Abstract
Cooperation and competition have long been considered separate modes or “logics” of interaction between firms. In this study, we turn attention to entrepreneurial firms that operate under the disparate logics of competition and cooperation, and elaborate on the unproductive as well as productive tensions involved in coopetition, i.e., the simultaneous pursuit of cooperation and competition. We further disentangle the relevance of partners’ embeddedness in local clusters for startup innovation and ability to attract financial investments in emerging sustainability-oriented industries.
Drawing on a sample of 287 startups in the emerging US clean transportation industry (2008-2012), we quantitatively examine and compare the role of coopetitive and purely collaborative (i.e., non-coopetitive) relationships that entrepreneurial firms engage in and how these differential ties allow for innovation and attracting startup financing. Our findings show that coopetitive relationships, despite the involved complexity, are positively associated with innovation activity, whereas collaborative relationships with non-competitors have a negative effect. The positive innovation effect of coopetitive ties is stronger for relationships with rivals that enable access to novel knowledge from outside of local geographic clusters.
With regard to attracting startup financing, our results suggest that investors are reluctant to fund startups with coopetitive ties. However, investors seem to value the traditional logic of collaboration with non-rivals, especially if startups collaborate with non-rivals that are physically located within local clusters. Overall, these findings have important implications for the literature on coopetition and institutional complexity, and the development of new sustainability-oriented industries.