electronics R&D investment is 9.5% of parent company sales. Total assets
in 2003 are based on non-consolidated nancial data.

Because it is a joint venture between two market leaders and


has had tremendous impact on the industry, the case provides a
useful context to understand why and how co-opetition for technological innovation between giants or large powerful players occurs
and how such co-opetition could impact the participating rms,
other players in the industry, and the industry as a whole over
time. It is an interesting setting for our study also because trends
in the past several years suggest that the at panel TV industry
has the characteristics of short product life cycles, a massive capital investment requirement, and a broad range of products. As the
TV technology changed from analog (CRT TV) to digital such as
liquid crystal display (LCD) and plasma display panel (PDP), relationships and dynamics among major players have also changed.
During the transition period, competition surrounding technological standards has become intense. Thus, this is an intriguing case
to examine co-opetition because the rms are erce rivals, have
matched resources and overlapping markets, and operate in a
rapidly changing and technology-intensive industry.
3.2. Sources of data
This study primarily relies on secondary data for two reasons.
First, because the joint venture was widely publicized in media
outlets, it was possible to collect relevant information from published sources. Compared to interview data, published secondary
data are likely to be more objective and allow for cross-checks using
multiple sources. Second, our attempts to interview managers of SLCD did not succeed mainly because internal working details of the
venture are kept secret. Even though we informally interviewed a
few managers, it was difcult to get rst hand information of the
intents, strategies, and positions of the partners. Data collection
involved two primary approaches. First, we collected data using
the two rms annual reports, industry research rms such as DisplaySearch, and other publicly available information. These sources
helped us develop a better understanding of the companies, various
technologies and trends, the industry, and related aspects. Second,
using the Factiva database we downloaded and analyzed all news
reports related to the S-LCD, covering the period of 2003 (a year
prior to the formation of the S-LCD) to 2009. The Factiva database
covers thousands of newspapers from around the world. We made
sure that the reports contained major Japanese and Korean publications such as Nikkei, Nikkei Weekly, Korea Times, and Korea Herald.
One of the authors is a native Korean and was able to analyze news
reports published in the Korean language and gained additional
insights about the joint venture.
4. Results from the case study
We organize results from the case study in the following manner: what factors led Samsung and Sony to engage in co-opetition;

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D.R. Gnyawali, B.-J. Park / Research Policy 40 (2011) 650663

how the co-opetition evolved over time; and how this co-opetition
impacted the participating rms, other players, and the industry
as a whole. Data collected from the various sources noted above
are used to illustrate relevant points. We provide in the appendix
a summary of relevant quotes from the Factiva database and illustrate how they relate to the various aspects of our discussion in this
section.
4.1. Drivers of co-opetition
What made two large and erce rivals pursue the co-opetitive
partnership? Our examination showed that multi-level factors
were driving this relationship. In the TV industry, at panel displays
have replaced Cathode-ray tube (CRT), which was the predominant
display technology for a long time. In addition to the prominent
LCD and PDP, rms introduced other technologies such as electroluminescent display (ELD), light emitting diode (LED), and organic
light-emitting diode (OLED). Such efforts of rms to introduce
new technologies have shortened product life cycles. The industry shifted from analog to digital technology. The digital era also
required huge capital expenditures for the mass production of at
panel displays. Moreover, technological convergence forced rms
to develop new products, such as LED TV and 3D TV. Understanding complex technologies and engaging in mass production became
critical in the digital era (Sony Annual Report, 2008). Thus, at the
technology or industry levels, key forces leading to the formation of the S-LCD were rapid change in the technology, the cost
of developing new technologies, and the complicated nature of the
technology.
At the rm level, both Samsung and Sony are very aggressive and
proactive in terms of their technological development and marketing. Both are either leaders or close followers in many consumer
electronics technologies and products. The rms have not only
remained a step ahead of the competition but have also aimed to
lead in their major segments. They also established several technological standards. As a recent example, the Sony group, including
Samsung, won the DVD battle with the Blu-ray technology over
the Toshiba groups HD-DVD. The battle for the standard between
LCD and PDP is intriguing. PDP technology led by Matsushita (now
Panasonic) and LG Electronics was dominant in large screen TVs
(over 40 in.) segment until Samsung and Sony worked together to
produce large LCD panels through S-LCD. Samsung stated that SLCDs industry-leading production capacity will be leveraged to
standardize and popularize LCD TVs with panel sizes in both the
40 and 50 ranges (Samsung Electronics Annual Report, 2006, p.
47).
Feeling of vulnerability in the face of changing industry and
technological dynamics prompted the rms to join hands with
competitors possessing complementary resources. When it considered the alliance, Sony needed to address a critical gap. Sony
had leadership in the traditional CRT TV market for a long time,
but it lagged far behind in the rapidly growing at-screen TV market. Sony suffered a massive loss in 2003, which caused anxiety
in the stock market. The Sony Shock was attributed to the weak
performance of its main electronics business, which accounted for
about 66% of total sales (Uranaka, 2003). The TV business, which
accounted for about 20% of Sonys revenue, was undergoing massive restructuring to escape from the shock (Uranaka, 2003; Sony
Annual Report, 2004). In shifting its business focus to at panel TV,
Sony executives realized that a stable supply of LCD panels was
critical for it to quickly catch-up on the at-panel TV segment.
In 2003, Samsung was one of the strongest LCD panel producers
(Kim, 2006), even though it was not the largest LCD TV maker. For
Samsung, securing a large partner like Sony was critical to achieve
economies of scale and win the battle for the technological standard. Sonys precise and high standards for technology and product

