Coopetition in New Product Development Alliances: Advantages and Tensions for Incremental and Radical Innovation
| Date | 01 July 2018 |
| DOI | http://doi.org/10.1111/1467-8551.12213 |
| Author | Paavo Ritala,Sascha Kraus,Ricarda B. Bouncken,Viktor Fredrich |
| Published date | 01 July 2018 |
British Journal of Management, Vol. 29, 391–410 (2018)
DOI: 10.1111/1467-8551.12213
Coopetition in New Product Development
Alliances: Advantages and Tensions for
Incremental and Radical Innovation
Ricarda B. Bouncken, Viktor Fredrich, Paavo Ritala1and Sascha Kraus2
University of Bayreuth, Chair of Strategic Management and Organization, Prieserstr. 2, D-95440 Bayreuth,
Germany, 1Lappeenranta University of Technology, School of Business and Management, PO Box 20, FI-53851
Lappeenranta, Finland, and 2University of Liechtenstein, F¨
urst-Franz-Josef-Strasse, FL-9490 Vaduz,
Liechtenstein
Corresponding author email: ritala@lut.fi
Coopetition (collaboration between competitors) can facilitate product innovation, but
there is still debate about how it is suited to radical or incremental innovation.This paper
argues that the early and later phases of coopetitivenew product development (NPD) pose
dierent benefits and risks for the innovation types. Building on the tensions approachto
value creation and appropriation, we developa series of hypotheses on the role of coope-
tition in NPD alliances and focal firm’s innovation output. The hypotheses are tested on
a quantitative data set of 1049 NPD alliances in the German medical and machinery sec-
tors. The results show that, while coopetition is advantageous forincremental innovation
in both pre-launch and launch phases, radical innovation benefits fromcoopetition in the
launch phase only.
Introduction
Coopetition (collaboration between competitors)
is increasingly discussed as a strategyfor new prod-
uct development (NPD) (e.g. Fernandez, Le Roy
and Gnyawali, 2014; Gnyawali and Park, 2011;
Yami and Nemeh, 2014). Coopetition facilitates
the creation of more new products than collabo-
ration between non-competitors does (Quintana-
Garcia and Benavides-Velasco, 2004; Tether, 2002)
by enabling the use of joint market and tech-
nological knowledge, leading to more eective
innovation generation and diusion (Ritala and
Hurmelinna-Laukkanen, 2009; Yami and Nemeh,
2014). However, the literature lacks consensus on
the role of coopetition in incremental and radi-
cal innovation (Bouncken and Fredrich, 2012; Ri-
tala and Hurmelinna-Laukkanen, 2009). Several
studies find that coopetition is advantageous for
radical innovation (Bouncken and Kraus, 2013;
Dussauge, Garrette and Mitchell, 2000), and even
more beneficial than for incremental innovation
(Bouncken and Fredrich, 2012). Conversely, some
studies find lower benefits for radical innovation
than for incremental innovation (Nieto and San-
tamar´
ıa, 2007; Ritala and Sainio, 2014). The rea-
sons behind these mixed results are not fullyunder-
stood, and constitute a clear gap in the literature.
In this study, we argue that these mixed results
arise from the complex nature of coopetition, cre-
ating multiple types of tensions (e.g. Fernandez,
Le Roy and Gnyawali,2014). In innovation-related
coopetition, in particular, firms come together to
create value by developing new products, services
and processes, while also seeking individually to
appropriate a portion of the value (Gnyawali and
Park, 2011; Ritala and Hurmelinna-Laukkanen,
2009). Weclaim that an important and so far over-
looked aspect in coopetitive innovation, and NPD
studies is the phase of the NPD process on which
the particular collaborationfocuses. Innovationre-
searchers acknowledge that the front end of NPD
© 2017 British Academy of Management. Published by John Wiley & Sons Ltd, 9600 Garsington Road, Oxford OX4
2DQ, UK and 350 Main Street, Malden, MA, 02148, USA.
392 R. B. Bouncken et al.
diers significantly from the later launch phase,
since the early phases involve a lot of uncertainty
(Bartunek et al., 2007; Reid and De Brentani,
2004). Similarly,in collaborative innovation, it has
also been recognized that collaborative innovation
includes a lot of uncertainty, especially in phases
where eventual value appropriation is still not vis-
ible (Dhanaraj and Parkhe, 2006).
