Competition, Cooperation, and Ownership Strategy in Acquisitions

Abstract

The coopetition framework posits that conflicting logics can help explain some complex firm strategies. We advance this framework by contrasting the competition and cooperation logics of acquisition to predict a firm’s ownership strategy. We argue that market competition between two firms may increase the level of ownership acquisition to certain extent, whereas cooperation through partnership may lower the level. Moreover, we examine whether cooperation deters rivalrous behavior or competition eclipses cooperation in collaborative ventures. In addition, we also introduce technology gap as a moderator that may alter the relationship between coopetition and ownership strategy. Based on the analyses of a sample of equity acquisitions between U.S. public firms, we find evidence that supports our theory and provides implications for the theoretical development of the coopetition framework.