Drivers, Boundaries and Performance Outcomes of Coopetition Capability: A Study of Small and Medium-sized Enterprises in a Developing Economy

With the growing globalisation and rapid technological change in today’s business world, an increasing number of firms in several industries are adopting coopetition - simultaneous pursuit of cooperation and competition, as a strategic tool to improve competitiveness and performance. The logic driving this phenomenon is that since competitors face similar challenges, they may possess diverse resources and capabilities that may benefit each other. Despite its strategic importance to firms, it has been argued that coopetition may undermine firms’ survival as it exhibits difficulties such as misunderstandings, opportunism and appropriation concerns. In recent years, coopetition scholars have suggested that for firms to benefit from coopetition as a core strategic tool, firms need to develop coopetition capability to manage the opportunities and challenges associated with cooperating with competitors. Notwithstanding its theoretical appeal to the academic community and interests from managers, current understanding of conceptual domain, development and outcomes of coopetition capability is lacking in the scholarly strategy literature, and small business research is particularly lacking on this topic. Accordingly, the aim of this study is to address this gap in the literature. The study draws insights from the dynamic capability perspective, institutional theory and resource based view of the firm to develop a model of the drivers, boundary conditions and performance outcomes of coopetition capability. The model is tested in an empirical study of small and medium-sized firms in Zambia, a sub-Saharan African economy. Findings from the study help advance the small business strategy literature in several ways. First, findings show that coopetition capability comprises five distinct but related dimensions that collectively have a positive effect on coopetition performance. Second, while institutional support is negatively associated with coopetition capability, managerial ties and coopetition learning process are positively related to coopetition capability. Third, coopetition capability has an indirect effect on financial performance through coopetition performance. Fourth, while coopetition capability is positively associated with coopetition performance, this relationship becomes stronger when institutional support and coopetition learning process are lower. The study discusses theoretical, managerial and policy implications of the findings whilst providing valuable avenues for future research