“Us Versus Them” : The impact of homophily and trust in partner selection and cooperation intensity in coopetitive agreements

Abstract

As an increasing number of companies adopt coopetition strategies (simultaneous cooperation and competition), it is important to better understand how they select their coopetitor (partner-competitor) and how they set the intensity of their cooperation with these competitors. Because previous studies underestimated the social ties in which these coopetitive agreements occur, this research answers the following research question: How do homophily and trust impact partner selection and the intensity of cooperation in coopetitive agreements? We conduct a multiple-case study to investigate a network of coopetitive relationships between nine competing Cameroonian firms in the distribution of construction and civil engineering equipment in the Douala region (the economic capital of Cameroon) and use ethnic groups to measure the notion of homophily. Because all these firms have interethnic and intraethnic coopetitive agreements, we were able to address the importance of homophily in partner selection and in the intensity of cooperation in coopetitive agreements. Our findings show, first, that coopetitors prefer to cooperate with competitors that belong to the same group because they trust them more and anticipate less coopetitive tensions and opportunistic behaviors in the future. Second, we note that the intensity of cooperation between competitors is much higher in intragroup coopetitive agreements (i.e., within the same group) than in intergroup coopetitive agreements (i.e., between two companies whose managers are from two different groups). Third, we underline that peer pressure and the existence of credible sanctions reinforce the positive relationship between being a member of the same group and trust and thus the intensity of cooperation between coopetitors.