Unveiling Competition and Cooperation Structures

A competitively structured situation refers to a situation in which the players are willing to achieve a goal that might be personally beneficial but detrimental to all others. Based on the grounding of the previous definition, we recognize two structured competitive situations (Johnson, & Johnson, Reference Johnson and Johnson1989; Stanne, Johnson, & Johnson, Reference Stanne, Johnson and Johnson1999). The first type of competitively structured situation is defined as zero-sum competition. Zero-sum competition occurs when the rewards are distributed according to a ‘winner-takes-all’ basis (Stanne et al., Reference Stanne, Johnson and Johnson1999). The second type of competitively structured situation is labeled appropriate competition and occurs when (a) some rules of the game exist; (b) all players have a chance to win because they are in a position to monitor the other players’ progress as a benchmark; and (c) winning is not very important because the players aim to pursue their interests^[Footnote ^2] (Stanne et al., Reference Stanne, Johnson and Johnson1999).

Keller (Reference Keller2009) argues that the first type of competition is similar to an attempt to undermine the other. Notably, zero-sum competition does not explain why rivals should consider cooperating with each other; because no player is willing to cooperate with another player who wishes to destroy him or her and vice versa, appropriate competition epitomizes an attempt to out-perform others that emerges when individuals ‘promote a team member's status through increasing his or her own performance relative to other members’ (Keller, Reference Keller2009: 14). Appropriate competition introduces the coexistence of competitive and cooperative situations. Rivals may cooperate with each other to increase private and common benefits (Khanna, Gulati, & Nohria, Reference Khanna, Gulati and Nohria1998) stemming from the competition–cooperation relationship (Chiambaretto, Massé, & Mirc, Reference Chiambaretto, Massé and Mirc2019).

We extend the previous argument in this study and consider players out-performing each other as an instance of competition because players may compete with each other to change their ‘relative standing’ (Keller et al., Reference Keller, Loewenstein and Yan2017: 543). Interestingly, the aim of individual out-performing may lead to situations that are also beneficial to the other team members. Individuals aim to out-perform others without necessarily destroying such others.

A cooperatively structured situation relates to the process in which two players work together to achieve specific goals (Chen, Chen, & Meindl, Reference Chen, Chen and Meindl1998). Actually, ‘cooperatively structured situations create perceptions of a shared fate and promote supportive behavior’ (Beersma et al., Reference Beersma, Hollenbeck, Humphrey, Moon, Conlon and Ilgen2003: 573). Thus, players’ out-helping each other involves other players that attempt ‘to be the most helpful’ (Keller et al., Reference Keller, Loewenstein and Yan2017: 543). This situation may be considered an instance of cooperation because it suggests that players may collaborate with each other and exert joint efforts to achieve a collective gain (Jones & George, Reference Jones and George1998; Keller et al., Reference Keller, Loewenstein and Yan2017). Adopting players’ out-helping each other as an instance of cooperation shows an ‘attitudinal reciprocity that develops as each individual helps’ the others (Tomasello & Vaish, Reference Tomasello and Vaish2013: 236).

Unveiling Co-opetition Structure

Scholars draw on Brandenburger and Nalebuff (Reference Brandenburger and Nalebuff1996) and conceptualize co-opetition as a phenomenon (e.g., Ritala et al., Reference Ritala, Kraus and Bouncken2016) or a mental state incorporating both competition and cooperation (e.g., Keller et al., Reference Keller, Loewenstein and Yan2017). Studies mainly acknowledge the tensions underlying the coexistence of competitive and cooperative actions (e.g., Bengtsson & Kock, Reference Bengtsson and Kock2014; Fernandez & Chiambaretto, Reference Fernandez and Chiambaretto2016). In this regard, differences and cultural implications emerge in managing task- or relational-oriented paradoxical demands (Keller et al., Reference Keller, Chen and Leung2018; Stadtler & Van Wassenhove, Reference Stadtler and Van Wassenhove2016).

