Collaboration between competing organizations:
A case study in the truck- and bus segment of the automotive industry
Public version
June 2016
MSc Technology and Operations Management
University of Groningen, Faculty of Economics and Business
Author B. Nigten
Student number 2813645
Address Hoendiepskade 10B
9718BD Groningen
E-Mail B.Nigten.1@student.rug.nl
Supervisor prof. dr. ir. G. J. C. Gaalman dr. J. Veldman Institution University of Groningen
Faculty of Economics and Business
University of Groningen
Faculty of Economics and Business
Address Nettelbosje 2
9747 AE Groningen
Nettelbosje 2 9747 AE Groningen
E-mail G.J.C.Gaalman@rug.nl J.Veldman@rug.nl
Word count: 9194
Abstract
This study examines coopetition, which is an inter-organizational partnership between two or more organizations that combines cooperative and competitive activities. Encouraging collaboration in these partnerships is often challenging due to difficulties in integration, knowledge sharing, information leakages and investment contracts. In this research different theories concerning coopetition are tested, by use of a case study, in order to explore how coopetition strategies are pursued within the truck- and bus segment of the automotive industry.
This research considers the incentives, hindrances, advantages, disadvantages and difficulties of organizations collaborating with a competitor. The results showed that collaboration strategies between competing organizations in the truck- and bus segment of the automotive industry are pursued to create industry wide standards due to the complexity of the business environment.
These competing organizations are restrained to collaborate in research and development (R&D) activities due to anti-trust regulations, unintended information leakages and the potential loss of competitive advantages. Innovations are achieved through internal R&D or collaboration with institutions, universities and suppliers.
Keywords: “Coopetition”, “truck industry”, “bus industry”, “R&D collaboration” and “Case study”.
Table of contents
1. Introduction ... 4
2. Theoretical background ... 5
2.1 Traditional inter-organizational relationships ... 6
2.2 Coopetition: collaboration between competitors ... 6
Incentives for coopetition ... 7
Advantages and disadvantages of coopetition ... 8
2.3 Organizational aspects of coopetitive partnerships ... 10
Multiple stakeholders ... 11
Political, cultural and demographical issues in coopetition ... 11
3. Research method ... 12
3.1 Conceptual framework ... 13
3.2 Methodology ... 13
3.3 Method ... 14
3.4 Sample ... 16
4. Results ... 17
4.1 Incentives for coopetition in the automotive industry ... 17
4.2 Barriers for pursuing coopetition strategies in the automotive industry ... 19
Competitive advantages ... 19
Conspiracy between organizations ... 20
4.3 External partners: research institutions, universities or suppliers ... 20
5. Comparing the results with literature ... 22
5.1 Incentives for coopetition in the automotive industry ... 22
5.2 Barriers for pursuing coopetition strategies in the automotive industry ... 23
Conspiracy ... 23
5.3 External partners: research institutions, universities or suppliers ... 25
5.4 Generalizing the results to the entire automotive industry and other industry sectors ... 25
6. Conclusion and discussion ... 27
6.1 Conclusion ... 27
6.2 Research contributions ... 28
6.3 Limitations ... 29
6.4 Suggestions for further research ... 29
References ... 31
1. Introduction
Nowadays, the increased amount of manufacturers in undeveloped countries has given manufacturers in developed countries difficulties to compete solely on the basis of costs (Wu et al. 2006). Manufacturers in developed countries face difficulties in getting access to new technologies, realizing economies of scale in research and development (R&D) activities and shortening development times (Sampson 2004). These manufacturers are seeking for new ways to innovate and create more sophisticated products and processes to achieve and retain a competitive advantage (Porter & Ketels 2003).
One approach of gaining a competitive advantage as a manufacturer is to collaborate with competitors (Bengsston et al. 2013). Collaboration between competitors in a business-to-business environment enhances innovation and organizations’ capabilities through co-creation, information sharing and access to external resources (Belderbos et al. 2015). Collaboration between competitors is needed in order to respond to the increasing global competition (Jorde &
Tence 1990) and enhances organizational performance and survival (Cristina et al. 2002; Park et al. 2014). Due to the dynamic environment and technological complexities, the ability of organizations to innovate on a sustainable basis is rather limited. Collaborating with competitors has benefits, among others, concerning the costs, efficiency improvements, risk sharing, product development and entering into new markets (Gnyawali & Park 2009; Zhang & Frazier 2011; Park et al. 2014; Bouncken et al. 2015b). According to Bengtsson and Kock (2000), cooperative partnerships among competitors are the most advantageous relationships. An example is de cooperation between Kodak and FujiFilm, who are two large photo paper manufacturers. In order to constantly innovate in response to customer needs Kodak and FujiFilm collaborate in R&D activities while simultaneously compete against each other in the photo paper market (Gnyawali 2006).
Collaboration between competitors is widely recognized, as many articles concerning this topic have been published (Bouncken et al. 2015b). Several different authors define this phenomenon as coopetition - i.e. simultaneously pursuing cooperation and competition activities (e.g.
Gnyawali & Park 2011; Bouncken et al. 2015b). Both the Industrial Marketing Management (vol.
43, issue 2, February 2014) and Strategic Management Journal (call for paper November 2015) highlight the importance of research concerning coopetition. Several researchers acknowledge research in coopetition is still fragmented and limited (e.g. Gnyawali 2006; Bouncken et al.
2015b; Gast et al. 2015). In current literature, research in coopetition has concentrated on several different industries - e.g. production, engineering, bio- technology, energy, information technology (Bouncken et al. 2015b). However, research in the automotive industry is limited, whereas manufacturers operating in the automotive sector frequently pursue coopetition strategies (Segrestin 2005; Gwynne 2009).
This research seeks to provide a more practical understanding of collaboration strategies used between competing organizations in the truck- and bus segment of the automotive industry. The research question of this paper is: How are cooperation and competition strategies simultaneously pursued in the truck- and bus segment of the automotive industry? First, an in- depth content analysis will be conducted by means of a literature review. Second, an explorative case study will be executed in the truck- and bus segment of the automotive industry, since empirical research in the passenger car segment is currently done (e.g. Ichijo & Kohlbacher 2008) and empirical research in the truck- and bus segment is lacking. Furthermore, it is expected that coopetition strategies are pursued in the truck- and bus segment due to the majority of the industry (Lado 1997). Due to the lack of empirical research of coopetition in the automotive industry, the aim of this explorative research is to come up with propositions for further research, based on the finding of the explorative case study.
