The effect of the influential power of partner on the failure of coopetitive joint ventures

Abstract

Purpose Why do collaborations between direct competitors fail and what are the risks? To enhance our understanding about the sources that generate diverse risks of failure of coopetition (cooperation between competitors), this study examined the effect of influential power each partner exercise in the industry on the unexpected dissolution of joint venture (JV) between direct competitors. Design/methodology/approach This study employed event history analysis to test the hypotheses using a sample of 188 coopetitive JVs between 2001 and 2010 and data on their survival for the following 5-year window. Findings The results show that as firms become more powerful within the industry, they have more incentives to cooperate with competitors to maintain their current JVs than to pursue their self-interest through opportunistically dissolving collaborations, which ultimately reduces the risk of failure of coopetition. Originality/value Scholars have often considered why firms cooperate with competitors and how coopetition creates value for firms but paid less attention regarding why coopetition unexpectedly dissolves. Based on transaction cost economics and the situational assumption of mixed-motive interaction, this study provides insight into how the different levels of influence each partner can exercise within the industry cause firms to have different incentives to cooperate with competitors.