Co-opetition Between Giants- Collaboration With

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Research Policy 40 (2011) 650663

Contents lists available atScienceDirect

Research Policy

j o u r n a l h o m e p a g e : w w w . e l s e v i e r . c o m / l o c a t e / r e s p o l

Co-opetition between giants: Collaboration with competitors for technologicalinnovation

Devi R. Gnyawali , Byung-Jin (Robert) Park 1

Department of Management, Virginia Polytechnic Institute and State University, Blacksburg, VA 24061 (0233), USA

a r t i c l e i n f o

Article history:

Received 1 June 2009

Received in revised form24 November 2010

Accepted 13 January 2011

Available online 12 February 2011

Keywords:

Co-opetition

Innovation

S-LCD

Co-opetition capability

Case study

a b s t r a c t

We investigate why and how co-opetition (simultaneous pursuit of collaboration and competition)

between large firms occurs, evolves, and impacts the participating firms and the industry. We develop

a multi-level conceptual framework by combining literature-based conceptual arguments and insights

from an in-depth study of an exemplar case of co-opetition between Samsung Electronics and Sony Cor-

poration. Our study demonstrates that co-opetition is challenging yet very helpful for firms to address

major technological challenges, to create benefits for partnering firms, and to advance technological

innovation. We alsoshow thatco-opetition between giants causes subsequent co-opetition among other

firms and results in advanced technological development. Moreover, co-opetition capabilities of firms

play an important role in enhancing common benefits as well as in gaining proportionately larger share

of the benefits.

2011 Elsevier B.V. All rights reserved.

1. Introduction

Scholarly attention to co-opetition, which we define as a

strategy embodying simultaneous cooperation and competition

between firms (Bengtsson and Kock, 2000; Gnyawali et al.,

2008)has increased with its practical significance (Brandenburger

and Nalebuff, 1996; Dagnino and Padula, 2002; Luo, 2004;

Walley, 2007). Co-opetition is more critical in high technol-

ogy contexts because of several challenges such as shrinking

product life cycles, need for heavy investments in research and

development, convergence of multiple technologies, and impor-

tance of technological standards (Garud, 1994; Gnyawali and

Park, 2009; Gomes-Casseres, 1994). Because competing firms

possess relevant resources and face similar pressures, collab-

oration with competitors enables firms to acquire and create

new technological knowledge and use the knowledge in pur-

suit of innovations (Quintana-Garca and Benavides-Velasco,2004; Ritala et al., 2009). Despite its increased importance, lim-

ited research has systematically examined why and how firms

engage in co-opetition and how co-opetition impacts innova-

tion. This paper aims to address this critical gap by focusing

on the following questions: (a) what factors drive co-opetition

in the context of technological innovation? and (b) how does

Corresponding author. Tel.: +1 540 231 5021; fax: +1 540 231 3076.

E-mail addresses:[email protected](D.R. Gnyawali),[email protected](B.-J. Park).1 Tel.: +1 540 231 2749; fax: +1 540 231 3076.

co-opetition impact the participating firms and the indus-

try?

We address these questions in two phases. First,we reviewrele-

vant literature to develop conceptual arguments regarding drivers,

dynamics, and consequences of co-opetition. Second, we discuss

our study of a unique and exemplar case of co-opetition between

giants, i.e., a joint venture called S-LCD between two rivals Sam-

sungElectronics and Sony Corporation to develop and manufacture

flat-screen LCD TV panels. The case study was instrumental in

illuminating critical factors relevant to the drivers, dynamics, and

outcomes of co-opetition described in the conceptual discussion.

By blending the conceptual arguments and the findings from the

case study, we develop a multi-level conceptual framework of co-

opetitionthat consistsof multipledrivers,dynamics, andoutcomes.

Our framework also underscores the role of firms co-opetition

capability in creating common benefits by the partners as well as

in leveraging the benefits by the individual firms.This paper contributes to both co-opetition and innovation lit-

eratures. First, it enriches our understanding of why and how

co-opetition between giants could be driven by factors at multi-

ple levels, how the co-opetition relationship evolves, and how the

leadingfirms co-opetitionmight impactthe participatingfirms and

the industry as a whole. Second, we demonstrate that co-opetition

between leading firms often helps the firms to achieve better out-

comes in terms of market shares, technological development, and

technological standards in the industry. We also articulate why co-

opetition may not generate benefits for participating firms unless

the firms possess necessary capabilities to anticipate and manage

0048-7333/$ see front matter 2011 Elsevier B.V. All rights reserved.

doi:10.1016/j.respol.2011.01.009
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D.R. Gnyawali, B.-J. Park / Research Policy 40 (2011) 650663 651

challenges and opportunities in co-opetition. Finally, we articulate

unique dynamics of co-opetition between giants and explain how

it changes the dynamics in the industry. Ourfindings show that co-

opetition between giants causes subsequent co-opetition among

other firms, whichchanges the competition structure in the indus-

try andresults in advancedtechnological development. We suggest

that co-opetitionbetween bigrivals canbe instrumental not just to

push technological advancements but also to provide consumers

with better products and lower prices.

2. Co-opetition for technological innovation

In this section, we provide an overview of the co-opetition

literature and discuss why co-opetition is important for techno-

logical innovation. We then discuss key drivers and outcomes of

co-opetition between leading firms (giants). The conceptual foun-

dation laid in this section provides the basis for the case study

described in the next section.

2.1. Role of co-opetition in innovation

Based on the core idea of the dynamic interplay between col-

laboration and competition (Chen, 2008; Gnyawali and Madhavan,2001; Gnyawali et al., 2006; Lado et al., 1997), co-opetition is

considered a unique strategy that capitalizes on the benefits

of collaboration and competition (Brandenburger and Nalebuff,

1996; Bengtsson and Kock, 2000)and necessitates management

approaches that can address the tension caused by the inter-

play. Increased popularity of co-opetition is evident by the fact

that over 50% of collaborative relations (strategic alliances) are

between firms within the same industry, that is, among competi-

tors (Harbison and Pekar, 1998).

