Virtual Organizations That Cooperate and Compete: Managing the Risks of Knowledge Exchange

Abstract

‘Co-opetition’ describes the phenomenon that firms engage in a virtual form of interaction where they cooperate and compete with their counterparts. Such hybrid relationships challenge traditional notions of firm boundaries and strategic resource management. There seems a contradiction in the fact that partners are supposed to share knowledge which is at the same time a key determinant of their competitive advantage. This balancing act suggests the need for special competencies that enable companies to reap the benefits of temporary synergy, while avoiding risks associated with making knowledge available to external partners. This chapter explores the art of controlling knowledge flows in ‘coopetitive’ relationships. We conceptualize types of knowledge flows and dependencies, resulting in four configurations. For each of these, risks in terms of deviations from the original agreement are examined. We propose control strategies that allow companies engaged in co-opetition to anticipate deviant trajectories and define adequate responses. Directions for future research on this topic are indicated.