The paper is structured as follows; first, the theoretical background (chapter two) concerning the emergence and the concept of coopetition is elaborated upon. In the methodology (chapter three) the conceptual framework, research methodology, research method and data collection is elaborated on. The most important results, based on the analysis, will be elaborated on in the results section (chapter four). The results obtained from the case study will be compared with literature (chapter five). The conclusion (chapter six) contains the conclusions, research contributions, limitations and recommendations for further research.
2. Theoretical background
In this chapter, the concept of coopetition is further elaborated on. The first section (2.1) explains the traditional inter-organizational relationships. The second section (2.2) elaborates on the concept of coopetition, including the incentives, advantages and disadvantages of pursuing
coopetitive strategies. The last section (2.3) elaborates on the organizational aspects of coopetitive partnerships.
2.1 Traditional inter-organizational relationships
Relationships were often described as completely cooperative or competitive streams (d’Aspremont & Jacquemin 1988; Cristina et al. 2002; Bouncken et al. 2015b). Mota and de Castro (2005) define cooperative relationships as mechanisms through which organizations combine resources of their own and of their partner during a period of time. During this relationship, both parties absorb knowledge and enhance their capabilities by pooling complementary resources, skills and capabilities leading to the exploration of new routes (Cristina et al. 2002; Furlan et al. 2007; Kazadi 2015; Bengsston et al. 2013). These cooperative relations between organizations are based on convergent interests - i.e. common goals.
Collaborative relationships are a consequence of the awareness that collaborating could lead to performance enhancements by exploiting mutual resources, knowledge, information and capabilities (Padula & Dagnino 2007). On the other hand, with competitive relationships, the interests among partners are divergent - i.e. they have conflicting goals. These organizations are self-interest-orientated, since both organizations benefit at the expense of the competing organization (Padula & Dagnino 2007). However, d’Aspremont and Jacquemin (1988) argue that relations between organizations are rarely completely cooperative or competitive. Organizations pursue both cooperative and competitive activities simultaneously during a partnership in different parts of the relationship.
2.2 Coopetition: collaboration between competitors
Pursuing cooperative and competitive activities simultaneously is the concept of coopetition.
Coopetition has been recognized as a new paradigm in research regarding inter-organizational relationships (Bouncken et al. 2015b), since previous research focuses on completely cooperative or competitive partnerships. Using competitive and cooperative strategies simultaneously result in both complementary and conflicting interests, resulting from the paradoxical nature of pursuing coopetition strategies (Bengtsson et al. 2010). This paradox distinguishes coopetition from other inter-organizational relationships. Coopetition is rather broadly defined and could comprise partnerships among the organizations’ suppliers, customers, complementors and competitors (Bouncken et al. 2015b). This research adopts the concept of coopetition where organizations collaborate with competitors while compete in the market simultaneously and is illustrated in Figure 1 (e.g. Gnyawali & Park 2011; Bengtsson et al. 2014; Ritala et al. 2014).
During these partnerships, organizations strategically collaborate and manage intra- and inter-organizational activities in order to maximize customer value through the enhancement of products/services, information, decisions and capital flows (Flynn et al. 2010).
These partnerships are often the combination of integrating corporate strategies and product- process technologies. With corporate strategy integration, partners’ business objectives, manufacturing objectives, strategic plans and knowledge are shared. Meaning that these organizations both share common strategic goals. This type of integration is often used to align business and plant level decisions e.g. resource allocation, performance objectives etc. (Swink et al. 2007). The authors define product-process technology integration as sharing information and knowledge for co-development purposes.
Product-process technology integration is often used to increase product and process understanding, quality and exploiting both organizations’ capabilities. With corporate strategy and product-process technology integration, both organizations share common goals on strategic, tactic and operational level. Organizations can be encouraged to cooperate with competitors for several different reasons. These incentives are discussed in the next sub-section.
Incentives for coopetition
Coopetition in high technology industries is often driven by shorter product life cycles, convergence of multiple technologies, increasing innovation, the establishment of industry wide standards, capital expenditures and complexity of the business environment (e.g. Rijamampianina
& Carmichael 2005; Gnyawali & Park 2011; Ritala 2012; Belderbos et al. 2015; Bouncken et al.
2015a; Bouncken et al. 2015b). For example, Gnyawali and Park (2011) investigated a case with two large competitors, being Sony and Samsung. Sony and Samsung formed a joint venture for the development and production of the 7th generation Liquid Crystal Displays (LCDs). The authors found that a driver for collaboration was the technological convergence, forcing both organizations to shift from analog to digital technology era. During the industry shift, the vulnerability and uncertainty persuade both organizations to collaborate, since the LCD technology could not be developed in isolation (Katsanakis et al. 2011). Coopeting strategies between market leaders within an industry encourages other organizations to coopete as well,
Figure 1: The 'value net' retrieved from Nalebuff and Brandenburger (1997)
resulting in a structurally change of the industry (Gnyawali & Park 2011). Another incentive to collaborate with a competitor is due to changing markets. For example Toyota, Peugeot and Citroën reacted to the changing European market by producing small compact vehicles (i.e.
Peugeot 107, Citroën C1 and Toyota Aygo). These three automotive manufacturers formed an international joint venture ‘Toyota, Peugeot and Citroën Automobile (TPCA)’ located in the Czech Republic owned by Toyota Motor Corporation (TMC) and Peugeot Société Anonyme (PSA). Both organizations have other incentives to collaborate; Toyota’s incentive to collaborate was to gather knowledge from PSA concerning the European market, whereas PSA’s incentive to collaborate was Toyota’s experience in the development and production of vehicles (Ichijo &
Kohlbacher 2008). There are many advantages of coopetition, as collaborating with strategic alliances could help both partners to specialize their core business and gain access to additional assets (Cristina et al. 2002). However, there are also disadvantages of coopetition. The advantages and disadvantages of coopetition will be discussed in the next sub-section.