While elements of both competition and collaboration are

essential for the conceptualization of co-opetition, scholars have

used a wide variety of definitions and perspectives in examin-

ing co-opetition (Yami et al., 2010).Some definitions are focused

and others are rather broad.Brandenburger and Nalebuff (1996)adopt a broad view of co-opetition and define it as relationships

in a value-net in which two competitors (e.g. computer manu-

facturers) can be complementors through their cooperation with

a third firm (e.g. software producers). Co-opetition is viewed by

them as the sum of many different relationships and the cooper-

ative and competitive parts are divided between different actors

(Bengtsson et al., 2010).On the other hand, Bengtsson and Kock

(1999, 2000) narrowly define co-opetition as simultaneous col-

laboration and competition between two firms and the different

parts of the relationship are divided between activities. For exam-

ple, competitors cooperate within activities far from the customer,

while competing in activities that are close to customer interac-

tion (Bengtsson and Kock, 2000).Gnyawali et al. (2008)provide a

framework that explains how co-opetition occurs very intensely(when a dyad engages in simultaneous collaboration and competi-

tion) and much less intensely (when several firms engage in some

forms of collaboration and competition at different time periods).

They suggest that the most intellectually intriguing and manageri-

ally challenging form of co-opetition is dyadic inter-firm. Along the

same lines, Bengtssonand Kock(1999) suggest thatscholars should

more narrowly define co-opetition in order to deeply understand

co-opetition and its implications. Accordingly, we adopt a focused

definition of co-opetition, i.e., simultaneous pursuit of collabora-

tion and competition between a pair of firms.

Although co-opetition is considered a win-win strategy, firms

struggle with a dilemma between the need to work together in

order to create value and the temptation to be opportunistic in

order to appropriate a greater share of the created value (Lavie,

2007; Gnyawaliand Park,2009; Ritala andHurmelinna-Laukkanen,

2009). Co-opetitive relationships thus involve high degree of inter-

dependence with each other and are full of conflict, and yet the

potential for payoff is also high. Therefore, it is important to

examine conditions in whichfirms engage in co-opetition, how co-

opetition evolves, and how firms can achieve positive outcomes

through co-opetition.

Another important inquiry is how co-opetition could impact

innovation. Innovation has long been seen as a source of com-

petitive advantage (Abernathy and Clark, 1985; Ahuja and Katila,

2001; Schumpeter, 1942; Teece, 1996; Utterback andSuarez,1993).

Research shows that alliance partners and network help firms to

access, acquire, and leverage important resources in pursuing inno-

vation (Ahuja, 2000; Ahuja et al., 2008; Lei, 2003; Powell et al.,

1996; Sampson, 2007; Tether, 2002; Tsai, 2009). Collaborations

provide timely access to knowledge and resources that are oth-

erwise unavailable, and firms can combine each others resources

in pursing innovation projects that involve high risks and require

heavy investments. Because the relational resources and advan-

tages that stem from such relationships are important (Dyer and

Singh, 1998), firms actively pursue inter-firm alliances to create

new knowledge and capabilities so that they can enhance their

innovation outcomes(Sampson,2007). Verylimitedresearch,how-

ever, has addressed how co-opetition impacts innovation. Jordeand Teece (1990)argue that cooperation among competitors is

essential if innovating firms are to compete in todays global mar-

kets. Quintana-Garca and Benavides-Velasco (2004) empirically

show that collaboration with direct competitors is important not

only to acquire new technological knowledge and skills from the

partner, but also to create and access other capabilities based on

intensive exploitation of the existing ones. Considering that co-

opetition is popular in high-tech industries (Dagnino and Rocco,

2009; Gnyawali and Park, 2009), it is necessary to examine the

role of co-opetition in innovation in high-techindustries and under

what conditions firms might generate positive innovation perfor-

mance in co-opetitive relationships.

Collaboration with competitors also raises public policy con-

cerns with the potential for collaborating competitors to engagein collusion that may hurt innovativeness as well as consumer

welfare. Collusion concern could be high when giants with strong

market power engage in co-opetition.To address thisconcern,Jorde

and Teece (1990)suggest that cooperation among competitors for

technological innovation might not necessarily be anticompeti-

tive because of the potential to bring unique products, create new

markets, and develop integrative technologies that will ultimately

benefit consumers.Ingram and Yue (2008)argue that the oppor-

tunity for cooperation between competitors should not be seen as

violating antitrust issues, but rather as a legitimate business prac-

tice. They argue that deflating the taboo against the cooperation

between competitors also contributes to the policy makers deci-

sion when designing policies that aim at developing a more viable

business community (Ingram andYue, 2008, p. 296). An importantneed in the literature therefore is to examine if and when cooper-

ation among competitors could promote competition and, in turn,

innovation as suggested byTeece (1992).

2.2. Drivers of co-opetition in high technology industries

As notedearlier,high technology industries seem to face unique

challenges and opportunities and therefore are more conducive to

co-opetition. FollowingGnyawali and Park (2009)and other prior

research (Chen and Li, 1999; Palmberg and Martikainen, 2006;

Quintana-Garca and Benavides-Velasco, 2004; Sampson, 2007),

we identify key industry-level factors that drive co-opetition.

Gnyawali and Park (2009) argue that three major technological

challenges shorter product life cycles, convergence of multi-


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652 D.R. Gnyawali, B.-J. Park / Research Policy 40 (2011) 650663

ple technologies, and increasing R&D and capital expenditures

serve as important drivers for firms in high technology industries

to engage in co-opetition. As product life cycles are dramat-

ically shrinking (Chen and Li, 1999) due to rapidly changing

customer preferences and speed and magnitude of technological

changes, firms need to speed-up their innovation efforts (Lynn

and Akgn, 1998).Technological convergence provides both risks

and opportunities to firms, which facilitates co-opetition. Conver-

gence increases risks and uncertainty aboutmarket and technology

and pushes firms to reach out to other firms, including competi-

tors, to share the risk and to access and combine a variety of

sophisticated technologies. Technological convergence also offers

companies (especially for leading firms)opportunities to set indus-

try standards. Besides competing to develop new technologies,

companies try to shape emergingindustrystructures andstandards

required to support their development and diffusion(Garud, 1994).

As technological standards and platforms lay the foundation for

new products and services (Lei, 2003), competitors cooperate with

each other to win battles for industry standards (Gomes-Casseres,

1994) and to create industry-wide norms (Mione, 2008).Finally,

R&D intensity (R&D expenditures as percent sales) is very high in

high technology sectors (BIS, 2009).Such high R&D costs provide

strong incentives for companiesto cooperate withcompetitors that

have a large resource base. Creating a co-opetitive relationship isan effective way to combine R&D expenses, expertise, and other

resources (Zineldin, 2004).