Interestingly, thus far, the literature does not clarify the logic underlying competition and cooperation. Studies emphasize the simultaneous coexistence of competition and cooperation (Luo, Reference Luo2004) but temporally or spatially separate both constructs rather than treating them as strictly intertwined (Ritala & Hurmelinna-Laukkanen, Reference Ritala and Hurmelinna-Laukkanen2013). Therefore, they ‘suppress the tension that ensues by ignoring one element or switching back and forth between two elements’ (Keller & Chen, Reference Keller, Chen and Das2017: 104).^[Footnote ^2]

Our aim is to understand how cultural influences mold different approaches to address the coexistence of competition and cooperation that leads to plausible distinctions in how managers engage in and scholars conceptualize co-opetition in Eastern and Western contexts (Prashantham & Eranova, Reference Prashantham and Eranova2020). First, we conceptualize co-opetition as behavioral in nature,^[Footnote ^3] suggesting that co-opetition refers to publicly observable behavior and its link to publicly observable characteristics of the environment that lead to competitive and cooperative actions (Moore, Reference Moore2001). Second, we draw on the notion that ‘the same structural conditions that seed competition also present opportunities for cooperation’ (Ingram & Yue, Reference Ingram and Yue2008: 276) and adopt out-performing and out-helping ‘that can be categorized as both cooperative and competitive’ (Keller et al., Reference Keller, Loewenstein and Yan2017: 543).

Eastern Lineage of Co-opetition

Whereas Taoism, Confucianism, and Legalism share the cognitive frame of yin-yang balancing (Li, Reference Li2016; Lin, Li, & Roelfsema, Reference Lin, Li and Roelfsema2018), they also present philosophical differences that inform the specific patterns of co-opetition.

Taoism

‘According to the yin-yang thinking at the core of Taoism’ (Li & Yang, Reference Li and Yang2017: 913), yin and yang are mutually opposing forces – yang is generated from yin and vice versa. Together, they create the ‘qi’ or vital energy of the universe (Hang, Reference Hang, Liu and Allison1988; Legge, Reference Legge1994). Similarly, out-performing and out-helping (i.e., competition and cooperation) are mutually opposing forces that coexist (Mattsson & Tidstrӧm, Reference Mattsson and Tidström2015). Taoism supports the either/and logical approach to co-opetition that recognizes not only the tension or conflict between cooperation and competition (i.e., ‘either’) but also the synergy of complementarity between cooperation and competition (i.e., ‘and’).

Confucianism

Confucianism borrows from the cognitive frame of yin-yang balancing (Law & Kesti, Reference Law and Kesti2014) and follows the either/and logic for which: ‘wishing [their firm] to be settled in position, set up others; wishing [their firm] to have access to the powerful, achieve access for others’ (Confucius, Reference Eno2018, Analects, 6.30). Confucianism ‘involves not only finding a compromise between opposing elements, but also analyzing and synthesizing the two elements in a way that optimizes the preferred aspects of both’ (Keller et al., Reference Keller, Chen and Leung2018: 15). Thus, an increment in out-performing behaviors leads to a balance in out-helping (Keller et al., Reference Keller, Loewenstein and Yan2017: 549).

Legalism

Legalism focuses on the immorality of human behavior (Fu, Reference Fu2016) that follows ‘after benefit as water flows downward’ (Shang junshu 23:131; Book of Lord Shang 23.2). According to Han Feizi, individual profit-seeking behavior varies across circumstances (shi) or forces that ‘make sense of the action’ (Moody, Reference Moody2008: 99) and from which military operations emerge. Therefore, the system of incentives should fit the circumstances that progressively emerge as to induce individuals to obey (Shang, Reference Shang and Pines2017). Apparently, Legalism seems to follow the either/or logic for which out-performing and out-helping contradict each other. Nonetheless, Legalism draws on the cognitive frame of the yin-yang balancing and integrates the out-helping and out-performing that may eventually meet because of the constraints imposed by lawmakers and the rules that ‘may serve common ends’ (Winston, Reference Winston2005: 316).

Western Lineage of Co-opetition

Although the general principle of holism emerged in the early works of Western philosophers (e.g., Aristotle's Metaphysics and Plato's holism) and dialectical reasoning (Li, Reference Li2014b), the coexistence of opposites (i.e., competition and cooperation) has long been central in Western philosophy (e.g., Aristotle's Metaphysics and Hegel's Logics), which has traditionally focused on dividing ideas into parts (Fang, Reference Fang2012; Li, Reference Li2012a).

Immanuel Kant

The opposition between out-performing and out-helping in Kant's thought is visible in his Ideas for a Universal History from a Cosmopolitan Point of View (1784), which reports the following: A man ‘expects opposition on all sides because (…) is inclined to oppose others’ (Kant, Reference Kant and Beck1784/1963: IV).

