Managing Selling Coopetition: A Case Study of the ERP industry

Date01 March 2018
AuthorFrédéric Le Roy,Estelle Pellegrin‐Boucher,Călin Gurău'
Published date01 March 2018
DOIhttp://doi.org/10.1111/emre.12123
Managing Selling Coopetition: A Case Study
of the ERP industry
ESTELLE PELLEGRIN-BOUCHER,
1
FRÉDÉRIC LEROY
1,2
and CĂLIN GURĂU
2
1
Montpellier Management Institute, University of Montpellier, Montpellier, France
2
Montpellier Business School, Montpellier, France
Managing coopetition is important for the success of coopetition strategies. Past studies on the management of
coopetitionare largely dedicated to R&D coopetition. However, sellingcoopetition is an important phenomenonthat
is quite different from R&Dcoopetition. In this research, we therefore focus onthe management of selling coopetition
and build on past studies to formalize a framework that combines two complementary principles: separation and
integration. We then evaluate the relevance of this framework for managing selling coopetitive agreements by
studying how firms from the ERP industry manage their coopetitive selling. The results show that the principles of
separation and integration are present but not sufficient to manage selling coopetition. We underline that a third
principle, internal arbitration, is a key element in managing selling coopetition. To our knowledge, this is the first
study specifically dedicated to the management of selling coopetition.
Keywords: coopetition; selling; alliances; management; arbitration; ICT firms
Introduction
Coopetition strategies allow firms to achieve economies
of scale, access strategic resources, and create inter-
organizational synergies (Gnyawali and Park, 2009,
2011; Yami et al., 2010; Bouncken and Kraus, 2013).
However, coopetition strategies can also expose firms to
risks, such as loss of secrets and loss of control of their
capabilities (Bouncken and Fredrich, 2012; Dagnino
et al., 2012; Peng et al., 2012; Ritala, 2012). These risks
create tensions inside and between the firms involved in
coopetitive strategies. If these tensions are too high and
not well controlled, coopetition strategies can fail and
damage the participating firms. Therefore, the application
of effective management principles and procedures is
crucial for the success of coopetitive strategies (Tidström,
2013; Fernandez et al., 2014; Le Roy and Fernandez,
2015; Le Roy and Czakon, 2016).
Different schools of thought are based on relevant
principles regarding managing coopetition. The first
school of thought recommends organizational separation
between competition and cooperation (Dowling et al.,
1996; Bengtsson and Kock, 2000; Oliver, 2004; Herzog,
2010). Because people cannot internalize the duality of
coopetition, firms must create organizational separation
between activities dedicated to competition and activities
dedicated to collaboration. In contrast, the second school
of thought holds that organizational separation does not
address the complex and interdependent nature of
coopetition. Scholars thus recommend that employees
individually integrate the coopetition paradox (Clarke
Hill et al., 2003; Oshri and Weber, 2006; Chen, 2008;
Gnyawali and Park, 2011).
The third school of thought suggests that these two
principles of separation and integration have their own
interests as well as limitations. Therefore, they must be
combined to ensure efficient management of coopetition
(Fernandez et al., 2014; Fernandez and Chiambaretto,
2016; Seran et al.,2016). Another research streamregards
the combination of these two principles as necessary but
not sufficient. It is recommended that a third principle be
added: the co-management principle (Le Roy and
Fernandez, 2015).
This debate on the relevance of coopetition
management principles is mainly focused on how to
manage collaboration between competitors in R&D
projects. As a general rule, prior research on coopetition
has focused on collaboration for innovation (Quintana-
García and Benavides-Velasco, 2004;Gnyawali and Park,
2011; Ritala, 2012; Bouncken and Kraus, 2013; Ritala
and Sainio, 2014; Estrada et al., 2016). However,
Correspondence: Estelle Pellegrin-Boucher, Montpellier Management
Institute, 208 Rue Vendémiaire, 34000 Montpellier, France. E-mail
estelle.boucher@umontpellier.fr
European Management Review, Vol. 15, 3756, (2018)
DOI: 10.1111/emre.12123
©2017 European Academy of Management
collaboration with competitors can occur in areas other
than R&D.
Many cooperative agreements between competitors
are established in the marketing, distribution and sales
fields (Peng and Bourne, 2009; Kylänen and Mariani,
2012, 2014; PellegrinBoucher et al., 2013;
Chiambaretto and Dumez, 2016; Chiambaretto et al.,
2016; Mariani, 2016). Coopetition in selling fields
appears to be a particularly important strategy in many
industries, such as the airline (Chiambaretto and Dumez,
2016), TIC (PellegrinBoucher et al., 2013), and tourism
industries (Kylänen and Mariani, 2012, 2014; Czakon
and Czernek, 2016).
