COOPE – a framework for managing coopetition in the platform economy

Abstract

Over the last 20 years platform business models become increasingly important in global economies. Digital economy and platform business models offer great potential for adding value to digital or digital enabled products. Companies can gain significant network effects and connect with different user groups via digital transaction platforms.Companies planning to enter platform business models traditionally have a choice between ‘making or buying’ a platform or enter existing ecosystems. Both options come with significant disadvantages in terms of risk, costs and governance. A promising innovative option for smaller players like SMEs or startup companies is the “co-opetition” approach. Companies co-operating with competitors to pool their economic strength and network effects in a joint platform and reduce market entry risks. In addition, potentials for reducing the costs of setting up IT infrastructures can be realised.Despite the advantages, the co-opetition approach also presents companies with design-related challenges. One challenge, for example, is to sustainably protect key competitive advantages and unique resources despite the cooperation and intensive exchange with competitors. If two or more competitors work together on a digital platform solution to collect, analyse and use machine data, the data could create unintended transparency about machine performance, strengths and weaknesses. Clear demarcation, control options and the building of trust between the companies are needed here. At the operational level, for example, it is important to establish a culture of cooperation among employees that allows for intensive exchange in some areas and competitive thinking and behaviour in others.In this paper we present a model for co-opetition in platform-economy combining concepts of platform economy, co-opetition and agility. Based on theoretical concepts a three-dimensional model has been elaborated that reduces complexity and provides decision support for relationship building with competitors in the dimensions: (1) strategy to enter platform economy (2) design layer which allows structural but agile coordination of relationships and (3) perspectives that need consideration on platforms. By combining the different concepts and perspectives, the model provides a theoretical framework for decision-making and supports companies in assessing the potentials of coopetition and realising them through appropriate design.