quality helped to push Samsungs panel technology ahead of others. Each rm had unique characteristics and capabilities that the
other one needed. Sony beneted from Samsung in terms of strong
capability in the LCD technology, drive for pushing the LCD technology, and overall resource base. Samsung beneted from Sony in
terms of TV making expertise, brand name, and large and continued
demand for LCD panels (Dvorak and Ramstad, 2006).
In addition to the complementarities noted above, the two rivals
shared the massive capital investment needed to develop and
produce LCD panels. The total investment of approximately US$6
billion in 7th and 8th generation LCD panel plants was possible
because the two leading rms pursued the same goal of focusing
on large-size and high value-added models. It is hard to invest in
large-scale LCD facilities alone, and it holds a lot of attraction to
make investment in a place of strong infrastructure like this, said
Idei, CEO of Sony Corporation (Yonhap English News, 2004, refer to
Appendix A). Partnering with competitors with strong technological capabilities was critical as the rms also faced time pressure
and could not develop the technology on their own. By collaborating with Samsung, Sony could launch its Bravia series in the market
within one year after establishing S-LCD, and Samsung soon followed with its own Bordeaux series. In summary, main reasons
for the formation of this co-opetition relationship included important factors related to the industry and technology, the nature and
strategies of the rms, and resources and capabilities they had to
offer to each other. The rms not only felt that they could overcome their vulnerability but also enhance their individual strengths
and combine their strengths to create a positive impact on the LCD
technology and the at-screen TV industry.
4.2. Dynamics of SamsungSony co-opetition
As discussed in Section 2.3, dynamics relates to formation and
evolution of co-opetition. We observed that the governance mode
and the commitment of top management were important factors in
the formation of co-opetition. The rms established a joint venture,
a governance mode that provided strong safeguards and balance.
Each party owns 50% of the venture, with the CEO from Samsung and the CFO from Sony. Top management from the two rms
already had close relationships and made strong commitments to
the joint venture. For example, at Sonys request, Mr. Jae-Yong Lee,
the current vice president of Samsung Electronics and the eldest
son of the Samsung Group chairman, became a member of S-LCDs
board of directors. As Samsung was involved in both LCD and PDP
technologies, Sony wanted a strong commitment to S-LCD from
Samsungs top management.
The co-opetitive relationship has evolved over time. In Fig. 1,
we present areas of collaboration and competition mainly through
S-LCD and illustrate how the co-opetition between the two rivals
has evolved. The upper part of Fig. 1 illustrates areas of competition and the lower part illustrates collaboration; moving from left
to right provides the evolution of co-opetition over the period of
20032009.
Since the establishment of S-LCD in 2004, Samsung and Sony
have deepened their resource commitments to the venture. S-LCD
started 7th generation LCD panel production in April 2005 and the
production capacity increased from 60,000 to 100,000 panels per
month through additional investments. Based on their tremendous
success in the 7th generation technology, they have invested in
the 8th generation plant, which produces LCD panels of 46 in. and
larger. S-LCD started its 8th generation production in August 2007
with a production capacity of 50,000 substrates per month. In June
2009, S-LCD started production from its second 8th generation line
with a production capacity of 70,000 substrates per month.
While collaborating through the S-LCD, Samsung and Sony were
simultaneously competing ercely in the at screen TV market (and

D.R. Gnyawali, B.-J. Park / Research Policy 40 (2011) 650663

655

Fig. 1. Evolution of co-opetition between Sony Corporation and Samsung Electronics.

also does not apply to TFT-LCD and OLED display patents. Crosslicensing not only facilitated knowledge sharing but also kept their
core knowledge protected.
4.3. Impact of SamsungSony co-opetition
Co-opetition between Samsung and Sony had a tremendous
impact on both rms, the LCD segment, and the TV industry as a
whole. We focus on how this co-opetition enabled the rms to both
create and appropriate value and how it changed the technological
and industry landscapes.
4.3.1. Value creation for the partners
SamsungSony co-opetition created a substantial value for the
rms. First, the success of S-LCD and its impact on the partners are evident when we look at the market shares (refer to
Figs. 2 and 3 for trends in market shares). Before S-LCD produced
LCD panels, Sony and Samsung were ranked as the 3rd and 4th
LCD TV makers (behind Sharp and Philips). In the 4th quarter of
2008, however, Samsung and Sony were ranked as the 1st and
25