Despite the importance of coopetition in selling
activities, little research has been dedicated to this type
of coopetition. In particular, no studies have focused on
investigating the management of coopetition in selling
activities. To bridge this gap, the present research aims
to answer the following questions: What management
principles are relevant to managing selling coopetition?
Is the separation principle relevant to managing selling
coopetition? Is the integration principle relevant to
managing selling coopetition? If not, which additional
principles shouldfirms use to manage sellingcoopetition?
To address these questions, we apply a qualitative
approach. We investigate the main competitors involved
in developing and commercializing enterprise resource
planning (ERP) applications: SAP, Oracle and IBM. We
study how thesefirms manage selling coopetition between
them. Our resultsindicate that the firms use the separation
principle between sales people in charge of competition
and alliance managers in charge of cooperation. Such
separation is necessary to resolve coopetitive tensions,
but paradoxically, it createsnew internal tensions between
sales people and alliance managers.
To resolve conflicts due to these tensions, top
management helps sales people and alliance managers to
cognitively integrate the coopetitive paradox. However,
complete integration cannot be achieved, and coopetitive
tensions between those involved remain high. Therefore,
firms introduce another principle, internal arbitration,
enacted by top management. Such arbitration permits
temporary conflict resolution. We conclude that the three
principles of separation, integration and arbitration
together facilitate the management of coopetitive selling
agreements.
This research contributes to existing knowledge in
several ways. First, this is the first study specifically
dedicated to the management of selling coopetition. We
formalize a theoretical framework of selling coopetition
management and highlight managerial procedures and
processes used by firms to manage this type of
coopetition. Second, this research contributes to theory
on coopetition management. We complementpast studies
dedicated primarily to R&D coopetition and identify both
common and different principles used for different types
of coopetition. Finally, we contribute to coopetition
knowledge by showing in detail how coopetition pertains
to not only activities far from the market, such as R&D,
but also activities directly linked to the market, such as
selling activities.
Theoretical background
Selling coopetition
For Brandenburger and Nalebuff (1996), coopetition is a
value net involving the focal firmsinterplay with
customers, suppliers, complementors, and competitors.
Bengtsson and Kock (2000) and Gnyawali and Park
(2011) adopt a narrow definition in which coopetition is
viewed as dyadic interplay between two firms that
compete and cooperate with one another simultaneously.
For a better understanding of the concept and its
implications (Bengtsson and Kock, 1999), we adopt the
narrow definition of Gnyawali and Park (2011: 51): co-
opetition is a simultaneous pursuit of collaboration and
competition between a pair of firms. Therefore,
coopetition is a counter-intuitive, paradoxical relationship
that simultaneously includes competition and cooperation,
which are aprioriopposite forces (Padula and Dagnino,
2007; Gnyawali and Park, 2011; Bengtsson and Kock,
2000, 2014; Czakon et al., 2014).
Past studies dedicated to coopetition have largely
focused on R&D coopetition for new product innovation
(Quintana-García and Benavides-Velasco, 2004;
Gnyawali and Park, 2011; Ritala, 2012; Bouncken and
Kraus, 2013; Ritala and Sainio, 2014; Estrada et al.,
2016; Ritala et al., 2016). Coopetition is viewed as a
strategy in whichcompetitors collaborate duringupstream
stages of the value chain that are far from the client, and
compete during downstream stages of the valuechain that
are close to the client (Bengtsson and Kock, 1999, 2000).
The market is the field of competition, and market
cooperation should generate suspicion of collusion.
However, competitors do not limit their cooperation to
stages far from the market. Many cooperative agreements
are established between competitors in activities close to
the market, such as marketing, distribution and sales
(Peng and Bourne, 2009; PellegrinBoucher et al., 2013;
Kylänen and Mariani, 2014; Chiambaretto and Dumez,
2016; Chiambaretto et al., 2016; Mariani, 2016). Selling
coopetition, in particular, is a growing strategy in
industries suchas the airplane (Chiambaretto and Dumez,
2016), Information and Communication Technologies
(ICT) (PellegrinBoucher et al., 2013) and tourism
industries (Kylänen and Mariani, 2012, 2014; Czakon
and Czernek, 2016). However, this type of coopetition is
still under-investigated and needs more research.
38 E. Pellegrin-Boucher et al.
©2017 European Academy of Management

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