Advantages and disadvantages of coopetition
Pooling and utilizing valuable resources from different inter-organizational partnerships could help both organizations to create more value (Ritala 2012). From a resource-based perspective, utilizing resources from different inter-organizational partnerships may create valuable knowledge for both organizations or significantly decrease development costs (Segrestin 2005, Waligo et al. 2014). A well-known example is the co-development of modular platforms for the production of different vehicles between organizations operating in the automotive industry (Segrestin 2005). Developing common platforms reduces the development, equipment and procurement costs (Gwynne 2009). Pursuing coopetition strategies often results in knowledge sharing and increased performance on team or group level (Enberg 2012). Bengsston et al. (2013) identified four different outcomes of coopetition, being; i) increased competitive advantages, ii) technological innovation, iii) exploration of new opportunities and iv) access to valuable resources. These outcomes can be identified by the TPCA joint venture as well, mentioned in the previous section. The outcomes are summarized in Table 1.
Table 1: Outcomes of pursuing coopetition strategies retrieved from Bensston et al. (2013) and Ichijo and Kohlbacher (2008).
Outcomes of pursuing
coopetition strategies according to Bengsston et al. (2013)
Toyota Motor Corporation (Ichijo & Kohlbacher 2008)
PSA Peugeot Citroën (Ichijo & Kohlbacher 2008)
i) Increased competitive advantages:
- Market share in European market - Knowledge of European market
- Market share in European market - Knowledge of development and production from Toyota
ii) Technological innovation: - New category of technologically advanced vehicles
- New category of technologically advanced vehicles
iii) Exploration of new opportunities:
- Entering new market in Europe - Create new customers in existing market
iv) Access to valuable resources: - Experience in European customer demands from PSA Peugeot Citroën - Expertise in purchasing activities
- Experience in development and production processes from Toyota - Toyota’s management style
Although the structure is complex, coopetition is the most advantageous relationship among competitors (Bengtsson & Kock 2000). This complexity is caused by the two paradoxical elements within these coopetitive partnerships. Despite the paradoxical nature, these elements are equally important to gain benefits (Bengtsson & Kock 2014). Cristina et al. (2002) argue that a balance between both collaboration and competition enhances the organizational performance and survival. Balancing competition and cooperation helps in managing tensions, conflicts and contradictory interests (Park et al. 2014). Despite the advantages, there are some inconsistent opinions as well. For example towards innovation, Ritala and Sainio (2014) argued that coopetition is more applicable for incremental rather than radical technological innovations, whereas Bouncken and Kraus (2013) found a positive relation between coopetition and radical innovations. Innovation is especially important in the automotive industry, which is constantly subjected to pressure (Zapata & Nieuwenhuis 2010). Ili et al. (2010) showed that using external sources for innovation within the automotive industry results in more productive R&D activities compared to the traditional ‘In-house’ innovation.
Despite the advantages of coopetition, collaboration between competitors is risky and fraught with difficulties (Gwynne 2009). Coopetition could lead to unintended knowledge or information transfers and access to strategic competitors’ information, especially when these organizations have diversity in knowledge and technologies (Sampson 2004). The question is whether the
invested capacity (e.g. resources, knowledge, capabilities, information, capital etc.) will benefit the competing organization (or other organizations not involved in the partnership) more than initially intended. For example, coopeting organizations gain access to competitors’ information concerning strategies, motives, capabilities and actions. This will increase the organizations’
knowledge and the awareness of opportunities (Gynawali et al. 2006). Especially in the automotive industry, competitors’ information is very important in order to stay ahead from competitors (Ichijo & Kohlbacher 2008). Gynawali et al. (2006) argue that an organization within a partnership positioned at a superior location in terms of centrality and structural autonomy gives the organization the ability to learn about competitive opportunities more quickly compared to their partners. These unintended ‘spillovers’ could inhibit organizations to invest. Coopeting organizations often use contractual agreements dictating how the invested capacity should be used. Other organizations form a joint venture, where alliances pool their capabilities and create a new jointly owned entity (Sampson 2004). Joint ventures facilitate knowledge transfers while simultaneously restrict the risk of leakages to external organizations (Sampson 2004).
Irrespectively of the advantages and disadvantages of coopetition, the organizational aspects of the partnership are important as well.
2.3 Organizational aspects of coopetitive partnerships
Due to the characteristics of coopetitive partnerships, selecting the right partner to collaborate with is important. Sampson (2004) demonstrate when partners have equal or slightly different knowledge bases, the risks of important information leakages are reduced and partners are more likely to use an equity joint venture rather than a contractual form. However, if the knowledge bases are very different, organization are more likely to use a contractual agreement. In both situations, communication and knowledge sharing mechanisms are important. Communication and knowledge sharing mechanisms enhance integration while simultaneously restraining specific knowledge transfers, shrinking the risk of unintended spillovers (Devaraj et al. 2007;
Füller et al. 2010; Enberg 2012). Tsai (2002) studied the impact of hierarchical structures within organizations and found that informal structures positively affect knowledge sharing among partners, whereas the key to relationship success is the adaption or relationship specific investments and uncertainty reduction to overcome opportunistic behavior (Williamson 1985 in Ambrose et al. 2010). Partners should employ active management and use information sharing systems concerning when and which resources to share under which conditions (Levy et al.
2003). Both partners should be aware of the value gained in order to consider the relationship as a
success (Narayandas & Rangan 2004). According to the social exchange theory, the level of commitment and trust influences the relationship (Ge et al. 2014), whereas commitment and trust are dependent on communication, power and dependency between the organizations (Liu et al.
2009). Actions and behavior of one party influence the actions and behavior of the other party (Griffith et al. 2006). The authors showed that when a member in the supply chain treats its partner fairly in terms of rewards and activities, its partner reciprocates and adopts these attitudes aiming at strengthening the relationship with a long-term orientation. This long-term orientation helps in overcoming disagreements during the relationship. A long-term orientation is even more important when partnerships consist of multiple stakeholders, due to the potential differences in interests (Kotabe et al. 2003).