We combine the insights of earlier research in
that value creation and appropriation are con-
tradictory, persisting tensions of the coopeti-
tive relationship (e.g. Bengtsson, Raza-Ullah and
Vanyushyn, 2016; Brandenburger and Nalebu,
1996; Gnyawali et al., 2016; Raza-Ullah, Bengts-
son and Kock, 2014; Ritala and Tidstr¨
om, 2014),
with the evidence from innovation literature on
dierences in uncertainty and tensions in dier-
ent phases of the NPD process and relationships.
While the earlier research has discussed the mer-
its of coopetition at pre-commercial phases of in-
novation (e.g. Dussauge, Garrette and Mitchell,
2000; Gnyawali, He and Madhavan, 2006; Tidd
and Trewhella, 1997), the launch phase of prod-
uct innovation has received less attention. The
lack of studies in this regard may be related to
the fact that most coopetition relationships (and
literature) focus on pre-commercial stages that
are far away from the customer (for reviews, see
Bouncken et al., 2015; Walley, 2007), which is also
a broader tendency in the collaborative innovation
and NPD literature (Aarikka-Stenroos and Sand-
berg, 2012). Given thatthe dierent stages of NPD
processes are clearly dierent in terms of uncer-
tainty and tensions (Bartunek et al., 2007; Reid
and De Brentani, 2004), we expect that examina-
tion of coopetitive NPD relationships in dierent
stages provides important understanding of how
firms are able to achieve incremental and radical
innovation benefits fromcoopetition. Thus, in this
study we examine the eect of coopetition inten-
sity in dierent phases of NPD alliances on focal
firm’s innovation outcomes.
Following an introduction to the main concepts
and approaches, we develop hypotheses concern-
ing coopetition in dierent phases of NPD al-
liances and innovation outcomes. We test the hy-
potheses based on a survey of 1049 NPD alliances
in the medical and machinery sectors. Our main
finding is that coopetition is beneficial forearly and
later stages of incremental innovation but, in the
case of radical innovation, the benefits apply only
to the less uncertain later stages. We contribute
to the literature by providing better understand-
ing of the mixed findings in relation to incremental
and radical innovationbenefits in coopetition and,
more generally, to the literature focusing on collab-
orative innovation and NPD.
Theory and hypotheses
Coopetition and innovation types
Coopetition is defined as simultaneous competi-
tion and collaboration within the same relation-
ship (Bengtsson and Kock, 2000). In this study, we
focus on coopetition intensity within the NPD al-
liance and its implications forincremental and rad-
ical innovation of the focal firm. In conceptualiz-
ing and measuring coopetition intensity, we build
on earlier studies that have focused on the per-
ception of coopetition intensity within an alliance
relationship (Bouncken and Kraus, 2013). Thus,
when we formulatethe hypotheses, we examine the
level of competitive perceptionswithin a particular
collaborative relationship (here: NPD alliance).
Radical innovations entail a major departure
from existing technologies and products (Aber-
nathy and Clark, 1985; Utterback and Abernathy,
1975). In the coopetition context, collaboration
for radical innovation creates market uncertainties
and investment requirements that partners seek to
reduce with the help of their coopetition partners
(e.g. Ritala, 2012). These uncertainties also bring
ambiguity and ambivalence, generating high ten-
sions between coopetition partners (Raza-Ullah,
Bengtsson and Kock, 2014). Tensions are likely to
be most severe in the early phases of radical prod-
uct innovation, whenuncertainties add to the di-
culties of securing proprietary knowledge.At later
phases, functionalities become more visible, allow-
ing firms to divide tasks between them (Le Roy
and Fernandez, 2015; Raza-Ullah, Bengtsson and
Kock, 2014), to define safeguards and to reduce
partner opportunism.
Incremental innovations usually involve small
changes to an existing product concept or technol-
ogy (Abernathy and Clark,1985; Dewar and Dut-
ton, 1986; Utterback and Abernathy, 1975). The
process of incremental innovation in coopetition is
less ambiguous and uncertain, allowing partners
to understand more easily the underlying mecha-
nisms and enabling better separation of tasks, re-
ducing the risk of knowledge leakage and oppor-
tunistic behaviour. As a result of this, it has been
© 2017 British Academy of Management.
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