In addition to the industry and technological trends discussed

above, firm strategies and resources are likely to motivate giants

to engage in co-opetition. From the firm strategy perspective,

leading firms aspire to lead their industry and constantly pursue

technological innovations to establish industry standards and gain

competitive advantages (Ahuja et al., 2008; Lei, 2003). From the

resource/capability perspective, large rival partners haveresources

and capabilities superior to many other potential partners in the

industry. Resources and capabilities of competitors are also likely

to be directly relevant because competitors confrontcommonchal-

lenges. Superior and relevant resources and capabilities will be

critical for speeding up R&D process or pursuing industry (or tech-nology) standards.

2.3. Dynamics of co-opetition between leading firms

Co-opetitive relationships are unstable (Park and Russo, 1996)

and dynamic in nature (Luo, 2007), which cause high level of

tension for firms. Leading firms pursuing co-opetition with rivals

confront a dilemma: the existence of attractive opportunities and

risks of misappropriation by the partner. That is, co-opetition

between leading players involves high levels of tension for var-

ious reasons. As Ingram and Yue (2008) note that competition

and cooperation derive from the same relationships to resources,

the very characteristics of partners that are critical for pursuing

opportunities may also cause competitive tension. Tension inten-sifies because direct competitors may be aware of, motivated to

pursue, and be capable of confronting each other (Chen et al.,

2007).Also, firms competitive goals conflict because of their aspi-

rations to become market leaders. Any opportunistic behavior by

the competitor-partnercould result in serious knowledge and mar-

ket loss. These conditions coupled with potential for high payoff

from co-opetition simultaneously lead to instability in and rein-

forcement of the relationship. Such tension and instability also

underscore the need to have a more balancedpartnershipbetween

the partners and the importance of balancing competition and

cooperation by the firms.

The abovementioned conditions are illustrative of how co-

opetition forms and evolves over time and thereby help explain

the dynamics of co-opetition. In the co-opetition formation stage,

firms will actively seek a way toreduce thehazardsof opportunism.

Transaction cost economics suggests that adopting an equity joint

venture structure mitigates the hazards of opportunism because

incentives are more closely aligned (Oxley, 1997; Sampson, 2004).

Narrowing the scope of cooperation is an alternative to reduce the

risk of partner opportunism (Oxley and Sampson, 2004).Mutual

commitment of partners top management to co-opetition would

be an important factor in dealing with opportunism.

Participating firms need for value creation and appropriation

and balance of competition and collaboration lead to dynamism

in co-opetition. Value creation occurs through cost sharing,

economies of scale, standard setting, and use of relational-specific

routines.Luo (2007)implies that firms will get more opportuni-

ties to create greater common value and benefit from it when the

industryor thebusinesssegmentis growing.Leading firmscan even

create new markets. Being able to balance competition and cooper-

ation is critical to maintain stability in relationships (Das and Teng,

2000).Dynamics of co-opetition would be thus shaped by indus-

try and partner conditions as well as firms capabilities to pursue a

win-win approach, manage the tension, and balance the relation-

ships. We explicitly discuss the role of firm capability in Section

4.4.

2.4. Outcomes of co-opetition between leading firms

We suggest that the outcomes of co-opetition between lead-

ing firms should be analyzed at multiple levels (focal firm, dyadic

or combined, and industry levels) to explore the effects of value

creation and appropriation and address the concern of scholars

and policy makers on the industry impact of co-opetition. Fur-

ther, participating firms capability to manage co-opetition could

be important for firms to generate benefits from co-opetition.

Value creation and value appropriation are central to co-opetition

(Brandenburger and Nalebuff, 1996).Cooperation is based on the

expectation to enlarge and/or protect the size of value through

joint efforts, but competition is driven by the desire to capture a

bigger proportion of the value privately. Private benefits depend

on the distribution of common benefits and the effects go beyondthecollaboration boundary.Commonbenefits aredistributed based

on the resource dependency; the partners who bring the more

critical resources to the relationship can appropriate a higher per-

centage of the benefits (Pfeffer and Salancik, 1978). By learning

from partners, firms can facilitate their own product/technological

development andleverage theknowledge across related businesses

within the firms. Such effects may be intensified by competition in

co-opetition relationships. When competing firms cooperate, they

have a strong incentive to benchmark each other and prepare for

the consequences of competition (Tsai, 2002).Capability of firms

to effectively manage co-opetition would be helpful in generating

higher common benefits and in appropriating a greater share of

such benefits. A firm possessing the mindset and experience rele-

vant forco-opetition may be able to handle conflicts, creategreatervalue, and appropriate bigger private benefits.

We suggest that co-opetition between leading firms in high-

tech industries, especially in the upstream aspects of a value chain

suchas R&D andtechnological innovation, leadsto a strong positive

impact on the industry. Co-opetition between major players may

promote innovationthrough competition.Teece (1992) argues that

complex forms of cooperation are usually necessary to promote

competition. We note that co-opetition between leading firms

may cause subsequent co-opetition among other firms because

many followers typically imitate and respond to industry leaders

actions. Thus, co-opetition between giants may change competi-

tive dynamics to more intensified form of competitionand leads to

group-to-group competition. Co-opetition can also enable firms to

overcome the appropriability (spillover) problems (Teece, 1992).


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Teece (1992, p. 12)points out that coupling to competitors often

promotes innovation because the set of firms receiving the bene-

fitsis likelyto include a greater portion offirmswhich have incurred

R&D costs. Finally, co-opetition is more likely to promote price

decline and better products in the market. Co-opetition between

giants may let consumers enjoy multi-feature products at reason-

able price due to economies of scale, pulling of complementary

resources to develop more integrative technologies, reduction of

duplication efforts, as well as intensified competition.

So far, we have reviewed the relevant literature and developed

conceptual arguments regarding the drivers, dynamics, and out-

comes of co-opetition between leading firms. Now we turn to an

exemplar case to illuminate and expand conceptual arguments.

After a thorough discussion of the case, we will propose a multi-

levelconceptualmodel by blendingthe literature-based conceptual

arguments and findings from the case.

3. In-depth case study

Case-based exploratory methods are best suited for investigat-

ing new and poorly understood phenomena (Eisenhardt, 1989)

that have multiple and complex elements (Dodgson et al., 2008)

and that evolve over time (Langley, 1999).Since co-opetition is amulti-faceted and paradoxical phenomenon, a thoroughcase study

spanningmultiple yearswouldprovidea goodunderstandingof the

drivers, dynamics, and consequences of co-opetition. Accordingly,

we conducted an in-depth study of an exemplar case with the goal

of providing richer anddeeper insightson thephenomenon to bring

key dimensions to light (Yin, 1984).

