The emergence of coopetition in highly regulated industries: A study on the Brazilian private healthcare market

Abstract

Coopetition between firms starts from one of two general development patterns: the deliberate strategy or the emergent strategy. These two patterns of coopetition have been largely studied in developed countries where institutions are efficient and provide a favorable environment for business strategies. However, the institutional environments in developing economies are neither efficient nor business friendly. Government intervention is not uncommon in developing economies, particularly in highly regulated industries. The purpose of this paper is to advance knowledge about the emergence of coopetition in highly regulated industries in developing economies. To achieve this, we carried out an exploratory case study with 22 representatives from the Brazilian private healthcare industry. The study extends coopetition theory on the emergence of cooperation between competitors in a highly regulated industry; advances the institutional approach to coopetition; shows the role of governmental pressures in the interplay of competition and cooperation in developing economies; and contributes to the coopetition strategy literature by identifying institutional dysmorphia, a distortion of a formal institutional agent's primary role, and its effects on the strategic decisions of competitors. We conclude that legitimate institutional pressures foster the emergence of transactional coopetition while dysmorphic institutional pressures foster the emergence of confrontational coopetition.