Georg Wilhelm Friedrich Hegel

According to Hegel, individuals evolve through a dialectical path formed by the following three levels (Walsh, Reference Walsh1951): family, state, and civil society (which is formed by firms, markets, and other public institutions). Whereas family and state are based on cooperation, recognition, and mutuality (Klikauer, Reference Klikauer2016), civil society is based on competition among members. Juxtaposing out-helping and out-performing according to Hegel's dialectics implies ‘integrating mental opposites by rejecting their inherent conflict and trade-off’ (Li, Reference Li2014a: 329) at any level of social interaction, that is, horizontal in-group level (i.e., within family members, firms, and governments); vertical in-group level (i.e., master-slave relationship); and vertical out-group level (i.e., between firms at different stages of the supply chain or among governments and firms). Therefore, managers adopting the Hegelian's view follow the both/or logic in which no trade-off exists because the possibility of reconciling out-helping with the pursuit of out-performing is maintained.

Adam Smith

Adam Smith is among the Western philosophers who considered that, by nature, individuals both out-perform each other and care for themselves and are sympathetic and prone to out-helping each other. Hence, cooperation among individuals cannot originate from the good feelings, sympathy, pity, or compassion that exist ‘for the help of their brethren’ (Smith, Reference Smith, Raphael and Macfie1759/1976). In fact, the both/and logic that informs the Smithian view ‘is incomplete and insufficient, because it adopts an absolute stance whereby one polarized end is not properly balanced against its opposite end’ (Li, Reference Li2016: 60). Essentially, in Smith's view, out-performing and out-helping are opposites that might eventually coexist, but his ultimate analysis is that individuals must choose between one way or another. Thus, out-performing and out-helping are not conceived as fake opposites and are true opposites. By denying the coexistence of true opposite elements (Li, Reference Li2016), Smith epitomizes the dualism underlying the both/and logic. Interestingly, although the concept of dualism is self-apparent in the either/or logic and the both/or logic, understanding such dualism is challenging in the both/and logic. Thus, Smith temporarily supports the both/and logic but ultimately supports the both/or logic.

Summary

Keller, Chen, and Leung (Reference Keller, Chen and Leung2018: 5) unveil ‘cultural background as an important factor that contributes to variance in individuals’ subjective experience’ with the coexistence of opposites. Similarly, Taggart and Robbey (Reference Taggart and Robey1981: 187) acknowledge that philosophical explanations of human duality help in ‘understanding the decision styles and decision strategies of managers’. As our philosophical inquiry shows (see Table A2 in Appendix I), Eastern and Western philosophies have peculiarities that help with an in-depth exploration of co-opetition (Li, Reference Li2016; Peng & Nisbett, Reference Peng and Nisbett2000).

First, although Western philosophy rejects contradictions as incompatible with the either/or formal logic that requires separation and the Hegelian dialectical logic that requires resolution or synthesis, Eastern philosophy supports the concept that holism and tolerance of contradiction are inevitable in human life; see the yin-yang image (Spencer-Rodgers, Anderson, Ma-Kellams, Wang, & Peng, Reference Spencer-Rodgers, Anderson, Ma-Kellams, Wang, Peng, Spencer-Rodgers and Peng2018). Keller et al. (2017: 555) show a link between out-performing and out-helping in cultural contexts. Specifically, for out-performing, ‘Chinese people are more likely than [people from the West] to respond with high levels of both cooperative and competitive behaviors’ (Keller et al., Reference Keller, Loewenstein and Yan2017: 549). In contrast, Westerners respond with high levels of competitive behaviors because they separate and categorize out-performing and out-helping conditions as competitive or cooperative. A practical implication is that the escalation of conflict within cooperation and the shift from co-opetition to competition is more observable in Western than in Eastern contexts. Conversely, the Eastern perspective requires that executives develop capabilities to accept, holistically understand, and regulate the interdependence between antithetical behaviors (Bengtsson et al., Reference Bengtsson, Raza-Ullah and Vanyushyn2016).

Second, whereas Western philosophy assumes stability, and changes in competition and cooperation follow a linear form (Spencer-Rodgers et al., Reference Spencer-Rodgers, Anderson, Ma-Kellams, Wang, Peng, Spencer-Rodgers and Peng2018), Eastern philosophy assumes dynamism, and changes in competition and cooperation occur in a nonlinear or curvilinear way (Taggart & Robbey, Reference Taggart and Robey1981). There is constant balance in all things (Lin et al., Reference Lin, Li and Roelfsema2018; Smith & Lewis, Reference Smith and Lewis2011), and both competition and cooperation change from dominant to subordinate and vice versa. Managers inspired by Eastern philosophy interpret the coexistence of competition and cooperation as ‘intraepisode plurality’, in which one episode encompasses the coexistence of both actions (Prashantham & Eranova, Reference Prashantham and Eranova2020). Thus, they adopt a ‘becoming’ approach that is ‘interdependent and interactive’ (Li, Reference Li2016: 50). In contrast, managers inspired by Western philosophy interpret the coexistence of competition and cooperation as ‘inter-episode plurality’, for which a sequence of episodes exists in which either cooperation or competition is dominant (Prashantham & Eranova, Reference Prashantham and Eranova2020). Thus, they focus on ‘being’ as a ‘fixed, certain, and complete status’ (Li, Reference Li2016: 50).

