The Consequences of a Third Party Decision on Coopetition Strategies: The Case of the International Accounting Standard-Setting Process

The Consequences of a Third Party Decision on Coopetition Strategies: The Case of the International Accounting Standard-Setting Process

Anne-Sophie Fernandez (University of Montpellier, Montpellier, France) and Francoise Pierrot (University of Montpellier, Montpellier, France)
Copyright: © 2016 |Pages: 19
DOI: 10.4018/IJSR.2016070101
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Abstract

Coopetition is a paradoxical strategy combining simultaneously cooperation and competition. Previous scholars investigated the role of the third-party in coopetition dynamics: it can initiate and drive the coopetition strategy or it can be involved in the management of the relationship. But the consequences of this involvement remain under-investigated. This research aims to fill this gap: what are the consequences of the involvement of a third-party in a coopetition strategy on the partners and their relationship? To answer this question, we conducted a longitudinal case study of coopetition strategies between two institutions the FASB and the IASB in the specific context of the global accounting standard-setting process and convergence process between the US GAAPs and the IFRSs.Our findings enable us to identify three different phases in the process. We provide evidence on the role of the third-party (the European Union in the case) in the evolution of the coopetition dynamic between the FASB and the IASB, and analyze the consequences on both partners and their relationship.
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Introduction

The past global economic crisis highlighted the impact of the accounting standards on the evaluation of firm performance. In such a context, the type of standards companies use became increasingly critical. Both the FASB1 and the IASB2 are two of the most important standard-setting bodies, responsible for accounting standardization in the world, each one developing its own set of standards: the US GAAPs3 (Bengtsson and Kock, 2000), the role of the third-party can be emergent and unintentionally o collaborate. The coopetition and the IFRSs4. The economic and financial globalization pointed out the need for global accounting standards. As an answer to this issue those institutions, previously acting as competitors, began to collaborate and worked on a convergence project in order to develop a single set of high quality global accounting standards. From a strategic point of view, this evolution is analysed as coopetition (Brandenburger & Nalebuff, 1996).

Globalisation and the technology race encourage firms to adopt coopetition strategies, i.e., simultaneous collaboration and competition (Brandenburger & Nalebuff, 1996; Bengtsson & Kock, 2000; Gnyawali & Park, 2011; Yami et al., 2010). Coopetition strategies may be a direct relationship between firms or may involve a third-party such as a client, an institution, a union, the government, etc. (Bengtsson & Kock, 2000; Freel, 2003; Rindfleisch & Moorman, 2003; Eriksson et al., 2008; Depeyre & Dumez, 2010; Castaldo et al., 2010). A common vision appeared in the literature about the roles played by the third party. First, the third party is considered as an initiator of a coopetition strategy (Depeyre & Dumez, 2010; Castaldo et al., 2010). Second, the third party is entrusted to manage collaboration to ensure the success of a coopetitive strategy (Bengtsson & Kock, 2000; Rindfleisch & Moorman, 2003).

However, the consequences of the involvement of a third-party in a coopetition strategy remain unexplored. Thus, our research aims to answer the following questions: what are the consequences of the involvement of a third-party in a coopetition strategy on the partners and their relationship?

In order to provide insights on this question, we conducted an exploratory longitudinal case study of coopetition dynamics between two main accounting standard-setters the FASB and the IASB. The longitudinal study allows us to highlight the macro drivers of coopetition strategies over time. Developing global accounting standards useful for worldwide companies is a challenging and competitive activity that led two important standard-setters to collaborate, whereas they remained competitors to some extent. While most of previous studies focused their attention on worldwide companies (Gnyawali & Park, 2011; Fernandez et al., 2014) or between SMEs5 (Gnyawali & Park, 2009), in this study we show that institutions represent relevant and appropriate empirical background to investigate coopetition strategies.

Our findings confirmed that coopetition strategies between institutions are driven by multiple macro drivers. In line with previous studies, we confirmed the important role of economic, structural and institutional drivers. We also evidenced the key role of the third-party in coopetition dynamics.

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