Researcher describes how ”coopetition” can improve competitive companies’ sustainability work
”My research can be used by managers who are interested in collaboration with their competitors in general and especially with intent to improve sustainability, both economic and social or environmental values. My findings can help in several ways, I hope,” says Siarhei Manzhynski.
By JOHAN MAGNUSSON
January 05, 2022
As a portmanteau of ”cooperation” and ”competition”, Manzhynski tells how coopetition means a phenomenon in which competition and cooperation occur simultaneously.
— On the one hand, coopetition is a complex, even paradoxical phenomenon. By default, the terms competition and cooperation are somehow opposing: they are rational and understandable separately but seem illogical together. The human mind usually finds it difficult to even imagine how it is possible to compete and cooperate simultaneously. So coopetition is a contradictory complex relationship that is very hard to organize and manage. On the other hand, in real life, we see more and more practical examples of coopetition. Some of them became famous in business life. For instance, the cooperation between Sony and Samsung who set up a joint venture in 2004 to develop and manufacture large-sized LCD panels. Another example is airline alliances such as Star Alliance, SkyTeam, and Oneworld. Recently, we have seen successful cooperation between Pfizer and BioNTech to create COVID-19 vaccine COMIRNATY based on the mRNA technology, he tells.
Originally from Belarus, Manzhynski is now a researcher and teacher at Umeå School of Business, Economics and Statistics, where he just defended his second PhD in Business Administration on the topic of Coopetition for Sustainability.
— My research focus is coopetition for sustainability, which means when competitors collaborate not only to gain economically but when they aim to achieve considerable economic, social, and environmental goals, he tells. In coopetition for sustainability economic interests do not dominate over environmental and social ones and that makes this kind of coopetition unique and more complex for managing. On the other hand, it sounds more promising for society because such coopetition is not limited to the boundaries of several companies and can address large societal and environmental challenges such as climate change, poverty, wastewater, air emissions, and land pollution. An organization can obviously contribute to sustainability differently and not only via coopetition. However, the role of coopetition in the sustainability agenda is increasing. Sometimes cooperation among competitors (companies from the same industry) seems the optimal, if not the only, possibility to deal with a certain environmental or societal issue. Why? Because usually, one company is unable to do it itself while the state or other stakeholders don’t have enough competence to address the issue effectively and efficiently.
One practical example that Manzhynski has investigated in his thesis is the project Tomtebo strand. In this new sustainable residential area in the city of Umeå, around 3,000 apartments and many business premises are planned to be built. When finished, in 2030, it will accommodate nearly 10,000 people living and working in the area, making it by far the largest project during recent years in the city. The project is developed by seven Swedish national construction companies, such as NCC, Peab, and Skanska.
— In this case, the construction companies remain strong competitors in the market but they, together with Umeå municipality, collaborate to create a green, energy-efficient, and car-free area with a high mobility potential and affordable housing. It’s an excellent case where sustainability and coopetition are taking place together because the project is based on close sustainability-oriented collaboration between seven construction firms that are strong competitors in the national market. Furthermore, it involves not only construction firms but also several other collaborators, including the local municipality and its infrastructure companies. This makes the project even more complex and involves other inter-organizational aspects, such as a public-private partnership. Involvement of other stakeholders in coopetition is quite frequent for sustainability-oriented projects because of the complexity and importance of sustainability issues and Tomtebo strand is one such, as it involves multi-stage planning and construction of an entirely new district in Umeå.
Manzhynski tells how his experience shows that many companies from various industries in Sweden are willing and looking for opportunities to cooperate with their competitors for sustainability matters, such as social innovation, developing new environmentally friendly products and technologies, and resolving infrastructure issues.
— However, not always do they dare to initiate such relationships because of high perceived risks. Some cases of cooperation among competitors remain formal and others fail over time. The reason for these failures is in coopetition’s complexity and contradiction. It may rise numerous tensions that can confuse and frustrate managers. For example, it simultaneously requires knowledge sharing, which the collaborative logic implies, and knowledge protecting, which the competing logic demands. Balancing between knowledge sharing and knowledge protecting is not easy. And if this coopetition is for sustainability, managers additionally need to balance between economic, social, and environmental demands which often contradict each other as well. For instance, one solution might be more expensive but ”greener” and vice versa. Furthermore, coopetition is often associated with opportunistic behavior, when one company forces other competitors to act in line with its interests, and/or free-riding, when one or some companies pretend cooperation rather than act in good faith.
— So in my research, I try to understand why competitors cooperate for sustainability, how they organize their cooperation process, what makes cooperation with competitors successful, and how we can assess this success.
Yes, how can companies use your research in their daily operations?
— It can be used by managers who are interested in collaboration with their competitors in general and especially with intent to improve sustainability, both economic and social or environmental values. My findings can help in several ways, I hope, says Manzhynski. He continues:
— First, my co-authors and I elaborate organizing mechanisms that help managers to navigate the coopetition for sustainability relationship, providing, on the one hand, flexibility to adjust and adapt different solutions and, on the other hand, momentum to drive the competitive relationship forward. We revealed in practice and characterized in detail four interrelated organizing mechanisms — bracketing, gluing, calibrating, and locking-in. We describe how they function separately and together.
