Competitive Embeddedness and the Emergence of Interfirm Cooperation

Abstract

How does a history of competition between two economic actors affect their willingness and ability to work together for mutual benefi t? Existing theory and research offer mixed predictions and answers. The competitive embeddedness hypothesis suggested here postulates that the likelihood of cooperation between two fi rms is positively related to the intensity of competition between these fi rms in the preceding period. The likely mechanisms leading to this are familiarity and knowledge-based trust, both of which are greater between competitors than between noncompetitors or two randomly selected actors. Analysis of investment syndicates in venture capital industry supports the competitive embeddedness hypothesis. The hypothesis holds independently of business culture and of the industry's development stage.

The Two Facets of Collaboration: Cooperation and Coordination in Strategic Alliances

“…Organizations have also demonstrated preferences for proximate partners-those that share common ties with the focal organization (Chung, Singh, & Lee, 2000;Gulati & Gargiulo, 1999;Walker, Kogut, & Shan, 1997) or are situated in the same industry or region (Sorenson & Stuart, 2008;Trapido, 2007) 14 -and for high-status partners (Ahuja, 2000;Guler & Guillen, 2010). Both proximity and status offer informational advantages-it may be easier to assess proximate or high-status partners' reputations-and deter opportunism by threatening damage to uncooperative partners' reputations.…”

Don’t stand so close to me: competitive pressures, proximity and inter-organizational collaboration

“…Organizations whose access to material and symbolic resources depends on evaluations by the same audience will adjust their structures and behavioural orientations to conform to the audience's expectations (ZUCKERMAN, 1999(ZUCKERMAN, , 2000. However,6 organizations that are more similar along relevant structural and behavioural dimensions might find it easier, rather than more difficult, to exchange resources and information (INGRAM and RAO, 2004;TRAPIDO, 2007). This principle of interorganizational attachment based on homophily has received considerable support from empirical studies of interorganizational relations (BAKER and FAULKNER, 1993;PODOLNY, 1994;POWELL et al, 2005;STUART, 1998).…”

“…However, rivalry also increases with niche overlap, 3 because similarities in patterns of resource dependence will elicit and intensify competitive interdependencies between organizations (BAUM and HAVEMAN, 1997;FREEMAN and HANNAN, 1983). As a result, the effect of niche overlap on the propensity of organizations to collaborate is not linear (ALTER and HAGE, 1993;TRAPIDO, 2007).…”

After the Break-Up: The Relational and Reputational Consequences of Withdrawals from Venture Capital Syndicates

“…Organizational theorists have long been interested in the drivers of collaboration partner selection in various settings, such as strategic alliances (Ahuja, 2000;Gulati, 1995b), investment bank syndicates (Podolny, 1994;Shipilov & Li, 2012), and venture capital (VC) syndicates (Sorenson & Stuart, 2008;Trapido, 2007). Much of this research has been concerned with how the history of prior tie formation can facilitate the development of future collaborative ties.…”