Multiple stakeholders
Bringing multiple organizations together could lead to potential contradictory interests and goals, resulting in conflicts and distrusts (Waligo et al. 2014; Pathak et al. 2014; Park et al. 2014;
Kazadi 2015). This can be applied to coopetition as well, since inter-organizational relationships consist of convergent and divergent interests resulting from its paradoxical nature (Padula &
Dagnino 2007). These diverging interests intensify with greater innovativeness (Bouncken et al.
2015a). Collaborating with competitors creates tensions due to the risk of unintended spillovers and asymmetric learning (Le Roy & Czakon 2015), the risk of transferring important knowledge to competing partners or turning a weak competitor into a strong competitor (Gnyawali & Park 2011). The ability to access resources is determined by the structural position in the network. A superior position gives the organization more access to competitive opportunities leading to partner observations, greater flexibility and access to unique and valuable resources (Gnyawali 2006). Understanding these relational aspects, structural characteristics and organizations behavior is important for coopeting organizations (Pathak et al. 2014), especially when these partnerships are international. International partnerships consist of, among others, political, cultural and demographical differences. These political, cultural and demographical issues increase the complexity of relationships and will be discussed in the next sub-section.
Political, cultural and demographical issues in coopetition
Global coopetition is more complex and may offer more opportunities. This complexity increases due to international regulations, legislations and the balance between maximizing social welfare and regulating and controlling markets (Bouncken et al. 2015b). Managing global or international relationships are more difficult due to the geographic, economic, social, cultural and political
differences (Dunning & Lundan 2008). Furthermore, the transaction costs associated with information and knowledge transfers in cross-national partnerships increases, compared to national partnerships, due to the increased uncertainty caused by psychological or cultural differences between borders (Berry et al. 2010). The authors demonstrate with a multidimensional construct that, cross-national differences are influenced by nine different dimensions, being; economic, financial, political, administrative, cultural, demographical, knowledge, connectedness and geographical 1. These nine dimensions impact, among others, the decision to enter specific countries, the entry mode and the sequence of entry activities.
Nevertheless, it should be noted that these differences do not capture all the complexities involved in cross-border activities (Campbell et al. 2011). For example, Buller et al. (1997) highlight the importance of ethical issues, such as, corruption, environmental pollution, safety issues, treatment of employees etc. Ethical issues are caused by, for example, the difference between what is “wrong” and what is “right” and the resistance to change in different cultures (Rijamampianina & Carmichael 2005). The authors demonstrate that incompatible cultural differences between coopeting organizations can be prevented through executing common practices. These practices include strategic motivation drivers (e.g. identification of mutual benefits, interests and dependencies), interaction drivers (e.g. mutual understanding, commitment, trust and respect), vision drivers (e.g. co-creation of common vision) and learning drivers (e.g. learning towards a common vision etc.) 2 (Rijamampianina & Carmichael 2005).
Aligned with their suggestions, Renault and Nissan found almost similar results during their joint venture. Both organizations differ in terms of corporate cultures and strategies. Aligning these corporate cultures and strategies is done through developing common grounds and interests during their partnership (Gwynne 2009).
3. Research method
This chapter elaborates on the method used for this research in order to accomplish the research goal. The aim of this research is to explore how competitors operating in the automotive industry collaborate in practice. The first part of this section (3.1) elaborates on the conceptual framework.
The second part (3.2) describes methodology that will be used during this research. Section three (3.3) elaborates on the method. Section four (3.4) focuses on the research sample.
1 For a full overview concerning these nine dimensions of cross-national distance, see Berry et al. (2010).
2 For a detailed explanation concerning these four drivers for effective cross-cultural coopetitive relationships, see Rijamampianina and Carmichael (2005).
3.1 Conceptual framework
A conceptual framework is developed based on the theoretical concepts, principles and relations found during the literature review (see chapter 2). It is expected that contractual agreements, power differences and partner selection influence the barriers and incentives to enter a coopetitive partnerships (see left column Figure 2).
During these coopetitive partnerships the extent of knowledge, information and capabilities shared, collaboration, relationship management and spillovers influence the process of coopetitive partnerships (see middle column Figure 2). It is expected that the outcomes of coopetitive partnerships result in shorter product life cycles, increased innovation, specialized competences and higher organizational performance (see right column Figure 2). Furthermore, it is expected that the industrial characteristics of the truck- and bus segment of the automotive industry influence the barriers and incentives to enter a coopetitive partnership, the process during a coopetitive partnership and the outcomes of a coopetitive partnership (see column at the bottom Figure 2). The next section elaborates on the methodology that will be used during this research.
3.2 Methodology
Several different methodologies are considered, being; survey, conceptual research, extensive literature and a case study methodology. This research is directed towards exploring a complex phenomenon with interrelated variables in practice. The aim of this research is theory building, where it is important to explore the phenomenon in depth. A case study research is most appropriate for this research, since the phenomenon of coopetition can be studied in depth, in its natural setting and explored within its context (Åhlström & Karlsson 2010; Baxter & Jack 2008).
Case study research is particularly appropriate for how questions. These questions can lead to theory development, since theories can be generated through observing practice. Case studies are appropriate for explorative research, where the variables and relations are relatively undiscovered and the phenomenon is not understood completely (Yin 2014). Within a case study methodology, several different types of case studies exist, being; single, multiple, retrospective and longitudinal
Figure 2: Conceptual framework
cases. A summary of the advantages and disadvantages of these different types of case studies are listed in Table 2.
Table 2: Different type of case study methodologies (adapted from Åhlström & Karlsson 2010)
Type of case study Advantages Disadvantages
Single case study: - In depth - Limited generalizability
- Misjudgment of representativeness Multiple case study: - Augment external validity
- Guards against observer bias
- More resources needed and less depth per case
Retrospective case study: - Data on historical events - Difficult to determine cause and effect - Not recall important events
Longitudinal case study: - Determine cause and effect - Recall important events
- Time consuming
The aim of this research is to explore how organizations operating in the truck- and bus segment of the automotive industry are collaborating with competing organizations. Within each segment of the industry there will be sought for one case, in order to explore the phenomenon in depth (Kazadi 2015). A retrospective, rather than a longitudinal case study will be used due to the limited amount of time. The research method will be explained briefly in the next section.