Overall, the coexistence of opposites is present in all societies and cultures. How both academics and executives approach co-opetition depends on the perspective introduced to the analysis (Allison, Reference Allison1969) and the paradoxical frames adopted to understand reality (Keller & Chen, Reference Keller, Chen and Das2017). Table 1 clarifies the connections between Eastern and Western philosophies and co-opetition by considering basic arguments related to co-opetition and its patterns.

Table 1.

Core distinctions between the diverse logics underlying co-opetition in Eastern schools of thought and Western philosophers

Implication 1. The Yin-yang Balancing Frame Inspires Three Types of Co-opetition Strategies: Explicit, Induced, and Implicit

As Table 2 shows, the culmination block of co-opetition according to Eastern philosophy is always out-helping and out-performing. From such ground, it is important to understand the value-added contribution of yin-yang balancing in managing co-opetition and, specifically, to shed light on the three mechanisms of yin-yang balancing in terms of asymmetrical balancing, transitional balancing, and curvilinear balancing (Li, Reference Li2016). Specifically, the asymmetrical balancing mechanism of yin-yang allows for the nonequal nature of the relationship between cooperation and competition; that is, cooperation may be dominant, whereas competition is subordinate and vice versa. However, cooperation and competition are opposite poles that tend to change because of the transitional balancing mechanism. Thus, competition changes from dominant to subordinate and vice versa. The ‘shift can be caused by an external shift in a priority status or by the position of a specific subgoal, which may trigger an associated shift from one type of asymmetrical balance to another’ (Gao, Ren, & Miao, Reference Gao, Ren and Miao2018: 26). Finally, the curvilinear balancing mechanism assures that cooperation and competition have a ‘good balance as healthy tension when one opposite element is at a high level, and the other is at a moderate level’ (Li, Reference Li2016: 26). In other words, the asymmetry between the two opposites should be moderate rather than too large or too small.

Within the three abovementioned mechanisms featuring the cognitive frame of yin-yang balancing, our framework shows that it is possible to grasp three different typologies of co-opetition, each related to different perspectives and patterns. For instance, drawing on Taoism, managers develop co-opetition as an implicit strategy, whereas competition is seen as a tacit, and reaching harmony in organizations implies that ‘rulers rule best when they rule least’ (Mattson & Tidstrom, Reference Mattsson and Tidström2015: 3). Because ruling works against reaching harmony, managers that approach co-opetition aim to overcome conflicts, and leverage problem solving and delegations as nonpreference and extreme avoidance (Ma & Tsui, Reference Ma and Tsui2015). In contrast, drawing on Confucianism, managers approach co-opetition as an explicit strategy that addresses normative strategies to balance opposing elements. The extant co-opetition literature typically proposes that both competition and cooperation are explicit (Hoffmann et al., Reference Hoffmann, Lavie, Reuer and Shipilov2018). Nonetheless, as Sun Tzu shows, competition can develop in many forms. For instance, Taoism offers insight into the essence of implicit competition in which rivals focus on their strengths and weaknesses. In fact, Taoism-inspired managers are ‘less likely to believe that conditions that appear contradictory are intrinsically more demanding and challenging than the combined demands from each element’ (Keller et al., Reference Keller, Chen and Leung2018: 12). Similarly, the qualification of implicit and explicit also refers to cooperation (Hoffmann et al., Reference Hoffmann, Lavie, Reuer and Shipilov2018) underlining co-opetition. Co-opetition as an implicit strategy is a ‘ground of analysis’ (Kylänen & Rusko, Reference Kylänen and Rusko2011). This condition is clearly highlighted by Sun Tzu, who stated that ‘an army cannot have constant Shi, similar to water without any constant form or shape; those who are able to adapt and change flexibly in accordance with the competitive context’ (Li & Yang, Reference Li and Yang2017: 918–919). Co-opetition intended as an implicit strategy is observed when it derives from out-helping and out-performing situations to simultaneously out-performing and out-helping with others. Additionally, co-opetition should forestall extremes, and actions should be in harmony with the Zhong-yong. Accordingly, even if both implicit and explicit strategies are rooted in the either/and logic, we infer that the outcomes of these two strategies depend on how managers actually respond to paradoxical tensions (Leung et al., Reference Leung, Liou, Miron-Spektor, Koh, Chan, Eisenberg and Schneider2018).

