Definition

coopetition (co-opetition)

Coopetition is a business strategy that uses insights gained from game theory to understand when it is better for competitors to work together. 

Coopetition games are mathematical models that are used to examine in what ways cooperation among competitors can increase the benefits to all players and grow the market. The models also examine when it's best to allow competition to divide the existing benefits among players in order to provide the leading competitors with more market share. 

The coopetition model starts out with a diagramming process called the value net, which is represented as a diamond with four defined player designations at the corners. The players are customers, suppliers, competitors and complementors (competitors whose products add value). The goal of coopetition is to move the players from a zero-sum game, in which the winner takes all and the loser is left empty-handed, to a plus-sum game, a scenario in which the end result is more profitable when the competitors work together. An important part of the game is to learn which variables will influence the players to either compete or cooperate and when it is to a player's advantage not to cooperate. 

Coopetition (also spelled co-opetition) is a portmanteau, combining the words cooperation and competition. The principles and practices of coopetition are credited to Harvard and Yale business professors, Adam M. Brandenburger and Barry J. Nalebuff. Competitive businesses that also cooperate when it is to their advantage are said to be in coopetition.

This was last updated in March 2014
Posted by: Margaret Rouse

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