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Coopetition, a combination of cooperation and competition, is the idea that competing firms can benefit from sharing information and collaborating to increase competitiveness and improve products. It creates win-win scenarios that increase survival, profitability, and competitive advantage. Apple and Microsoft are an example of coopetition, where they both create software for each other. The goal is to create higher profits and lifetime competitors, sustaining each other’s existence. Coopetition is also used in school settings, where students work together to achieve individual grades.
The term “coopetition” (coopetizione) is a combination of the words cooperation and competition. It is the concept that competing firms sometimes benefit from cooperation, so that each acquires a greater ability to compete in the market. Often this idea is used in technological fields, where shared information can improve products and offer some economic and competitive advantages to all stakeholders. This is in opposition to business practices where all information and technology is tightly guarded and exclusive and where competition in the marketplace becomes a zero-sum game. Instead, co-option, which could also be referred to as a strategic partnership, provides an opportunity for competing firms to create win-win scenarios that increase survival, profitability, and competitive advantage.
Cooptition has been used as a commercial and economic term since the early 20th century, but the name gained more popular use with the 1990s book Coopetition, written by Harvard Business School’s Adam Brandenburger and Yale’s Barry Nalebuff School of management. The book draws on game theory and a number of examples to argue that directly competing firms can benefit from sharing information or collaborating on some issue. This doesn’t mean that companies give up competing with each other, but they help each other to get stronger so that each acquires equal competitiveness and produces better products or services.
An example of this has been the ongoing engagements between Apple and Microsoft. While these companies have a legendary rivalry with each other, they both create software for each other. An Apple user can choose to use Microsoft Word on his computer. A Microsoft operating system has access to iTunes. Similarly, Apple now uses Intel microprocessors in many of its computers, making it a faster computer that competes better with numerous PCs.
The goal of cooperation is never to diminish competition. Rather, it magnifies it because companies use shared information or access to make their products and services more attractive. When companies choose these opportunities to help each other, they sustain each other’s existence. Instead of creating winners and losers, the goal is to create higher profits and lifetime competitors. Cooperation and competition combined are seen as much more positive for all involved.
On a micro scale, this concept is sometimes used in school settings. Students may be asked to work together, but each student gets an individual grade, which is essentially a competition. To derive maximum benefit, two students would like to work closely together, each contributing their best work to a project. If successful, both students can leave with a good grade. If there is only competition, both students can end up in the loser. In co-option, the desire to compete fuels the spirit of cooperation.
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