3.3 Method
Data collection
For this research, data was collected by use of semi-structured interviews. A semi-structured interview protocol was roughly made in advance and pilot tested. The interview questions were based on the conceptual framework resulting from widely used literature ending in core categories, being: barriers and incentives to enter a coopetitive partnership, the process during a coopetitive partnership (including the contracts used), organizational aspects of the partnerships, the outcomes of the partnership and environmental factors influencing the partnership. The interviews were conducted face-to-face, increasing the flexibility in sequencing the questions, explanation of the answers and details of the answers (Åhlström & Karlsson 2010). The interviews were conducted at the location of the respondents’ preferences. The respondents have been informed in advance about the purpose of this research, in order to prepare themselves. It has been clearly stated that the interviews were anonymously and voluntarily. Furthermore, the respondents were asked for their permission in advance, whether the interview could be recorded.
After the interviews were held, they were transcribed. The transcripts and analysis were sent back to the respondents in order to obtain agreements whether the data is accurate and complete.
Data analysis
The data was analyzed by use of both inductive and deductive coding. As the coding process proceeded, new concepts were added (i.e. the inductive part). For the inductive part, the transcripts were analyzed through an open, axial and selective coding method (Boeije 2005). In the open coding analysis, information was used which directly originate from the interviewees.
The information was labeled in different codes in order to examine, compare, conceptualize and categorize the data (Strauss & Corbin 2014). These codes consist of ‘in vivo’ codes and
‘constructed codes’ (Flick 2009). ‘In vivo’ codes are definitions or expressions used by the interviewees and ‘constructed’ codes are definitions borrowed from the literature. Within the axial coding analysis the first-order codes were described. These codes were divided into relevant and less relevant codes resulting in a hierarchical structured coding tree (Boeije 2005). In the last part of the coding analysis, the codes were selectively structured in categories. The selective coding analysis focused on integration and causal relations between categories, ending with core categories. The coding tree was compared with the conceptual framework in order to find differences and similarities (i.e. the deductive part).
Validation, reliability and implications of this research design
A semi-structured interview method limits informant bias (Eisenhardt & Graebner 2007) and increases reliability and construct validity due to the standardization of formulations and questions. The questions are based on widely used literature and thus expected to be reliable in representing the constructs (Åhlström & Karlsson 2010). Furthermore, a semi-structured interview gives the interviewees more flexibility to address important issues related to the topic.
However, due to the nature of semi-structured interviews, it is difficult to gather similar expressiveness (in terms of wording) among the interviewees. Therefore, much attention was dedicated to the expressiveness among the interviewees. The respondents were asked to reflect on concrete rather then abstract examples, mitigating the risk of interpreting the results differently (Miller et al. 1997). Respondents were selected from different functions operating in the truck- and bus segment. The respondents were carefully selected based on their knowledge and experience in the entire automotive industry. Their statements were compared, to increase the external validity. Interviews were conducted in both, the respondents’ and the researchers’ native
language, increasing the internal validity of this research, since it is less difficult to interpret the results. In order to increase the reliability, the interview protocol, transcripts and coding tree can be retrieved at all times. This transparency ensures that the data collection procedure, including the steps while conducting the research can be repeated, ending with similar results (Yin 2014;
Åhlström & Karlsson 2010).
3.4 Sample
Twenty-four organizations positioned in West-Europe were contacted by e-mail and/or telephone to participate in this research. These organizations were screened on the following selection criteria:
i) Organization operates in the truck- or bus segment of the automotive industry.
ii) The organization collaborates with a competitor, while compete in the market simultaneously, or is involved in projects including competing organizations collaborating with each other.
iii) The duration of this partnership was at least three years and the employees involved are currently available for interviews.
iv) Manufacturers are considered as large enterprises (containing at least 250 full time employees).
VDL (operating in the bus segment) and DAF (operating in the truck segment) were the organizations that met the selection criteria mentioned. These organizations are currently working on a Fleet Management System (FMS) together with Scania, Volvo, Renault, MAN AG, Daimler and Iveco (LogiCom n.d.). These organizations collaborate to develop an industry wide standard for FMSs, for both the truck- and bus segment. DAF develops the FMS standard for the in the truck segment together with MAN AG, Scania, Daimler, Iveco, and Volvo. VDL develops the FMS standard for the bus segment together with Daimler, MAN AG, Scania, Volvo, Iveco. In this way, the differences between the truck- and bus segment of the automotive industry can be studied in detail.
During the interviews with VDL and DAF, it became evident that these organizations collaborate with competing organizations, in their own segments, in combination with universities and project facilitating organizations. It has been decided to interview these organizations as well, in order to validate the data provided by VDL and DAF and to deepen practical insights from different points of view. In total, seven respondents representing five different organizations were
interviewed, since these respondents were involved during coopetitive partnerships in the past. A summary of the respondents can be found in Table 3, including the organization, the function of the respondent, the industry of the organization, the duration of the interview and the location of the interview.
Table 3: Summary of respondents’ information
Organization Function Industry Duration Location
1 VDL Engineer electric systems Bus 57 min Heerenveen, Netherlands
2 DAF Director purchasing Truck 55 min Eindhoven, Netherlands
3 VDL E/E development Bus 43 min Valkenswaard, Netherlands
4 VDL Senior engineer Bus 30 min Roeselare, Belgium
5 TU/e Associate professor University 51 min Eindhoven, Netherlands 6 AW projects Managing director Facilitator 1 hour 3 min Helmond, Netherlands 7 Automotive NL Green mobility & innovation Facilitator 40 min Eindhoven, Netherlands Note: In order to guarantee anonymity, the respondents have been coded numerically.
The interview protocols for VDL and DAF can be found in Appendix A, whereas the interview protocol for TU/e, ‘AW projects’ and ‘Automotive NL’ can be found in Appendix B. The coding tree based on the interviews from the manufacturers, including open, axial and selective codes can be found in Appendix C, whereas the coding tree based on the interviews from the university and project facilitating organizations can be found in Appendix D. The interview transcripts can be found in Appendix E through K.