— For example, bracketing [the photographic technique of taking several shots of the same subject using different camera settings, Ed’s note] orients managers to focus on specific issues by demarcating certain problem areas while temporarily ignoring other aspects beyond the demarcation borders. Using analogy from photographing technics, managers install (bracket), separate settings (solutions) for different parts of the picture (issues of the project). It enables actors to divide the complex project into some parts (solutions, elements) and temporarily mitigate some contradictions. The latter, in turn, allows moving the mutual activities forward, acknowledging, however, that solutions and decisions are rather suboptimal and will be critically analyzed further.
— Gluing, in contrast, orients managers to integrate problem solutions via common discussions, evaluations, and decision-making. Actors are ”zooming out” from the specifics that have been dealt with within bracketing. Continuing the photo analogy, managers glue different parts of the picture in one.
— Calibrating orients managers to be flexible in determining the means and ends of their mutual work by adjusting ongoing goals and solutions. It enables actors to correct former decisions and solutions and thus to adapt the cooperation to possible changes. In other words, by calibrating managers adjust initial settings in their ”mutual cameras”.
— Locking-in orients actors to stick to certain frameworks in their project activities by establishing and controlling the execution of specific tasks, milestones, and deadlines. It enables actors to carry out their activities and to move the project forward even though with some remaining contradictions. Employing the analogy, managers tend to stick to some standard settings if the previous series of ”snapshots” were not successful.
— Second, by examining the cause-effect relationship between the process and outcomes in coopetition for sustainability, I provide important practical implications for managers who are involved in and responsible for coopetitive relationships. For example, my findings show that managers can affect outcomes by regulating the intensity of cooperation with competitors. For relatively rare and weak interactions, such as to those who have not been involved in coopetition for sustainability, managers are encouraged to intensify cooperation by initiating mutual projects or joining existing initiatives. In contrast for relatively strong coopetition — when the company is already engaged in a large number of coopetive projects and interact with many competitors — managers instead need to keep the status quo and not get involved in more or deeper interactions or even abate some interactions because increased complexity can spoil benefits of the cooperation.
— Third, my research suggests a practically applicable approach for systematically assessing the outcomes of coopetition for sustainability.
According to Manzhynski, depending on which level and which resource is in factual interest success of coopetition can be interpreted differently.
— I argue that for a more comprehensive evaluation of coopetition for sustainability we need to consider aggregated outcomes that go beyond the level of individual firms or individual resources, he says. For practical assessments, I developed a special method based on Sustainable Value Approach. That allows managers to present information about outcomes in a traditional business way, that is in numerical monetary units, which is not easy when it comes to environmental and social dimensions. This allows stakeholders to compare gains and losses for each firm and resource as well as at the group level, supporting decision-making processes. For example, partners can conclude the overall feasibility of coopetition. They can also justify practical mechanisms of compensation of losses.
— The other possible practical application of the presented approach for assessing the outcomes of coopetition for sustainability lies in corporate governance and governmental regulations. It can be used by corporate boards, governments, and other stakeholders to support firms’ sustainability-oriented practices. For example, many nations are now pushing their domestic industries to reduce CO2 emissions to fulfill the Paris Agreement, and in these trajectories, collaboration between industry competitors is often called for, such as the Swedish Fossil Free Sweden Initiative. The presented approach can help clarify when and where coopetition works as a strategy to make the best use of shrinking industrial carbon budgets.
For Manzynski, the cover page picture of the dissertation (pictured above, featuring his own kids) symbolizes the phenomenon of coopetition for sustainability.
— This is a relatively novel phenomenon, kids, that means cooperation, or mutual action, for something socially and environmentally important but hard — watering flower which is growing through asphalt — and with the dark side, the shadow picture, of fighting, he says.
What happens now? How do you proceed?
— We continue working with our empirical cases, in particular with Tomtebo strand in Umeå. I and my co-authors are involved as observers in the project and we follow how it develops over time. We have already applied some of our findings presenting and discussing them with the actors of the project during two special workshops. Moreover, me, associate professor Herman Stål and professor Maria Bengtsson in the research team won the research grant from FORMAS where we plan to continue investigating coopetition for sustainability in the context of mobility hubs. In this project, we are studying the development and implementation of business models for residential mobility hubs which are designed collectively by competing companies. Such mobility hubs are devoted to decreasing car use in residential areas by transitioning from car ownership to a mobility-service business model. We are also open to any cooperation with practitioners who are interested in or fulfilling cooperation with other companies from the industry. We are willing to provide our experience and expertise in the field of coopetition for sustainability: how to organize and manage it as well as how to comprehensively estimate results and outcomes of such relationship, Manzhynski concludes.