Finally, in contrast to Taoism and Confucianism, which posit that individuals naturally out-help each other, Legalism assumes that cooperation should be imposed among the players (Lin et al., Reference Lin, Li and Roelfsema2018). Actually, Legalism offers the following original perspective of co-opetition that occurs as an induced strategy in which ‘public sector organizations might exert a very important effect on the way co-opetition is formed’ (Mariani, Reference Mariani, Fernandez, Chiambaretto, Le Roy and Czakon2018: 111). Managers develop co-opetition strategies when forceful incentives drive them to find alternatives to cooperating with rivals (Kylänen & Rusko, Reference Kylänen and Rusko2011). Finally, because of yin-yang epistemology that exemplifies Legalism, cooperation induced by policy makers may activate a balancing mechanism of imposed cooperation in some activities at the same time and in the same space. The notion of induced co-opetition is particularly illuminating in understanding not only horizontal co-opetition but also vertical relations within a firm. For instance, Chiambaretto et al. (Reference Chiambaretto, Massé and Mirc2019) underscore the role of a neutral third party (as the state in Legalism) that is a ‘neutral actor’ that reduces any opportunistic behavior underlying the actions developed by the divisions and acts as a ‘go-between’ by encouraging and facilitating co-opetitive interaction between divisions.

Implication 2. Western Philosophy Allows Discerning Co-opetition as a Deliberate or an Emergent Strategy

As Table 2 shows, shifts along the vertical axis that trace the origination of co-opetition strategies cannot occur because the origination cannot change. In contrast, it is possible to think that actors may change interests and approaches of interaction during the stage of evolution of any relationship, which may lead to different culmination blocks for co-opetition. Nonetheless, drawing on our philosophical inquiry, we argue that shifts among the quadrants of our framework should occur within the contour of the same philosophical system. The fact that Western philosophy rejects contradictions explains why – far from being alternative options – both competitive and cooperative settings may serve as a culmination block for firm strategies.

Interestingly, when external forces stemming from the environment impose a change in a culmination block, as Mintzberg and Waters (Reference Mintzberg and Waters1985) argue, we can observe a shift from a deliberate to an emergent strategy. In this regard, the inquiry of the thinking of Smith and Kant (see Table 1) allowed us to detect the distinction between co-opetition as a deliberate strategy and co-opetition as an emergent strategy (Mintzberg & Waters, Reference Mintzberg and Waters1985). Specifically, through Kantian ideas, co-opetition is an emergent strategy because it is strictly related to conditions that may emerge to craft stable relationships with rivals. Through Smithian ideas, co-opetition is a deliberate strategy for which the market can operate on the grounds of participants’ pursuit of their self-interests (White, Reference White2010), and each specific economic transaction helps define the collective well-being. Drawing on such premises and Dahl, Kock, and Lundgren-Henriksson (Reference Dahl, Kock and Lundgren-Henriksson2016), we identify the following sequences:

1. 1. The shift from quadrant a1b1 to quadrant a1b2, namely, from deliberate cooperation to emergent competitive cooperation: actors in cooperation progressively adopt actions in which they out-perform each other and competitively race for learning faster to terminate the alliance. For instance, De Rond and Bouchikhi (Reference De Rond and Bouchikhi2004: 65) observe that ‘the continuation of the alliance after each competitive episode was possible only because people on both sides were willing to pursue cooperation despite diverging interests’ (Mariani, Reference Mariani2007).

2. 2. The shift from quadrant a1b2 to quadrant a1b1, namely, from deliberate competitive cooperation to emergent cooperation: Actors adopting competitive cooperation may progressively acknowledge that they could no longer compete because external forces stemming from the environment directly impose a pattern of forced cooperation.

3. 3. The shift from quadrant a2b1 to quadrant a2b2, namely, from deliberate cooperative competition to emergent competition: Actors adopting cooperative competition may progressively acknowledge that they are not interested in cooperating anymore because they see competition as the only way to further interact with that partner (Dagnino, Reference Dagnino, Dagnino and Rocco2009).

4. 4. The shift from quadrant a2b2 to quadrant a2b1, namely, from deliberate competition to emergent cooperative competition: Actors adopting cooperative competition may recognize that external forces push to cooperate (Kylänen & Rusko, Reference Kylänen and Rusko2011). In other words, emergent cooperative competition is unintentional in terms of external forces stemming from the environment that directly impose a pattern of forced cooperation between rivals (Castaldo et al., Reference Castaldo, Möllering, Grosso, Zerbini, Yami, Castaldo, Dagnino and Le Roy2010).