How Rival Partners Compete on International Market Based on Cooperation?

Abstract

Prior studies of coopetition have explained the what, how and why of firms cooperating with competitors. However, few of them studied what happens to competition on global market after the competitors cooperate. This study sheds light on the issue of cooperation-based competition by answering the question: while cooperating with competitors, how do rival partners internationalize based on cooperation? Using the theoretical lens of competitive dynamics, we conducted case studies to analyse the competition between two leading competitors in the Taiwanese bicycle industry. We used in-depth analysis of press coverage combined with informant interviews to examine their internationalization in two competitive settings (e-bike and European market). This led us to two propositions. First, despite cooperation inevitably facilitating higher resource similarity, rival partners are more likely to deploy their resources to develop situations where the companies do not overlap competitively in a given global market. Second, given high market commonality, rival partners are more likely to avoid head-on competition through product differentiation and dispersed geographical market segmentation. The way they compete is not based on “mutual forbearance in retaliation” but on “mutual trust in cooperation.” The findings also have implications for competing firms in emerging market who would like to internationalize by forming partnership.