Market Share (%)

in other aspects of their business but not depicted in Fig. 1). For
instance, while Sony was the rst one to introduce a LCD TV with
its Bravia model in summer 2005 and became the industry leader
(unseating Sharp Corporation), Samsung countered with its Bordeaux model and overtook Sony in the 3rd quarter of 2006. Since
then, competition between the two companies for market leadership has become more intense, which in turn caused Samsung
and Sony to emerge as leading TV makers. Further, they competed
in developing new technologies and products while cooperating
in LCD panel production. For example, in December 2007, Sony
launched rst 11 in. OLED TV in Japan and Samsung responded by
showing 31 in. OLED TV at the Consumer Electronics Show in January 2008. In February 2008, Sony announced a joint venture with
Sharp Corporation, the 3rd largest LCD TV maker at that time, for the
10th generation LCD panels. With an investment of around US$4.2
billion, the production capacity of the JV is planned to be 72,000
substrates per month and Sony plans to have 34% equity and Sharp
will have 66%.
We observed that in the dynamics of the co-opetitive relationship the two rivals followed the fundamental principle of
co-opetitioncreating a bigger value together while competing to
gain a larger portion of the value. They could create and share value
through cost sharing (US$6 billion investment), economies of scale,
and standard setting (LCD versus PDP). They also shared their interests through a strong governance mode (equity joint venture) and a
strong commitment to the venture. They also balanced competition
and cooperation. For example, they cross-licensed their patents
(11,000 patents from Samsung and 13,000 patents from Sony) in
November 2004, which facilitated knowledge sharing and product
development. On the other hand, they tried to maintain uniqueness
of each company and promote healthy competition in the market. So-called Differentiated Technology Patents, such as Sonys
PlayStation architecture and Samsungs home networking technology, are excluded in the cross-licensing agreement. The agreement

20
Samsung
Sony
Sharp
LGE
Philips

15
10
5
0
Q4 '04

Q4 '05

Q4 '06

Q4 '07

2008

Fig. 2. Market share (revenue basis) of top ve rms in the LCD TV segment.
Source: DisplaySearch.

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D.R. Gnyawali, B.-J. Park / Research Policy 40 (2011) 650663

45
40

Market Share (%)

35
Samsung + Sony

30
25

Others in top 5 (excluding


Samsung and Sony)

20
15

Total - Top5

10
5
0

Q3 '05

Q4 '08

Fig. 3. Samsung and Sonys combined market share in the LCD TV segment.
Source: DisplaySearch.

2nd TV makers respectively in both the total TV market and LCD


TV segment (DisplaySearch, February 18, 2009). Furthermore, the
combined market share of Samsung and Sony increased from 18.4%
in the 3rd quarter of 2004 to 40.9% in 2008. Second, S-LCD created larger value for both rms by winning the standardization
battle between LCD and PDP technologies. LCD segments market share rapidly grew from 13% in the 3rd quarter of 2005 to
68.4% in the 3rd quarter of 2009. Even though the PDP segment
also increased from a 3.6% to 6.5% share during the same period,
LCD dominated the TV industry partly because the two leading
rms Samsung and Sony focused on the LCD segment through the
venture. While rivals Matsushita (now Panasonic) and LG Electronics focused on PDP, S-LCD and the partners focused on LCD. As a
result, LCD has clearly taken the lead in the large at panel TV
segment (Fig. 4).
4.3.2. Value appropriation by the partners
Both partners were able to reap lots of benets from the collaboration and resulting co-opetition. As we mentioned earlier, Sonys
TV business was suffering when the joint venture was announced
in 2003. Through the partnership, Sony was able to quickly enter
into the large at screen TV segment and launch the Bravia model
in a very short time. Because of Sonys brand name and expertise
on TV, Bravia became an instant hit and Sony could unseat Sharp
from its top market position in LCD TV sales (refer to Fig. 2). Thus,
while Sony was experiencing deep problems in the at screen TV
market, the JV with a capable competitor enabled Sony to quickly
catch-up with the market trends. Samsung seems to have appropriated even greater value from the S-LCD. Samsung could take the
lead in the large size LCD panel segment and gained a favorable
position in the battle over technical standards. Since 2006, Samsung is the leading company in the total TV market as well as the

90
80

Market Share (%)

LCD segment, while Sony is ranked 2nd. Samsung is the largest


LCD panel producer through its own plant in addition to the SLCD plant. As a result, while Sony received high returns through
focused investment in LCD within a short period of time, Samsung
became the largest TV maker and panel producer. It appears that
rm-specic knowledge and capabilities played an important role
in value appropriation from co-opetition, which we will discuss
later.