3.1. Research design and case selection

The research design employed an exploratory approach in order

to provide meaningful insights on the drivers, dynamics, and out-

comes of co-opetition between powerful large players. With the

goal of an exemplar case, we chose a much publicized joint ven-

ture between two major and large rivals in the electronics industry Samsung Electronics and Sony Corporation spanning a seven

year period (20032009).

Formanyyears, Samsung Electronicskey mission was to unseat

Sony Corporation as the worlds top electronics maker (Dvorak

and Ramstad, 2006),and both Sony and Samsung competed vig-

orously in many product-market segments. Despite their fierce

rivalry, the two firms established a joint venture (called S-LCD) in

April 2004 to develop and produce 7th generation (motherglass

size of 1870mm2200mm) liquid crystal display (LCD) panels

for flat screen TVs. The initial investment was US$1 billion from

each firm, and they tripled their investment and moved on to

the 8th generation technology within a few years. Samsung con-

tributed its technological strengths in the LCD technology while

Sony contributed its technological strengths and brand recognitionin television.

We believe that the co-opetitionbetween these giant and fierce

rivals is probablythe bestexemplarcase to understand co-opetition

and its impact. These two firms are largely matched in their size

and resources (refer toTable 1for details) and they have overlap-

ping products and markets worldwide. In 2003 when they agreed

to establish S-LCD, the annual revenue of Samsung Electronics was

US$54.1 billion and that of Sony was US$67.2 billion and global

brand rankings were 25th and 20th respectively. They have been

competing in various product markets, suchas TV, computer,video,

audio, and handset, as well as in various geographic markets in the

US, Europe, and Asia. This highly matched resources and capabili-

ties, as well as a past history of competition, make SamsungSony

co-opetition an intriguing case.

Table 1

Comparison between Sony Corporation and Samsung Electronics.

Resources Samsung

ElectronicsaSony Corporation

2003 2008 2003 2008

Total assets (US$ mi llion) 32,751 83,771 83,786 126,260

Sales (US$ million) 54,114 96,495 67,178 77,688

Oper at ing incom e (US$ mill io n) 5,258 4,799 1,188 ( 2, 289)

Net income 4,978 4,686 790 (1,027)

R&D investment (US$ million) 2,900 5,489 4,590 4,998

R&D intensity (%) 5.36 5.69 6.83 6.43

Number of patents registered in US 1,306 4,237 1,513 1,723

Global brand (ranking) 25 21 20 25

Source: Annual Reports of Sony and Samsung Electronics, USPTO, Business Week.a Samsung Electronics datais basedon consolidated financialstatements.In 2008,

Samsung Electronics R&D investment is 9.5% of parent company sales. Total assets

in 2003 are based on non-consolidated financial data.

Because it is a joint venture between two market leaders and

has had tremendous impact on the industry, the case provides a

useful context to understand whyand howco-opetitionfor techno-

logical innovation between giants or large powerful players occurs

and how such co-opetition could impact the participating firms,

other players in the industry, and the industry as a whole over

time. It is an interesting setting for our study also because trendsin the past several years suggest that the flat panel TV industry

has the characteristics of short product life cycles, a massive capi-

tal investment requirement, and a broad range of products. As the

TV technology changed from analog (CRT TV) to digital such as

liquid crystal display (LCD) and plasma display panel (PDP), rela-

tionships and dynamics among major players have also changed.

During the transition period, competition surrounding technolog-

ical standards has become intense. Thus, this is an intriguing case

to examine co-opetition because the firms are fierce rivals, have

matched resources and overlapping markets, and operate in a

rapidly changing and technology-intensive industry.

3.2. Sources of data

This study primarily relies on secondary data for two reasons.First, because the joint venture was widely publicized in media

outlets, it was possible to collect relevant information from pub-

lished sources. Compared to interview data, published secondary

data arelikely tobe more objectiveandallowfor cross-checks using

multiple sources. Second, ourattemptsto interview managers of S-

LCDdid notsucceed mainly because internal working details of the

venture are kept secret. Even though we informally interviewed a

few managers, it was difficult to get first hand information of the

intents, strategies, and positions of the partners. Data collection

involved two primary approaches. First, we collected data using

the two firms annual reports, industry research firms such as Dis-

playSearch, and other publicly available information.These sources

helped us develop a better understandingof the companies, various

technologies and trends, the industry, and related aspects. Second,using the Factiva database we downloaded and analyzed all news

reports related to the S-LCD, covering the period of 2003 (a year

prior to the formation of the S-LCD) to 2009. The Factiva database

covers thousands of newspapers from around the world. We made

sure thatthe reports containedmajor Japanese and Korean publica-

tionssuch as Nikkei, NikkeiWeekly, Korea Times,and Korea Herald.

One of the authors is a native Korean and was able to analyze news

reports published in the Korean language and gained additional

insights about the joint venture.

4. Results from the case study

We organize results from the case study in the following man-

ner: what factors led Samsung and Sony to engage in co-opetition;


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howthe co-opetition evolved over time; andhow this co-opetition

impacted the participating firms, other players, and the industry

as a whole. Data collected from the various sources noted above

are used to illustrate relevant points. We provide in theappendix

a summary of relevant quotes from the Factiva database and illus-

trate how they relateto the various aspects of ourdiscussion in this

section.

4.1. Drivers of co-opetition

What made two large and fierce rivals pursue the co-opetitive

partnership? Our examination showed that multi-level factors

were drivingthis relationship. In the TV industry,flat panel displays

have replaced Cathode-ray tube (CRT), which was the predominant

display technology for a long time. In addition to the prominent

LCD and PDP, firms introduced other technologies such as electro-

luminescent display (ELD), light emitting diode (LED), and organic

light-emitting diode (OLED). Such efforts of firms to introduce

new technologies have shortened product life cycles. The indus-

try shifted from analog to digital technology. The digital era also

required huge capital expenditures for the mass production of flat

panel displays. Moreover, technological convergence forced firms

to develop new products, such as LED TV and 3D TV. Understand-

ing complex technologiesand engagingin massproduction becamecritical in the digital era (Sony Annual Report, 2008).Thus, at the

technology or industry levels, key forces leading to the forma-

tion of the S-LCD were rapid change in the technology, the cost

of developing newtechnologies, and the complicated nature of the

technology.