4. Results
This chapter summarizes the results of the data obtained from VDL, DAF, TU/e, ‘AW projects’
and ‘Automotive NL’. The sections in this chapter are based on the core categories found during the selective data analysis. The first section (4.1) elaborates on the incentives for pursuing coopetition activities. Whereas the barriers for pursuing coopetition activities are elaborated on in section two (4.2). Section three (4.3) elaborates on collaboration between competing organizations with third-party organizations.
4.1 Incentives for coopetition in the automotive industry
The first part of this section describes the incentives for DAF, operating in the truck segment, and VDL, operating in the bus segment of the automotive industry, to collaborate with competing
organizations. The second part of this section describes the organizational aspects during these relationships.
Incentives for collaboration between competing organizations in the automotive industry
The aim of collaboration strategies pursued by both, DAF (in the truck segment) and VDL (in the bus segment) is the establishment of industry wide standards. Regulators request the industry to develop standards in consultation with the regulator. Collaboration between manufacturers and the regulator is needed in order to develop the standards correctly. Developing industry wide standards ensures that participating organizations strive for unanimous guidelines. These organizations develop industry wide standards due to the complexity of the industry, where industry wide standards cannot be created in isolation (e.g. battery charging infrastructures, dimensions of trucks etc.). Competing organizations advise the regulator in order to assure that clients of the manufacturers are served in a uniform way and suppliers can develop products for different manufacturers according to standardized regulations rather than manufacturer specific regulations. Based on the results obtained during the interviews at DAF (in the truck segment) and VDL (in the bus segment), it became apparent that these organizations only collaborate with competing organizations in their segments to agree and develop common industry wide standards; these organizations do not collaborate in R&D activities. Several reasons why these organizations do not collaborate with competing organizations are explained in section 4.2.
Organizations operating in the truck and bus segment of the automotive industry advise regulators concerning the development of standards, certifications and regulations. These organizations advise, for example, the European Automobile Manufacturers’ Association (ACEA). The ACEA defines and supports common interests, policies and positions of the European automotive industry. An ongoing example is the ‘Truck platooning’ project, a state-of- the-art driving support system for trucks, where trucks follow each other on a close distance to reduce fuel consumption and increase safety (European Truck Platooning 2016). Several different truck manufacturers (i.e. DAF, Volvo, MAN AG, Daimler, Iveco and Scania) collaborate to advise research institutions, logistics providers and governments to harmonize and standardize regulations. The organizational aspects and communication mechanisms used during the development of industry wide standards are discussed in the next sub-section.
Organizational aspects used during collaboration activities to develop industry wide standards Partners involved during the establishment of industry wide standards share common interests, since these partners benefit from the creation of these standards. Some organizations operating in the bus segment are smaller; VDL highlights that smaller enterprises operating in the bus segment are more flexible and willing to share information. Partners involved with VDL provide all the necessary information needed to develop new standards. Information is often shared through Internet, mail or telephone, where partners involved sign confidentiality clauses to prevent information leakages to other manufacturers and third-party organizations not involved in the partnership.
Bringing multiple organizations together to develop industry wide standards could potentially lead to contradictory interests due to the paradoxical nature. For example, industry wide standards for electronic power trains in the bus segment are needed due to the global shift. Some of the organizations in the bus segment are currently shifting towards electronic power trains while others still use the traditional internal combustion engines and are intended to shift towards the electronic power trains in the future. Organizations developing electronic power trains have conflicting interests with organizations using internal combustion engines in terms of the development of industry wide standards, resulting in process delays.
4.2 Barriers for pursuing coopetition strategies in the automotive industry
During the interviews, two barriers that inhibit organizations to collaborate in R&D activities with competing organizations were found, namely; the loss of competitive advantages and conspiracy between organizations.
Competitive advantages
Organizations operating in the truck- and bus segment of the automotive industry are restrained to collaborate in R&D activities due to the potential loss of competitive advantages. Innovations are an important prerequisite for a competitive advantage and create a unique selling point. Both, the truck- and bus segments of automotive industry are saturated markets dominated by a few manufacturers. Organizations are heavily competing and restrained to collaborate in R&D activities with competing organizations due to the risk of information leakages. R&D of new models can last for several years, involved with large capital investments reaching up to billions of euros. If organizations, during the R&D of new models, collaborate with competing organizations and share intellectual property, the risk of unintended spillovers increases. The risk
of unintended spillovers increases even further due to the long lasting development programs (approximately six years per model). Furthermore, the automotive industry has become a high volume – high technology industry, where intellectual property is extremely important for a competitive advantage.
Conspiracy between organizations
Organizations are restrained to collaborate in R&D activities, since collaboration between competing organizations tends to unauthorized actions and is seen as colluding. These organizations are anxious to collaborate with direct competitors because they could potentially violate the anti-trust regulations and receive penalties up to 10% of their annual revenues. If competing organizations are willing to collaborate with each other in R&D activities, they need to merge, organize an acquisition, form a joint venture, or collaborate through projects with external partners such as research institutions, universities, or suppliers.
4.3 External partners: research institutions, universities or suppliers
As mentioned in the previous section, R&D could be accomplished through projects executed with research institutions, universities, or suppliers. Research institutions, universities and suppliers cluster knowledge, intellectual property, experience and information from various stakeholders in order to stimulate and accelerate innovation. Collaboration with external partners is more effective compared to internal R&D. In this section, the advantages and disadvantages of collaboration strategies with research institutions, universities and suppliers is briefly explained.
Collaboration between competing organizations and research institutions
Research institutions facilitate collaboration between competing organizations, suppliers and governments. Research institutions are gathering knowledge from various projects executed with manufacturers and suppliers. Knowledge gathered from projects in the past will be conveyed to projects in the future. This results in specialized knowledge and test facilities for specific purposes. Organizations collaborating with research institutions benefit from this specialized knowledge. These organizations do not have to invest in specialized knowledge themselves.
Therefore, collaborating with research institutions is one of the most successful collaboration strategies for manufacturers. Research institutions are changing their business-strategy towards generating their own revenues rather then relying on contributions from governments. This could result in unintended spillovers from stakeholders in previous projects to stakeholders in future projects as well. Therefore, non-disclosure agreements during these projects are important to
reduce unintended information leakages. Despite the non-disclosure agreements, manufacturers are still anxious for unintended information leakages and their consequences.