70
60
LCD TV

50

PDP TV

40

CRT TV

30

4.3.3. Impact on the industry


We were able to discern several industry-level implications of
SamsungSony co-opetition. First, technological development was
tremendous because the partnership between these leading companies intensied competition between LCD and PDP technologies
and the overall at screen TV market. Before S-LCD produced 40 in.
class panels, the at panel TV market was divided into two segments: smaller than 36 in. for LCD TVs and over 40 in. for PDP TVs.
Through S-LCD, Samsung and Sony could push the LCD technology
as a strong contender in the market within a short period of time,
which challenged the dominance of the PDP technology in large at
screen TVs. As a result, LCD overtook PDP in the 40 in. class in 2006.
To win over LCD, PDP makers led by Matsushita (now Panasonic)
developed the PDP technology quickly. The intense competition
between LCD and PDP led to the advancement of these technologies, resulting in more demand for at screen TV. According to
DisplaySearch, the competition between LCD and PDP makers
would boost the demand for 50-inch LCDs (Korea Times, 2007,
refer to Appendix C). Further, Samsung and Sony competitively
developed new technologies and products, such as LED TV and 3D
TV. Second, the technological development in the entire display
industry was stirred by SamsungSony co-opetition as it generated strong reactions from other competitors and led to multiple
co-opetitive relationships in the industry. In January 2005, Matsushita formed a joint venture called IPS Alpha Technology with
Hitachi and Toshiba to develop and produce LCD panels. In December 2007, Sharp announced the formation of a business partnership
with Toshiba to supply key components of LCD TVs, while supplying the panels to Pioneer. In February 2008, Sony announced
a joint venture with Sharp for the 10th generation LCD panels. A
comparison of Fig. 5a and b shows how collaboration among major
competitors in the at panel TV industry has emerged and evolved
since the formation of the S-LCD in 2004.
Finally, S-LCD and the resulting industry dynamics also partly
contributed to the rapid drop of prices of at-screen TVs. While
the power of concentrated retail stores inuenced the trends, the
price drop was possible due to two additional forces: economies of
scale and competitors response. As the partners put heavy investments in the S-LCD, it was possible to reach economies of scale
and produce panels with lower costs. Using the panels, Sony could
launch its Bravia model in a reasonable price range. In terms of
competitor response, when Samsung and Sony produced LCD TV
in the 40 in. class, Matsushita reacted promptly and dropped the
price of PDP TVs, resulting in a steeper price decline in the industry. This price decline (increasing affordability) and technological
development created new markets for at screen TVs. Overall, our
examination suggests that the co-opetition between Samsung and
Sony had strong positive impacts in the industry, through better
products with affordable prices, technological advancement, and
market creation.

RP TV

20

4.4. Role of rm capability

10
0
Q3 '05

Q4 '08

Fig. 4. Change in market share in key TV segments.


Source: DisplaySearch.

The above discussion clearly indicated that co-opetition


between Samsung and Sony had a tremendous impact on the rms,
the LCD segment, and the TV industry as a whole. A logical question at this point isWhat factors enabled the rms to generate

D.R. Gnyawali, B.-J. Park / Research Policy 40 (2011) 650663

657

Fig. 5. (a) Cooperative relationships among major competing rms in the at panel TV industry (as of December 2004). (b) Cooperative relationships among major competing
rms in the at panel TV industry (as of December 2009). Circles with solid line: Firms producing both LCD TVs and PDP TVs; Circles with dotted line: Firms producing mainly
LCD TVs; Shaded circles: Firms producing mainly PDP TVs; Boxes: JVs producing LCD panels; Solid line between circles: collaboration between rms.

the benets and have such an impact on the industry? While coopetition entails the risk of being out-learned and out-competed by
the competitor-partner, Samsung and Sony were able to manage
the risk and generate tremendous benets from the co-opetition.
We now turn to discuss the critical role of rm capabilities to deal
with co-opetition, which is rarely discussed in the co-opetition literature.
As noted earlier, each rm had resources and capabilities that
the other one needed, which helped to prompt the rms to
engage in co-opetition. However, each rms own internal capability played an important role in enabling the participating rms
to create greater common benets and appropriate a greater share
from the benets. The relationship has evolved with balance mainly
due to rm capabilities and subsequent strategic initiatives undertaken by the rms. Sony had internal strengths in TV making and
had achieved market leadership and technological prowess in the
industry. As a result, it was able to instantly introduce LCD TV and
gain leadership. Its internal strengths and reputation also helped
to attract other potential partners. Sonys strengths were instrumental in leading to its collaboration with Sharp mentioned earlier.
Sony was able to show to Samsung that it had other partners
(options); and therefore, the SamsungSony collaboration stayed
in balance. Even though such Sonys move raised questions about

S-LCDs future, the relationship continued because of mutual interdependence and gains. While Samsung needs Sonys market power
to get benets of economies of scale, Sony needs S-LCD because
8th generation is the most popular one for the time being. Also,
a win-win approach of open-minded executives was critical for
the success. Mr. Murayama says that, in consumer electronics, its
hard to keep secrets long anyway, and being open with Samsung is
key to making the joint venture work. If we put up barriers, theyll
close up too (WSJ, 2006, refer to Appendix B). The SonySamsung
alliance is certainly a win-win, declares Sang Wan Lee, president
of Samsungs LCD unit (BusinessWeek, 2006, refer to Appendix C).
While comparing the benets to Samsung and Sony, it appears
that Samsung beneted more from the co-opetition as shown
in Fig. 2. We suggest that Samsungs internal capability for coopetition contributed to its gain. Samsung has long tried to learn
from and cooperate with other rms. Samsung has evolved itself
from a rm producing key parts such as semiconductor to a major
manufacturer of consumer electronics. In the process, Samsung
had cooperated with customers that were competitors in the
nal products. Samsungs internal structure was also instrumental. Samsungs different businesses, such as semiconductor, mobile
communication, and LCD, compete with each other (Chang, 2008, p.
133). Further, Samsung Electronics LCD unit produces LCD panels

658

D.R. Gnyawali, B.-J. Park / Research Policy 40 (2011) 650663

Drivers of co-opetition
between giants
Industry and technological
challenges & opportunities
Superior and relevant
partners resources &
capabilities
Firm strategies and
aspirations

Dynamics of co-opetition
between giants
Formation of co-opetitive
relationship
Evolution of co-opetitive
relationship

Outcomes of co-opetition
between giants
Partners value creation &
appropriation
Industry technological
development & standards
Industry competitive
dynamics

Co-opetition capability
Co-opetition mindset
Co-opetition experience
Resources & capabilities

Fig. 6. A conceptual model of co-opetition between giants.

while Samsung SDI, an afliate of Samsung Group, produces PDPs.