Atthe firmlevel,bothSamsungand Sony areveryaggressiveand

proactive in terms of their technological development and market-

ing. Both are either leaders or close followers in many consumer

electronics technologies and products. The firms have not only

remained a step ahead of the competition but have also aimed to

lead in their major segments.They also established several techno-

logical standards. As a recent example, the Sony group, including

Samsung, won the DVD battle with the Blu-ray technology over

the Toshiba groups HD-DVD. The battle for the standard betweenLCD and PDP is intriguing. PDP technology led by Matsushita (now

Panasonic) and LG Electronics was dominant in large screen TVs

(over 40 in.) segment until Samsung and Sony worked together to

produce large LCD panels through S-LCD. Samsung stated that S-

LCDs industry-leading production capacity will be leveraged to

standardize and popularize LCD TVs with panel sizes in both the

40 and 50 ranges (Samsung Electronics Annual Report, 2006,p.

47).

Feeling of vulnerability in the face of changing industry and

technological dynamics prompted the firms to join hands with

competitors possessing complementary resources. When it con-

sidered the alliance, Sony needed to address a critical gap. Sony

had leadership in the traditional CRT TV market for a long time,

but it lagged far behind in the rapidly growing flat-screen TV mar-ket. Sony suffered a massive loss in 2003, which caused anxiety

in the stock market. The Sony Shock was attributed to the weak

performance of its main electronics business, which accounted for

about 66% of total sales (Uranaka, 2003).The TV business, which

accounted for about 20% of Sonys revenue, was undergoing mas-

sive restructuring to escape from the shock (Uranaka, 2003; Sony

Annual Report, 2004). In shifting its business focus to flat panel TV,

Sony executives realized that a stable supply of LCD panels was

critical for it to quickly catch-up on the flat-panel TV segment.

In 2003, Samsung was one of the strongest LCD panel producers

(Kim, 2006),even though it was not the largest LCD TV maker. For

Samsung, securing a large partner like Sony was critical to achieve

economies of scale and win the battle for the technological stan-

dard.Sonys precise and highstandards for technology and product

quality helped to push Samsungs panel technology ahead of oth-

ers. Each firm had unique characteristics and capabilities that the

other one needed. Sony benefited from Samsung in terms of strong

capability in the LCD technology, drive for pushing the LCD tech-

nology, and overall resource base. Samsung benefited from Sony in

terms of TV makingexpertise,brand name,and large andcontinued

demand for LCD panels (Dvorak and Ramstad, 2006).

In additionto the complementarities noted above, the two rivals

shared the massive capital investment needed to develop and

produce LCD panels. The total investment of approximately US$6

billion in 7th and 8th generation LCD panel plants was possible

because the two leading firms pursued the same goal of focusing

on large-size and high value-added models. It is hard to invest in

large-scale LCD facilities alone, and it holds a lot of attraction to

make investment in a place of strong infrastructure like this, said

Idei, CEOof Sony Corporation (Yonhap English News, 2004, refer to

Appendix A).Partnering with competitors with strong technolog-

ical capabilities was critical as the firms also faced time pressure

and could not develop the technology on their own. By collaborat-

ingwithSamsung, Sony could launch itsBravia series in the market

within one year after establishing S-LCD, and Samsung soon fol-

lowed with its own Bordeaux series. In summary, main reasons

for the formation of this co-opetition relationship included impor-

tant factors related to the industry and technology, the nature andstrategies of the firms, and resources and capabilities they had to

offer to each other. The firms not only felt that they could over-

cometheir vulnerabilitybut alsoenhance theirindividual strengths

and combine their strengths to create a positive impact on the LCD

technology and the flat-screen TV industry.

4.2. Dynamics of SamsungSony co-opetition

As discussed in Section2.3,dynamics relates to formation and

evolution of co-opetition. We observed that the governance mode

and the commitment of top management were important factors in

the formationof co-opetition. The firms established a joint venture,

a governance mode that provided strong safeguards and balance.

Each party owns 50% of the venture, with the CEO from Sam-sung and the CFO from Sony. Top management from the two firms

already had close relationships and made strong commitments to

the joint venture. For example, at Sonys request, Mr. Jae-Yong Lee,

the current vice president of Samsung Electronics and the eldest

son of the Samsung Group chairman, became a member of S-LCDs

board of directors. As Samsung was involved in both LCD and PDP

technologies, Sony wanted a strong commitment to S-LCD from

Samsungs top management.

The co-opetitive relationship has evolved over time. In Fig. 1,

we present areas of collaboration and competition mainly through

S-LCD and illustrate how the co-opetition between the two rivals

has evolved. The upper part ofFig. 1illustrates areas of competi-

tion and the lower part illustrates collaboration; moving from left

to right provides the evolution of co-opetition over the period of20032009.

Since the establishment of S-LCD in 2004, Samsung and Sony

have deepened their resource commitments to the venture. S-LCD

started 7th generation LCD panel production in April 2005 and the

production capacity increased from 60,000 to 100,000 panels per

month through additional investments. Based on their tremendous

success in the 7th generation technology, they have invested in

the 8th generation plant, which produces LCD panels of 46 in. and

larger. S-LCD started its 8th generation production in August 2007

with a production capacity of 50,000 substrates per month. In June

2009, S-LCD started production from its second 8thgeneration line

with a production capacity of 70,000 substrates per month.

While collaboratingthroughthe S-LCD, Samsung and Sonywere

simultaneouslycompetingfiercelyin the flatscreen TV market (and


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Fig. 1. Evolution of co-opetition between Sony Corporation and Samsung Electronics.

in other aspects of their business but not depicted in Fig. 1).For

instance, while Sony was the first one to introduce a LCD TV with

its Bravia model in summer 2005 and became the industry leader

(unseating Sharp Corporation), Samsung countered with its Bor-

deaux model and overtook Sony in the 3rd quarter of 2006. Since

then, competition between the two companies for market lead-ership has become more intense, which in turn caused Samsung

and Sony to emerge as leading TV makers. Further, they competed

in developing new technologies and products while cooperating

in LCD panel production. For example, in December 2007, Sony

launched first 11 in. OLED TV in Japan and Samsung responded by

showing 31in. OLED TV at the Consumer Electronics Show in Jan-

uary 2008. In February 2008, Sony announced a joint venture with

SharpCorporation, the3rdlargestLCDTV makerat thattime,forthe

10th generation LCD panels. With an investment of around US$4.2

billion, the production capacity of the JV is planned to be 72,000

substrates per monthand Sony plans to have 34% equity and Sharp

will have 66%.