Collaboration between competing organizations and universities
Manufacturers are willing to collaborate with universities due to their long-term vision. The intellectual property developed through projects executed with universities is often not directly applicable in the current manufacturers’ fleet. Where the information transfers to competing manufacturers during these long-term projects do not harm the competitive advantages, since the information is broadly defined. Detailed information of the current or near future fleet, which potentially could harm the competitive advantage, is not shared during these projects.
Information is often shared through platforms, where consortium agreements stipulate how the intellectual property should be handled. However, it should be noted that these consortium agreements used are less reliable compared to mechanisms used by institutions and suppliers, such as non-disclosure agreements or intellectual property contracts.
Collaboration between competing organizations and suppliers
Suppliers are an important factor in the design phase for manufacturers; there is an increasing shift from internal R&D activities towards suppliers. The supplier develops and produces components, such as, drive trains and electronics. Suppliers execute almost 80% of the R&D activities for new models. The manufacturer itself develops the bodywork, since the bodywork contributes to branding of the organization. Suppliers establish their business next to their major clients, increasing flexibility and information transfers. However, it should be noted that competing organizations collaborating with a ‘shared’ supplier are still cautious to share information, due to the risk of leakages to their competitor. A summary of the advantages and disadvantages of collaboration strategies between competing organizations with research institutions, universities and suppliers is given in Table 4.
Table 4: Summary advantages and disadvantages of collaboration strategies with third party organizations
Type of collaboration strategy Advantages Disadvantages
Collaboration between competing manufacturers and research institutions
- Intelligent test facilities - Confidentiality
- High specialized knowledge
- Potential transfer of intellectual property to competing organizations in future projects
Collaboration between competing manufacturers and universities
- Long term vision - Knowledge available
- Mechanisms used to reduce spillovers are less reliable
Collaboration between competing manufacturers and suppliers
- Increase of suppliers’
capabilities
- Loss of internal intellectual property
- Potential spillover to competing organization
5. Comparing the results with literature
This chapter discusses the results obtained during the interviews and compares it with literature.
The first section (5.1) discusses the incentives for pursuing coopetition activities. The second section (5.2) discusses the barriers for pursuing coopetition activities. Section three (5.3) discusses collaboration between competing organizations with third-party organizations. In section four (5.4) the results are generalized for the entire automotive industry and other industries.
5.1 Incentives for coopetition in the automotive industry
During the interviews it became evident that competing organizations only collaborate to create industry wide standards. Choi et al. (2010) define this specific collaboration strategy among competing organizations as collective horizontal coopetition, where all or most organizations in an industry (segment) collaborate to achieve common goals while competing in other activities.
During the creation of industry wide standards, smaller organizations operating in the bus segment are more flexible and willing to share all the necessary information. This flexibility is caused by the informal structures of these organizations, which is in line with the findings of Tsai (2002), who found that informal structures positively affects knowledge sharing among partners.
In particularly, based on the results and literature, it is proposed:
Proposition 1: Organizations operating in the truck-and bus segment of the automotive industry collaborate with competing organizations in order to create industry wide standards.
5.2 Barriers for pursuing coopetition strategies in the automotive industry
Previous research streams have described collaboration between competing organizations as a business-strategy to respond to the increasing global competition, increase innovation, shorter product life cycles and the convergence of multiple technologies (e.g. Rijamampianina &
Carmichael 2005; Gnyawali & Park 2011; Ritala 2012; Belderbos et al. 2015; Bouncken et al.
2015a; Bouncken et al. 2015b). However, this is not acknowledged by organizations operating in the truck- and bus segment of the automotive industry. Two different reasons were found during the interviews, being; the loss of competitive advantages and conspiracy between leading organizations, these will be discussed next.
Competitive advantages
Manufacturers in the automotive industry compete against each other on price, quality and branding. R&D projects can last for several years. Hence, collaborating between competing organizations in R&D activities could restrict the competitive advantages of an organization due to the potential loss of intellectual property. This is in line with the findings of Ichijo and Kohlbacher (2008), which claim that competitors’ information in the automotive industry is very important in order to stay ahead from competitors. Competing organizations in the automotive industry compete on price, quality, R&D and product technology (Hinlopen 2010). Collaboration in R&D activities and information sharing among competing organizations reduces their competitive advantage. In particularly, based on the results and literature, it is proposed:
Proposition 2: Characteristics of the truck- and bus segment of the automotive industry influence the barriers and incentives to participate in coopetitive partnerships. This is caused by the importance of intellectual property and competitive advantages.
Conspiracy
Organizations violate the anti-trust regulations if they form cartels or misuse their market dominance (Rijksoverheid, n.d. a). Collaboration between competing organizations is only allowed under specific conditions, for example through mergers, acquisitions and joint ventures.
Mergers, acquisitions and joint ventures are only allowed with permission from the Autoriteit Consument & Markt (ACM) (partnerships in the Netherlands) or the European Commission (EC) (international partnerships). The ACM and EC approve mergers, acquisitions, or joint ventures when;
i) The merger, acquisitions, or joint venture will not put the organization in a position that could potentially control the market (Article 101 Treaty on the Function of the European Union (Eur-Lex 2012)) and;
ii) The merger, acquisitions, or joint venture will not give the organization a position that could potentially force out smaller competitors (Article 102 Treaty on the Function of the European Union (Eur-Lex 2012)).
In the European Law, several exceptions concerning the anti-trust regulations exists for R&D activities through mergers, acquisitions and joint ventures with competing organizations (Rijksoverheid, n.d. b), these can be found in European regulations Nr.1217/2010 (Eur-Lex 2010).