Both supply to Samsungs TV manufacturing business and compete
ercely with each other (Chang, 2008). Also, design was one of the
Samsungs key strengths which improved subsequent to S-LCD formation. While Samsung used the same panel as Sony did, Samsung
paid more attention to improving its own TV designs. Its launch of
Bordeaux TV with a wine-glass shape design helped Samsung to
catch-up with Sony and then to take the lead. Further, Samsung
succeeded in creating the LED technology on its own, which was a
critical factor in solidifying Samsungs position. Such co-opetition
mindset and co-opetition-driven internal structure enabled Samsung to effectively engage in co-opetition with Sony and reap large
benets from it.
It is possible that Sonys past strengths and history of in-house
technological development may have somewhat hindered its gain
compared to Samsungs. Sony has historically taken pride in its
reputation as a do-it-yourself innovator. Rapid decline of old technologies and the introduction of new ones have challenged Sonys
ability to keep up with all the latest trends (Luh, 2003, p. 242). Perhaps this was a reason why Sony was slow in investing in LCD or
PDP while competitors were already working on it. Instead, Sony
tried to develop the OLED technology (Luh, 2003). Involvement in
S-LCD shows that Sony realized its limitations and the importance
of co-opetition to catch up with other leading players.

5. Discussion and conclusion


Our conceptual discussion followed by insights from the indepth case study led us to propose a conceptual framework of
co-opetition between giants. We depict such a framework in Fig. 6
and summarize the core points here. In terms of drivers of coopetition, our research has identied factors at multiple levels:
challenges and opportunities in the industry and technological
conditions (such as rate of technological change, convergence of
technologies, investment in research and development), useful and
superior resources and capabilities of potential partners, and strategies and aspirations of the rms. Even a giant cannot go it alone
given the technological trends. Firms seek appropriate partners,
including rivals, to pursue the opportunities (e.g. setting technology standards) or defend their positions. Our study of the S-LCD
case showed that the two leading rms engaged in co-opetition
to deal with technological challenges and opportunities and they
brought together relevant and complementary resources. These
factors, when combined, provided a strong motivation for the rms
to collaborate with each other although they have been erce rivals
for a long time.

The abovementioned drivers of co-opetition are also instrumental for the relationships to stay in balance and for co-opetition
to evolve over time. Continued expectations of greater benets
increase rms commitment to the relationship and work together
to create more benets as well as strive for a larger share of
the benets. As giants engage in co-opetition and evolve in their
relationships, they generate positive impacts for each other and
the entire industry. While rms can access the knowledge and
resources of partners and share the risks and costs, competitor partners benchmark each other and prepare for the consequences of
competition (Tsai, 2002) as well as foster a competitive culture for
developing distinctive competencies (Luo et al., 2007). The S-LCD
case clearly shows that two rival rms got benets from the coopetitive relationship (refer to Figs. 2 and 3). Further, co-opetition
between giants impacts the whole industry, in terms of technological development and competitive dynamics. The S-LCD case shows
that co-opetition between leading rms inuenced subsequent
co-opetition among other major players led to possible groupto-group competition. The new industry competitive landscape
shaped by rms engaged in co-opetition facilitates further innovation, thus providing support for Schumpeters (1942) argument
that innovative performance is enhanced when a small number of
large rms vigorously compete with each other to develop new
processes and products.
Our conceptual model also illuminates the importance of rm
capabilities in managing co-opetition. Co-opetition between strong
rivals is a very challenging relationship (Gnyawali et al., 2008) as
managers confront higher levels of tension, risk loss of knowledge to a competitor-partner, and might subsequently turn a
weak competitor-partner into a strong competitor. Managers
ability to anticipate and manage such a relationship by dealing with the paradoxical factors in co-opetition would therefore
be important in managing co-opetition and generating positive outcomes (Gnyawali et al., 2006). As evidenced in the
S-LCD case, co-opetition mindset of executives was critical for
the formation of co-opetition. In addition, superior and complementary resources and balance of such resources between
the partners were critical for rms to develop their relationship in a more balanced way, to maintain interdependence, and
subsequently generate substantial positive outcomes from the
relationship.

5.1. Contributions
This study contributes to both co-opetition and innovation literatures. First, we contribute to the innovation literature by showing