We observed that in the dynamics of the co-opetitive rela-

tionship the two rivals followed the fundamental principle ofco-opetitioncreating a bigger value together while competing to

gain a largerportion of thevalue. They could create andsharevalue

through cost sharing (US$6 billion investment), economiesof scale,

andstandard setting (LCD versusPDP). They also sharedtheirinter-

ests through a stronggovernance mode (equity jointventure)and a

strong commitment to the venture. Theyalso balancedcompetition

and cooperation. For example, they cross-licensed their patents

(11,000 patents from Samsung and 13,000 patents from Sony) in

November 2004, which facilitated knowledge sharing and product

development. On the otherhand, theytried to maintainuniqueness

of each company and promote healthy competition in the mar-

ket. So-called Differentiated Technology Patents, such as Sonys

PlayStation architecture and Samsungs home networking technol-

ogy, are excluded in the cross-licensing agreement. The agreement

also does not apply to TFT-LCD and OLED display patents. Cross-

licensing not only facilitated knowledge sharing but also kept their

core knowledge protected.

4.3. Impact of SamsungSony co-opetition

Co-opetition between Samsung and Sony had a tremendous

impact on both firms, the LCD segment, and the TV industry as a

whole. We focus on howthisco-opetition enabled thefirms to both

create andappropriate value and howit changed the technological

and industry landscapes.

4.3.1. Value creation for the partners

SamsungSony co-opetition created a substantial value for the

firms. First, the success of S-LCD and its impact on the part-

ners are evident when we look at the market shares (refer to

Figs. 2 and 3for trends in market shares). Before S-LCD produced

LCD panels, Sony and Samsung were ranked as the 3rd and 4th

LCD TV makers (behind Sharp and Philips). In the 4th quarter of

2008, however, Samsung and Sony were ranked as the 1st and

0

5

10

15

20

25

2008Q4 '07Q4 '06Q4 '05Q4 '04

MarketShare(%)

Samsung

Sony

Sharp

LGE

Philips

Fig. 2. Market share (revenue basis) of top five firms in the LCD TV segment.

Source: DisplaySearch.


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8/14


Fig.5. (a) Cooperative relationships amongmajor competing firmsin theflat panelTV industry(as of December 2004).(b) Cooperativerelationshipsamong majorcompeting

firms in theflat panel TV industry (asof December 2009).Circleswith solid line: FirmsproducingbothLCD TVsand PDPTVs;Circles with dottedline:Firms producing mainly

LCD TVs; Shaded circles: Firms producing mainly PDP TVs; Boxes: JVs producing LCD panels; Solid line between circles: collaboration between firms.

the benefits and have such an impact on the industry? While co-

opetitionentails the risk of being out-learned and out-competed by

the competitor-partner, Samsung and Sony were able to manage

the risk and generate tremendous benefits from the co-opetition.

We now turn to discuss the critical role of firm capabilities to deal

with co-opetition, which is rarely discussed in the co-opetition lit-

erature.

As noted earlier, each firm had resources and capabilities that

the other one needed, which helped to prompt the firms toengage in co-opetition. However, each firms own internal capa-

bility played an important role in enabling the participating firms

to create greater common benefits and appropriate a greater share

fromthe benefits.The relationship has evolved withbalance mainly

due to firm capabilities and subsequent strategic initiatives under-

taken by the firms. Sony had internal strengths in TV making and

had achieved market leadership and technological prowess in the

industry. As a result, it was able to instantly introduce LCD TV and

gain leadership. Its internal strengths and reputation also helped

to attract other potential partners. Sonys strengths were instru-

mental in leading to its collaboration withSharp mentionedearlier.

Sony was able to show to Samsung that it had other partners

(options); and therefore, the SamsungSony collaboration stayed

in balance. Even though such Sonys move raised questions about

S-LCDs future, the relationship continued because of mutual inter-

dependence and gains. While Samsung needs Sonys market power

to get benefits of economies of scale, Sony needs S-LCD because

8th generation is the most popular one for the time being. Also,

a win-win approach of open-minded executives was critical for

the success. Mr. Murayama says that, in consumer electronics, its

hard to keep secrets long anyway, and being open with Samsung is

key to making the joint venture work. If we put up barriers, theyll

close up too (WSJ, 2006,refer to Appendix B). The SonySamsungalliance is certainly a win-win, declares Sang Wan Lee, president

of Samsungs LCD unit (BusinessWeek, 2006, refer toAppendix C).

While comparing the benefits to Samsung and Sony, it appears

that Samsung benefited more from the co-opetition as shown

in Fig. 2. We suggest that Samsungs internal capability for co-

opetition contributed to its gain. Samsung has long tried to learn

from and cooperate with other firms. Samsung has evolved itself

from a firm producing key parts such as semiconductor to a major

manufacturer of consumer electronics. In the process, Samsung

had cooperated with customers that were competitors in the

final products. Samsungs internal structure was also instrumen-

tal. Samsungs different businesses, such as semiconductor, mobile

communication, and LCD,competewith eachother (Chang, 2008, p.

133). Further, Samsung Electronics LCD unit produces LCD panels


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Dynamics of co-opetition

between giants

Formation of co-opetitive

relationship

Evolution of co-opetitive

relationship

Outcomes of co-opetition

between giants

Partners value creation &

appropriation

Industry technological

development & standards

Industry competitive

dynamics

Drivers of co-opetition

between giants

Industry and technological

challenges & opportunities

Superior and relevant

partners resources &

capabilities

Firm strategies and

aspirations

Co-opetition capability

Co-opetition mindset

Co-opetition experience

Resources & capabilities

Fig. 6. A conceptual model of co-opetition between giants.

while Samsung SDI, an affiliate of Samsung Group, produces PDPs.

Both supply to Samsungs TV manufacturing business and compete

fiercely with each other (Chang, 2008).Also, design was one of the

Samsungs key strengths which improved subsequentto S-LCDfor-mation. While Samsung used the same panel as Sony did, Samsung

paid more attention to improving its own TV designs. Its launch of

Bordeaux TV with a wine-glass shape design helped Samsung to

catch-up with Sony and then to take the lead. Further, Samsung

succeeded in creating the LED technology on its own, which was a

critical factor in solidifying Samsungs position. Such co-opetition

mindset and co-opetition-driven internal structure enabled Sam-

sung to effectively engage in co-opetition with Sony and reap large

benefits from it.

