Abstract
The purpose of this paper is to examine inter-firm agreements between small firms and a large well-established firm, focusing on agreements involving complementary products. The well-documented emergence of the Japanese home video game industry is sourced for stylised facts to contribute to literature about the nature of complementary inter-firm agreements. Findings reveal that these agreements between small firms and a large well-established firm can be truly symbiotic, allowing the small firm to build its own reputation and influence the market. Furthermore, the small firm benefits from the user base and core competency of the large firm through economies of scale, and the large firm benefits from the product variety of the small firms through economies of scope. The managerial implications of this paper offer value to both small and large firms in terms of what to look for and how to benefit from inter-firm relationships based on complementary products.
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