D.R. Gnyawali, B.-J. Park / Research Policy 40 (2011) 650663

the need for and implications of co-opetition for technological


innovation. While the role of strategic alliances on innovation has
been extensively studied (Ahuja, 2000; Powell et al., 1996), little is known about how co-opetition might impact innovation.
We showed that co-opetition is extremely challenging yet necessary in addressing major technological changes. The win-win
outcomes from the exemplar case demonstrated how co-opetition
between giants could be instrumental for technological innovation. Such positive outcomes are motivating factors for rms to
actively consider co-opetition as a viable strategy for technological advancements. Second, our study explains why and how the
most intense and challenging form of co-opetition could occur,
evolve, and impact the participating rms and the entire industry. We have offered an integrative framework of drivers, process,
and outcomes of co-opetition (Fig. 6), which is expected to provide
a strong foundation for further research on this topic. Third, as a
part of development of the conceptual framework, we developed
the concept of co-opetition capability and demonstrated its critical
role in the formation and evolution of co-opetition, and, in turn,
value creation and value appropriation. This co-opetition capability is very important in understanding how rms could anticipate
and manage the benets and risks in co-opetition and, therefore,
create higher value and appropriate a greater share from the value.
Executives with a co-opetition mindset are more likely to pursue
the opportunities and could manage the complicated relationship
in positive ways and create greater value. Firms with co-opetition
capability could also manage the relationship with partners in
a more balanced way, which is critical for interdependence and
continued partnership. Fourth, we showed that co-opetition does
have positive impact on the entire industry. The leading rms
engagement in co-opetition by cooperating in the up-stream (LCD
panel development and production) while ercely competing in
the downstream TV market led to the advancement of the technology, creation of greater demand for large at screen TVs, and
increase of customers welfare through better quality products
with reasonable prices. Moreover, we showed that co-opetition
between leading rms led to subsequent co-opetition among other
rms, which might result in group-to-group competition. Such
dynamic changes of industry landscapes in high-tech industries
may cause inter-rm relationships complex and unstable, which
can be a signicant barrier to collusion. That is, collaboration in
upstream, including R&D, technological innovation, and development of key devices, and competition in the downstream aspect
of the value chain could be benecial to consumers by improving
the value of market offerings and by lowering prices. Finally, and
as a result of the above, our research suggests that public policy
makers and anti-trust regulators would need to develop a more
nuanced understanding of co-opetition and its implications before
dismissing it as simple end-market collusion that undeniably hurts
consumers.
5.2. Limitations and directions for future research
This study has some limitations that also offer opportunities
for future research. First, our case study focused on only one case
within an industry and therefore the ndings should be interpreted
with caution and need to be tested through large scale empirical
studies. Second, while we focused on the positive effects of coopetition, co-opetition could have downsides as well which need
to be investigated in future research. Co-opetition between leading
rms has the potential to push an inferior technology to the market
and set that as the standard, especially when the degree of competition between partners is weak. These downsides are even more
likely in a concentrated industry, i.e., an industry dominated by only
a few large players. Third, at this stage of our study, we were unable
to disentangle competition and collaboration at domestic versus

659

global markets. While cross-national co-opetition is more complex than domestic one, cross-national co-opetition with global
scope may offer more opportunities than domestic ones do. Future
researchers could compare two different cases, one global and one
domestic, to draw similarities and differences. Fourth, our case
study depended mainly on secondary data. Although we could
obtain ample data of the exemplar case and generated insights from
the secondary data, future research could conduct interviews and
collect rst-hand data to generate insights on the management of
co-opetition and the role of rm capability. Finally, future research
could examine our arguments and the model through large scale
empirical studies. Building on the conceptual arguments and ndings in this study, future research could develop and conduct
empirical studies related to the drivers, dynamics, and outcomes of
co-opetition.

5.3. Managerial implications


Our study helps managers to better understand how companies use co-opetition strategy to deal with rapidly changing
technological environment. Leading rms need to consider coopetition to pursue opportunities (e.g. technological standards) and
deal with threats stemming from environmental changes. When
leading rms engage in co-opetition, other rms also need to
consider co-opetition with other competitors. Our research also
underscores the need for rms to develop co-opetition capabilities in order to create value and capture a greater share from
the created value. Based on the ndings of this paper, we suggest that rms in high-tech industries need to explicitly consider
co-opetition as part of their strategy tool set. Just as strategists think about how to outcompete a rival in their industry
(competitive strategy) and about how to pursue and manage
collaborations (cooperative strategy), they need to pursue ways
in which they can simultaneously engage in collaboration and
competition with other rms in the industry. Overall, this paper
provides a framework for researchers to more systematically
examine co-opetition and its implications and equips managers
with a set of important concepts and approaches they could use
in their attempt to create competitive advantages through coopetition.
In conclusion, while prior research has recognized the
importance of co-opetition for technological innovation (e.g.
Quintana-Garca and Benavides-Velasco, 2004; Teece, 1992; Von
Hippel, 1987), we know little about what induces co-opetition,
how it evolves, and how it might generate positive innovation
effects. Further, co-opetition research has not examined how
rms manage the paradoxical relationship and how rm capability inuences the dynamics and outcomes of co-opetition.
We hope that our examination of both ex ante drivers and ex
post evolution and outcomes of co-opetition between leading
rms has provided an important foundation for future conceptual and empirical research on this very important and evolving
topic.

Acknowledgements
We thank the anonymous reviewers and the editor for their
helpful comments and suggestions. An earlier version of this
research was presented at the 2008 EIASM Workshop on Coopetition Strategy: Stretching the Boundaries of Co-opetition held
in Madrid, Spain, and received the Best Paper Award. This paper
also beneted from the feedback received from the panel at the 5th
Annual Mid-Atlantic Strategy Colloquium held at the University of
Maryland, USA, in November 2010.