It is possible that Sonys past strengths and history of in-house

technological development may have somewhat hindered its gain

compared to Samsungs. Sony has historically taken pride in its

reputation as a do-it-yourselfinnovator.Rapid declineof oldtech-

nologies and the introduction of new ones have challenged Sonys

ability to keep up with all the latest trends (Luh, 2003, p. 242). Per-

haps this was a reason why Sony was slow in investing in LCD or

PDP while competitors were already working on it. Instead, Sony

tried to develop the OLED technology (Luh, 2003).Involvement in

S-LCD shows that Sony realized its limitations and the importance

of co-opetition to catch up with other leading players.

5. Discussion and conclusion

Our conceptual discussion followed by insights from the in-

depth case study led us to propose a conceptual framework of

co-opetition between giants. We depict such a framework inFig. 6

and summarize the core points here. In terms of drivers of co-

opetition, our research has identified factors at multiple levels:challenges and opportunities in the industry and technological

conditions (such as rate of technological change, convergence of

technologies,investment in research and development), useful and

superior resourcesand capabilities of potential partners,and strate-

gies and aspirations of the firms. Even a giant cannot go it alone

given the technological trends. Firms seek appropriate partners,

including rivals, to pursue the opportunities (e.g. setting technol-

ogy standards) or defend their positions. Our study of the S-LCD

case showed that the two leading firms engaged in co-opetition

to deal with technological challenges and opportunities and they

brought together relevant and complementary resources. These

factors, whencombined, provided a strong motivation for the firms

to collaborate with each other althoughtheyhave been fierce rivals

for a long time.

The abovementioned drivers of co-opetition are alsoinstrumen-

tal for the relationships to stay in balance and for co-opetition

to evolve over time. Continued expectations of greater benefits

increase firms commitment to the relationship and work togetherto create more benefits as well as strive for a larger share of

the benefits. As giants engage in co-opetition and evolve in their

relationships, they generate positive impacts for each other and

the entire industry. While firms can access the knowledge and

resourcesof partners andshare the risksand costs, competitor part-

ners benchmark each other and prepare for the consequences of

competition (Tsai, 2002)as well as foster a competitive culture for

developing distinctive competencies (Luo et al., 2007).The S-LCD

case clearly shows that two rival firms got benefits from the co-

opetitive relationship (refer toFigs. 2 and 3).Further, co-opetition

between giants impacts the whole industry,in terms of technologi-

cal development and competitive dynamics. The S-LCD case shows

that co-opetition between leading firms influenced subsequent

co-opetition among other major players led to possible group-

to-group competition. The new industry competitive landscape

shaped by firms engaged in co-opetition facilitates further inno-

vation, thus providing support forSchumpeters (1942)argument

that innovative performance is enhanced when a small number of

large firms vigorously compete with each other to develop new

processes and products.

Our conceptual model also illuminates the importance of firm

capabilities in managingco-opetition. Co-opetition between strong

rivals is a very challenging relationship (Gnyawali et al., 2008)as

managers confront higher levels of tension, risk loss of knowl-

edge to a competitor-partner, and might subsequently turn a

weak competitor-partner into a strong competitor. Managers

ability to anticipate and manage such a relationship by deal-

ing with the paradoxical factors in co-opetition would therefore

be important in managing co-opetition and generating posi-tive outcomes (Gnyawali et al., 2006). As evidenced in the

S-LCD case, co-opetition mindset of executives was critical for

the formation of co-opetition. In addition, superior and com-

plementary resources and balance of such resources between

the partners were critical for firms to develop their relation-

ship in a more balanced way, to maintain interdependence, and

subsequently generate substantial positive outcomes from the

relationship.

5.1. Contributions

This study contributes to bothco-opetitionand innovation liter-

atures. First, we contribute to the innovation literature by showing


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the need for and implications of co-opetition for technological

innovation. While the role of strategic alliances on innovation has

been extensively studied (Ahuja, 2000; Powell et al., 1996), lit-

tle is known about how co-opetition might impact innovation.

We showed that co-opetition is extremely challenging yet nec-

essary in addressing major technological changes. The win-win

outcomes from the exemplar case demonstrated how co-opetition

between giants could be instrumental for technological innova-

tion. Such positive outcomes are motivating factors for firms to

actively consider co-opetition as a viable strategy for technolog-

ical advancements. Second, our study explains why and how the

most intense and challenging form of co-opetition could occur,

evolve, and impact the participating firms and the entire indus-

try. We have offered an integrative framework of drivers, process,

and outcomes of co-opetition (Fig. 6), which is expected to provide

a strong foundation for further research on this topic. Third, as a

part of development of the conceptual framework, we developed

the concept of co-opetition capability and demonstrated its critical

role in the formation and evolution of co-opetition, and, in turn,

value creation and value appropriation. This co-opetition capabil-

ity is very important in understanding how firms could anticipate

and manage the benefits and risks in co-opetition and, therefore,

create higher value and appropriate a greater share from the value.

Executives with a co-opetition mindset are more likely to pursuethe opportunities and could manage the complicated relationship

in positive ways and create greater value. Firms with co-opetition

capability could also manage the relationship with partners in

a more balanced way, which is critical for interdependence and

continued partnership. Fourth, we showed that co-opetition does

have positive impact on the entire industry. The leading firms

engagement in co-opetition by cooperating in the up-stream (LCD

panel development and production) while fiercely competing in

the downstream TV market led to the advancement of the tech-

nology, creation of greater demand for large flat screen TVs, and

increase of customers welfare through better quality products

with reasonable prices. Moreover, we showed that co-opetition

between leading firms led to subsequent co-opetition among other

firms, which might result in group-to-group competition. Suchdynamic changes of industry landscapes in high-tech industries

may cause inter-firm relationships complex and unstable, which

can be a significant barrier to collusion. That is, collaboration in

upstream, including R&D, technological innovation, and develop-

ment of key devices, and competition in the downstream aspect

of the value chain could be beneficial to consumers by improving

the value of market offerings and by lowering prices. Finally, and

as a result of the above, our research suggests that public policy

makers and anti-trust regulators would need to develop a more

nuanced understanding of co-opetition and its implications before

dismissing it as simple end-market collusion that undeniably hurts

consumers.

