Co-opetition and the Firm’s Information Environment

Abstract

Some firms in the technology sector choose to cooperate with competitors (“co-opetition”) in Standard Setting Organizations (SSOs). These SSOs create technology standards that facilitate rapid market penetration of new technologies such as Wi-Fi, Bluetooth, and 4G. Active participation in the standard setting process requires the exchange of proprietary information with competitors. While the goal of such information sharing is to further a technology or a market, firms potentially receive an unintended benefit from access to competitor and industry information. We examine whether active SSO participation enhances a firm’s information set and allows managers to better predict future sales. Conducting within-firm analyses, we find that the centrality of a firm’s location within the network of SSO collaborators is positively related to the accuracy of the firm’s sales forecasts. This relation is stronger when firms share more information with direct competitors, when forecasting is more difficult ex ante, and when firms forecast over longer horizons. Our findings show that collaborating with competitors in the product market provides an important unintended benefit of improving the manager’s information set.