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D.R. Gnyawali, B.-J. Park / Research Policy 40 (2011) 650663

Appendix A. Summary quotes from Factiva news reports on key drivers of S-LCD formation
Date

Source

Quotes

Drivers

October 17 03

Nikkei

Shorten development
time

June 1 07

Nikkei Weekly

September 23 03

Wall Street Journal

July 15 04

Yonhap English News

October 17 03

Reuters

March 8 04

Dow Jones

September 3 04

Nikkei Report

October 23 06

Dow Jones Newswires

July 14 04

AFX UK Focus

July 16 04

Nikkei Report

August 28 07

Business Wire

November 22 05

AP Newswires

December 2 05

AP Newswires

January 3 06

The Wall Street Journal

February 9 07

Nikkei Report

April 24 03

Joins.com

October 17 03

Reuters

October 17 03

Asahi Shimbun News

July 16 04

Nikkei Report

The agreement with Samsung will enable Sony to


comprehensively address at-panel and picture-quality
technologies, fostering speedier improvement in its
product line.
The ability to expand production capacity quickly when a
business opportunity presents itself is essential in the LCD
business.
. . .Sony said it wanted its own line of large LCD panels, but
. . . seek an alliance rather than come up with the
estimated $2 billion an LCD plant would cost.
It is hard to invest in large-scale LCD facilities alone,
and it holds a lot of attraction to make investment in a
place of strong infrastructure like this, said Idei. As
Toyota gets steel from outside, Sony will secure LCD
supplies. . .
It costs $3 billion to make a new LCD line and the
cooperation is to share benets and risks and to
maximize synergies, Samsungs Chu told reporters
For Samsung, which is already one of the worlds biggest
manufacturers of liquid-crystal displays, the deal secures
extra investment money as well as a big customer in a
at-panel TV market . . .
. . .more electronics manufacturers are allying with each
other to share the cost of building new plants making
LCD panels . . . and semiconductors.
Panel makers are spending a lot of money on big
factories. Its very important for them to maximize
utilization so if they can align with a TV brand to
guarantee some percentage of their supply, they are
much better off, said Ross Young, president and founder
of DisplaySearch.
The cooperation . . . offers an opportunity to lead the
rapidly growing LCD TV market and standardization of
glass substrate and LCD TV sizes, president and CEO of
Samsung Electronics LCD business SW Lee said.
Industry standard: S-LCD aims to use this position to take
the initiative in devising industry standards for image
resolutions and sizes, Yun Jong-yong, deputy chairman
and chief executive ofcer of Samsung Electronics.
We have remained a step ahead of the competition in
terms of production scale and timing, said Won-Kie
Chang, CEO of S-LCD. Our sights are now on LCD TVs in
the 50-inch class and we aim to lead that segment.
Sony fell behind rivals in liquid crystal displays, and the
JV with Samsung was a way for it to ensure a stable panel
supply for its newer TV models.
Sonys reliance on Samsung to produce the display panels
shows how far behind the Japanese company, once the
industrys king, has fallen. . .
When Sony considered a joint venture with Samsung
around 2003, its TV business was in serious trouble. . .
Samsung had developed a huge lead in the LCD technology
while Sony lagged behind
In the past, Sony was proud of standing alone in product
development. . . But to catch up with its rivals in the digital
age, the company nally changed course, joining hands
with Samsung Electronics Co. in LCD production.Faced
with the need to introduce a never-ending supply of
advanced products, Sonys collaboration with other
companies will likely continue to expand in the future.
Samsung executives reportedly found they had much to
learn from Sonys technical know-how and global
marketing skills.
Samsung would be the best choice, given its ability to
supply a large amount of high-quality panels in a stable
manner
With the new partnership, Sony expects to capitalize on
the technological prowess of Samsung, the worlds
leading LCD manufacturer.
The alliance . . . is ideal because it combines our abilities
to develop large LCD panels into at-panel TVs and
market them.

Massive R&D and


Capital Expenditure

Cost sharing and risk


reduction

Pursue industry leading


position/Industry
standard

Vulnerability

Partners technological
capability

D.R. Gnyawali, B.-J. Park / Research Policy 40 (2011) 650663

661

Appendix B. Summary quotes from Factiva news reports on the dynamics of co-opetition
Date

