Coopetition for innovation in R&D consortia: Moderating roles of size disparity and formal interaction

Increasingly, firms are forming alliances to engage in cooperative innovation activities with their competitors. Participating firms in an R&D consortium can not only obtain the general benefits from cooperation, but also further promote communication and mutual learning due to the common knowledge base with their competitors in the consortium. However, R&D consortium as a typical cooperative innovation alliance has downsides too - competition in a cooperative consortium provides member firms with not only benefits, but also challenges. The opportunistic nature of competition poses a dilemma for member firms when they decide how much effort should be committed to cooperative R&D activities. This study aims to investigate the benefits and costs of competition for firm innovation in cooperative R&D consortia. The study will also identify the boundary conditions to amplify the advantages of competition in terms of the network properties of consortia. The study employs data from 649 firms in 50 Japanese R&D consortia to analyze the curvilinear relationship between the intensity of competition and firm innovation in a cooperative consortium. It was found that a focal firm with a moderate level of competition will have better innovation performance compared to those with either a low or high level of competition. Moreover, it investigates the moderating roles of the firms’ size disparity of R&D consortia and the consortium-organized interaction. The results indicate that the R&D consortium with a low size disparity amplifies the linear effect of the competition on cooperative innovation, which can help the focal firm achieve more gains from cooperative R&D. The consortium-organized interaction strengthens the curvilinear effect of the competition intensity on innovation. This study, using resource dependence theory and social network lenses, extends our understanding of the role of coopetition in firm innovation performance by filling the gap in when and to what extent the intensity of competition matters in multiparty cooperative R&D consortia. It also provides new evidence on the boundary conditions of R&D consortia managing the tension.