Mergers, acquisitions and joint ventures in the 1990s have shaped the automotive industry, resulting in an oligopolistic market 3. A few large manufacturers exert a remarkable amount of power over smaller manufacturers (Sturgeon et al. 2009). Competing organizations willing to collaborate in research activities through mergers, acquisitions and joint ventures could send a notification of a proposed concentration pursuant to the ACM or EC. These commissions assess whether the partnership violates the anti-trust regulations for each case individually. A simple measure for market concentration and whether mergers, acquisitions and joint ventures are applicable is done through the Herfindahl-Hirschman Index (HHI). The HHI number is calculated as the sum of the squared market shares of all firms within the subsector of the industry. The market is considered as an oligopoly if the HHI exceeds 1000. Mergers, acquisitions and joint ventures raise anti-trust concerns if the HHI increases by more than 100 points in oligopolistic markets (U.S. Department of Justice and the Federal Trade Commission 1997). Hence, approval for collaboration in R&D activities through mergers, acquisitions and joint ventures is more likely for organizations with a smaller market share. In particularly, based on the results and literature, it is proposed:
Proposition 3: Leading organizations operating in the truck- and bus segment of the automotive industry are restrained to collaborate with competing organizations due to the anti-trust regulations.
3 Two examples are given of truck- and bus market structure in West-Europe in Appendix L.
5.3 External partners: research institutions, universities or suppliers
The results showed that innovation could be accomplished through collaboration with research institutions, universities and suppliers. Collaboration with external partners, especially with research institutions, is more effective compared to internal R&D. This is in line with the results of Ili et al. (2010), who showed that using external sources for innovation results in more productive R&D activities compared to the traditional ‘In-house’ innovation in the automotive industry. Furthermore, Langner and Seidel (2009) suggest that involving multiple suppliers in R&D projects could reduce uncertainties concerning appropriate partner selection in a later phase. Sturgeon et al. (2008), found that suppliers often establish their businesses close to their major customers to facilitate collaboration. In particularly, based on the results and literature, it is proposed:
Proposition 4: Organizations in the truck- and bus segment collaborate through projects executed with external partners to innovate.
5.4 Generalizing the results to the entire automotive industry and other industry sectors Passenger cars and small commercial vehicles market
More than fifty passenger car manufacturers serve the global passenger car and small commercial vehicle segment of the automotive industry. However, six of those passenger car manufacturers serve more than fifty percent of the global market (Hinlopen 2010). Mergers, acquisitions, or joint ventures between these leading organizations in the passenger cars segment potentially violates Article 101 & 102 of Treaty on the Function of the European Union (TFEU). The passenger car and small commercial vehicle segment of automotive industry is a saturated market, which has, compared to the truck- and bus segment even more complicated processes and is more professional in their activities. Intellectual property is extremely important. Organizations are heavily competing with each other. Therefore, it is expected that these organizations be restrained to collaborate with competing organizations, due to the risk of information leakages and the loss of a competitive lead. Remarkably, organizations in the passenger car and small commercial vehicle segment do collaborate with direct competitors in the R&D of smart communication technologies, since these organizations are anxious for organizations, such as, Google and Apple entering the industry. Based on the results found in the truck- and bus segment, it is expected that organizations operating in the passenger car and small commercial vehicle segment be restrained to collaborate with direct competitors as well. However, these
organizations are willing to collaborate with direct competitors to restrict other non-automotive organizations willing to enter the automotive industry.
Other industries
Several industries share equal concentrated characteristics, where a few organizations have a large market share, such as, among others, electricity market (e.g. Gutiérres-Alcaraz 2006), airline companies (e.g. Brander & Zhang 1993), commercial aircraft (e.g. Sturgeon et al. 2009) and video game industry (e.g. Daidj & Isckia 2009). However, it is difficult to generalize the results to global industries, since global industries could have many manufacturers operating in small regions, where a few organizations dominate globally and vice versa. For example, in the United States, several industries have concentered characteristics: Tire Manufacturing, Wireless Telecommunications Carriers, Soda production Industry, Satelite TV providers etc. (IBISWorld 2012). Globally, these industries do not have to be concentrated at all. Therefore, based on the findings in the automotive industry, it is expected that national and international commissions monitor industries with similar concentrated characteristics (globally and nationally) and asses whether collaboration in R&D activities, mergers, acquisitions and joint ventures between competing organizations are applicable. Based on the results found in the automotive industry, it is expected that leading organizations (i.e. with a large market share) in concentrated industries be restrained to collaborate due to the anti-trust regulations.
According to Gnyawali and park (2011) organizations operating in technology intensive industries seems to face unique opportunities in pursuing coopetition strategies with competing organizations. However, the findings of this research are contradictory. It is expected that organizations operating in technology intensive industries, such as aerospace, semi-conductor industry, computers systems, systems for communication and scientific instruments, are restrained to collaborate in R&D activities due to the high proportion of capital invested in their R&D activities (National Science Board 2010). Collaboration between these competing organizations potentially increases the risk of losing their competitive advantage, especially when these industries face long R&D times.
6. Conclusion and discussion
In this chapter a conclusion is given in section one (6.1). The second section (6.2) addresses the research contribution. Section three (6.3) discusses the limitations of this research and section four (6.4) addresses several topics for further research.
6.1 Conclusion
This research attempts to clarify the concept of coopetition in the automotive industry, aiming at filling the empirical gap in existing literature, by addressing the following research question:
” How are cooperation and competition strategies simultaneously pursued in the truck- and bus segment of the automotive industry?”.
An explorative case study was conducted in the truck- and bus segment, in which several experienced and knowledgeable practitioners were interviewed. These interviews led to several insights. Collaboration strategies between competing organizations in the truck- and bus segment are pursued in order to create industry wide standards. Organizations strive for unanimous guidelines, certifications and regulations, since these industry wide standards cannot be created in isolation. Partners involved during the establishment of industry wide standards share common interests, for example, towards the creation of battery-charging infrastructures. Information is often shared through Internet, mail or telephone, where partners involved sign confidentiality clauses to prevent information leakages.
The data also illustrated that competing organizations do not directly collaborate in R&D activities. Two different reasons why organizations operating in the truck- and bus segment of the automotive industry are restrained to collaborate in R&D activities with competing organizations were found:
i) Collaborating with competing organizations in R&D activities could restrict the competitive advantages of an organization. Research and the development of new models can last for several years. If organizations during the development of new models collaborate with competing organizations and share intellectual property, the risks of unintended spillovers increase significantly. Organizations innovate through internal R&D