Source

Quotes

Process

January 3 06

The Wall Street Journal

Internal conicts

July 11 08

The Japan Times

July 16 08

The Korea Herald

September 24 09

The Nikkei Weekly

January 8 10

Korea Times

February 27 08

Korea Times

January 3 06

The Wall Street Journal

November 29 06

Business Week Online

January 18 07

Business Week Online

The new alliances dont come without conict. Inside Sony, some engineers
worried that Samsung will eventually use Sonys TV expertise to beat the
Japanese company. At Samsung, some executives wondered whether its smart
to help such a big rival . . . Executives at both companies had concerns about
working so closely with a direct rival. Would this joint venture help us, as a
company that is competing in the TV sector? Mr. Chang recalls wondering.
Sony, other rms team up to develop organic displays: Sony Corp. and nine
other domestic companies have decided to jointly develop with government
support technology by 2013 to mass produce large energy-efcient organic
at-panel screens.
Samsung companies join for OLED venture: Samsung Electronics Co. and its
display afliate Samsung SDI Co. are moving to set up a joint venture for
organic displays. . .
Samsung rides LED-backlit TVs to the bank: . . . referring to LED TVs, the
name Samsung has coined for its LCD TVs that use white light-emitting diodes
instead of uorescent tubes for the backlight . . . Samsung succeeded in
building an image of itself as a company with strong environmental
technologies. . .
Korean, Japanese TV Giants Renew Rivalry in 3D: Major manufacturers such
as Samsung Electronics, LG Electronics, and Sony have announced plans to sell
3D televisions to consumers in 2010. . .
Challenge or Opportunity? Samsung Electronics . . . is concerned over a
partnership between Sony and Sharp. The two Japanese rms announced a
plan to team up to make at panels for LCD television. . . . It can be interpreted
that efforts by Japanese companies to check the rise of their Korean rivals have
allegedly forced Sony to join hands with Sharp.
. . .Mr. Murayama . . . concedes that Samsung could eventually use Sonys
technology to compete against him. But he adds that in consumer electronics,
its hard to keep secrets long anyway, and being open with Samsung is key to
making the joint venture work. If we put up barriers, theyll close up too,
he says.
Our alliance with Sony allowed us to benet from a virtuous circle: Bravias
success boosted sales of LCD panels, and volume meant lower costs which fed
greater sales of LCD TVs, says Cho Yeong Duk, vice-president at Samsung.
At least Sonys success isnt necessarily bad news for Samsung. The two have
a joint venture in LCD panels, which means Sonys gains also benet its Korean
partner.

Competition for new


technology and
products

Cooperation with another rival

Open-minded/win-win approach

Appendix C. Summary quotes from Factiva news reports on the outcomes of co-opetition
Date

Source

Quotes

Outcomes

October 29 03

New York Times

July 15 04

Dow Jones Intl News

Industry:
Standardization battle
between LCD and PDP
TVs

November 29 06

Business Week Online

August 21 07

Dow Jones Newswires

September 22 03

Joins.com

October 20 03

Nikkei Weekly

June 30 04

Asia Pulse

July 15 04

AFX Asia

July 15 04

AFX Asia

August 29 07

The Electronic Times

September 20 07

The Korea Herald

The alliance.. should lead the way toward standardizing the global TV
monitor format, the companies said
The cooperation offers an opportunity to lead the rapidly growing LCD TV
market and standardization of glass substrate and LCD TV sizes, S.W. Lee,
president and chief executive of Samsungs LCD business said. . .
The alliance has also had an industry-wide impact, especially in the TV
market for sets in the 40-inch screen class. The large screen segment had
been dominated by plasma TVs until S-LCD started providing LCD screens . . .
In the third quarter of 2006, . . . for the rst time overtook plasma TV sets. . .
Currently, PDP technology is well suited for big at TV panel of over 40 inches,
but its competitive edge in that segment has been slipping as large LCD
screens become cheaper to produce.
A sense of alarm that they cannot survive without cooperation seems to have
encouraged Samsung and Sony to come together, the industry ofcial said.
There will be more alliances among rivals to ensure mutual survival.
Sonys move from being a corporate customer to a producer will likely force
smaller LCD makers into alliances.
As competition increases in the market, the companies will try to increase
their shares by cooperating with each other. Its a trend that can be seen in
other countries as well, an industry ofcial said.
He said that increased production of LCD panels will result in lower prices
and in turn boost demand for LCD TVs . . .
We are highly positive about our businesses outlook. If LCD TV prices fall to
levels, the LCD TV market will grow and the oversupply will change to a
supply shortage, Chang said.
In response, Samsung SDI announced that it developed the worlds rst
50-inch Full HD PDP using single scan technology . . . This technology enables
to reduce the manufacturing cost as much as 30 percent. . .
To win over LCD TVs, PDP TVs have evolved in technology, as well.

June 25 07

The Korea Herald

Samsung Electronics will create various applications to meet the demand and
become a market creator rather than a market leader,

Common: Market
creation

Industry: More
alliances among other
competitors

Industry: Price decline

Industry:
Technological
development

662

D.R. Gnyawali, B.-J. Park / Research Policy 40 (2011) 650663

Appendix C (Continued )
Date

Source

Quotes

Outcomes

June 13 05

Nikkei Weekly

November 5 06

AP Newswires

September 3 07

Korea Times

July 16 04

Korea

Common: Win-win
outcome

November 29 06

Herald Business Week Online

January 3 06

The Wall Street Journal

November 28 06

Business week

. . .the steep drop in LCD panel prices has made the retail cost of computer LCD
monitors and LCD TVs seem more reasonable to consumers, and this has
begun to stimulate demand.
We created the 40-inch LCD TV market with Sony . . . Sonys role in opening
that market and realizing growth in the market . . . is important.
According to DisplaySearch, the competition between LCD and PDP makers
would boost the demand for 50-inch LCDs. . .
The cooperation between Samsung and Sony is a win-win situation for both
companies, said Chang Won-kie, President and CEO of S-LCD Corp.
The Sony-Samsung alliance is certainly a win-win, declares Sang Wan Lee,
president of Samsungs LCD unit.
Mr. Chang (Samsung executive) says . . . competition with Sony is helping
Samsung hone its own TV designs.
. . .says Cho Yeong Duk, vice-president at Samsung in charge of the companys
LCD business strategy. The rivalry with Sony also helped Samsung to bring
out better LCD products to the market, he said.

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