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20. October 2023

What you need to know when cooperating with your competitors

Original Study: Kraus, Sascha et al. (2019): Sleeping with competitors. Forms, antecedents and outcomes of coopetition of small and medium-sized craft beer breweries. In: International Journal of Entrepreneurial Behavior & Research, Vol. 25, no. 1, pp. 50-66.

The study in one sentence

This study uses the example of small craft beer breweries to show what makes coopetition a promising strategy for small firms.

Of interest for people who…

… want to know what are the most important antecedents and outcomes of coopetition among small and medium-sized enterprises.

What to remember

Coopetition is when two or more competitors work together to achieve mutual benefits. It's a familiar strategy, especially in industries with short product life cycles, such as the tech industry, where it helps to reduce costs by jointly developing basic technologies together. However, its application among small and medium-sized enterprises in traditional industries is less explored. This study highlights how coopetition can be a key strategy for smaller firms, particularly in competing with larger firms. It identifies two main advantages: 1) fostering innovation, creativity and learning, often leading to co-development of new products, e.g. a joint brew, and 2) expanding market reach by jointly targeting new markets, e.g. international customers. Alongside the well-known factors of mutual benefit, commitment and trust, 'sympathy' emerges as a critical success factor that is particularly important for small firms, defined here as sharing the same idea about the approach, purpose and future of their business, as well as enjoying fun when working together.

The most insightful sentence

«Cooperation between competing craft breweries can relate to, for instance, the assistance in equipment and materials, mutual marketing activities, exchange of know-how, experiences and information, or even joint development of new products through collaboration brews.»

The most provocative sentence

«It has been postulated that ‘the best partner for a firm in a strategic alliance is sometimes one of its strong competitors’ since a competitor generally shares the same contexts, threats and opportunities and possesses complementary resources that are relevant to the other party.»

Consequences for managerial practice

If you are a small business like a startup and solopreneur, you might greatly benefit from thinking around coopetition as a strategy to grow in your ecosystem landscape. Ask yourself the following questions: With whom could I partner for a joint marketing strategy to reach more people? Or maybe it is worth engaging for a joint quality label (like the wineries in Chianti)? What about collaborative product development, e.g. delivering your services together? Or else, sharing a show- or pop-up room to showcase your products? Are there competitors in other (national or international regions) that you could extend into mutually together? This study suggests that for successful small business coopetition (whether at an individual, organizational or network level) allow yourself to follow your heart. Look for other entrepreneurs who share your vision and approach, and among whom you like to be, rather than a perfect functional fit on paper.

Food for forward-thinking…

Is coopetition completely related to people or are there ways to scale it? What have been your observations? Consciously or not we've all encountered coopetition scenarios already, whether in large corporations merging e.g. IT units, co-sponsoring projects with varying interests, or collaborating with another teacher on stage. Share your stories with us or directly with me. Your insights are valuable for everyone!

Dr. Eva Bilhuber
Dr. Eva Bilhuber
Human Facts AG
Founder | Managing Partner
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