5.2. Limitations and directions for future research

This study has some limitations that also offer opportunities

for future research. First, our case study focused on only one case

within an industry and thereforethe findings should be interpreted

with caution and need to be tested through large scale empirical

studies. Second, while we focused on the positive effects of co-

opetition, co-opetition could have downsides as well which need

to be investigated in future research. Co-opetition between leading

firms hasthe potentialto push an inferior technology to the market

and set that as the standard, especially when the degree of compe-

tition between partners is weak. These downsides are even more

likely in a concentratedindustry, i.e.,an industrydominated by only

a fewlargeplayers.Third, at this stage of ourstudy, we were unable

to disentangle competition and collaboration at domestic versus

global markets. While cross-national co-opetition is more com-

plex than domestic one, cross-national co-opetition with global

scope may offer more opportunities than domestic ones do. Future

researchers could compare two different cases, one global and one

domestic, to draw similarities and differences. Fourth, our case

study depended mainly on secondary data. Although we could

obtain ample dataof the exemplar caseand generatedinsights from

the secondary data, future research could conduct interviews and

collect first-hand data to generate insights on the management of

co-opetition and the role of firm capability. Finally, future research

could examine our arguments and the model through large scale

empirical studies. Building on the conceptual arguments and find-

ings in this study, future research could develop and conduct

empiricalstudies related to the drivers, dynamics, andoutcomes of

co-opetition.

5.3. Managerial implications

Our study helps managers to better understand how com-

panies use co-opetition strategy to deal with rapidly changing

technological environment. Leading firms need to consider co-

opetitionto pursue opportunities(e.g. technologicalstandards) and

deal with threats stemming from environmental changes. Whenleading firms engage in co-opetition, other firms also need to

consider co-opetition with other competitors. Our research also

underscores the need for firms to develop co-opetition capabil-

ities in order to create value and capture a greater share from

the created value. Based on the findings of this paper, we sug-

gest that firms in high-tech industries need to explicitly consider

co-opetition as part of their strategy tool set. Just as strate-

gists think about how to outcompete a rival in their industry

(competitive strategy) and about how to pursue and manage

collaborations (cooperative strategy), they need to pursue ways

in which they can simultaneously engage in collaboration and

competition with other firms in the industry. Overall, this paper

provides a framework for researchers to more systematically

examine co-opetition and its implications and equips managerswith a set of important concepts and approaches they could use

in their attempt to create competitive advantages through co-

opetition.

In conclusion, while prior research has recognized the

importance of co-opetition for technological innovation (e.g.

Quintana-Garca and Benavides-Velasco, 2004; Teece, 1992; Von

Hippel, 1987), we know little about what induces co-opetition,

how it evolves, and how it might generate positive innovation

effects. Further, co-opetition research has not examined how

firms manage the paradoxical relationship and how firm capa-

bility influences the dynamics and outcomes of co-opetition.

We hope that our examination of both ex ante drivers and ex

post evolution and outcomes of co-opetition between leading

firms has provided an important foundation for future concep-tual and empirical research on this very important and evolving

topic.

Acknowledgements

We thank the anonymous reviewers and the editor for their

helpful comments and suggestions. An earlier version of this

research was presented at the 2008 EIASM Workshop on Co-

opetition Strategy: Stretching the Boundaries of Co-opetition held

in Madrid, Spain, and received the Best Paper Award. This paper

also benefited from the feedback received from thepanel at the 5th

Annual Mid-Atlantic Strategy Colloquium held at the University of

Maryland, USA, in November 2010.


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Appendix A. Summary quotes from Factiva news reports on key drivers of S-LCD formation

Date Source Quotes Drivers

October 17 03 Nikkei The agreement with Samsung will enable Sony to

comprehensively address flat-panel and picture-quality

technologies,fostering speedier improvementin its

product line.

Shorten development

time

June 1 07 Nikkei Weekly The ability to expand production capacity quicklywhen a

business opportunity presents itself is essential in the LCD

business.Septemb er 23 03 Wall Street Journal . . .Sony said it wanted its own line of large LCD panels, but

. . .seek an alliance rather than come up with the

estimated$2 billionan LCD plant would cost.

Massive R&D and

Capital Expenditure

July 15 04 Yonhap English News It is hard to invest in large-scale LCD facilities alone,

and it holds a lot of attraction to make investment in a

place of strong infrastructure like this, said Idei. As

Toyota gets steel from outside, Sony will secure LCD

supplies. . .

October 17 03 Reuters It costs $3 billion to make a new LCD line and the

cooperation is toshare benefits and risks and to

maximize synergies, Samsungs Chu told reporters

Cost sharing and risk

reduction

March 8 04 Dow Jones For Samsung, which is already one of the worlds biggest

manufacturers of liquid-crystal displays, the deal secures

extra investment money as well as a big customerin a

flat-panel TV market . . .

September 3 04 Nikkei Report . . .more electronics manufacturers are allying with each

other toshare the cost of building new plants making

LCD panels . . .and semiconductors.

October 23 06 Dow Jones Newswires Panel makers are spending a lot of money on big

factories. Its very important for them to maximize

utilization so if they can align with a TV brand to

guarantee some percentage of their supply, they are

much better off, said Ross Young, president and founder

of DisplaySearch.

July 14 04 AFX UK Focus The cooperation . . .offers an opportunity to lead the

rapidly growing LCD TV market and standardization of

glass substrate and LCD TV sizes, president and CEO of

Samsung Electronics LCD business SW Lee said.

Pursue industry leading

position/Industry

standard

July 16 04 Nikkei Report Industry standard: S-LCD aims to usethis position to take

the initiative indevising industry standardsfor image

resolutions and sizes, Yun Jong-yong, deputy chairman

and chief executive officer of Samsung Electronics.

August 28 07 Business Wire We haveremained a step ahead of the competition in

terms of production scale and timing, said Won-Kie

Chang, CEO of S-LCD. Our sights are now on LCD TVs inthe 50-inch class and we aim to lead that segment .

November 22 05 AP Newswires Sony fell behind rivals in liquid crystal displays, and the

JV with Samsung was a way for it to ensure a stable panel

supply for its newer TV models.

Vulnerability

December 2 05 AP Newswires Sonys relianceon Samsung to produce the display panels

showshow far behindthe Japanese company, once the

industrys king, has fallen. . .

January 3 06 The Wall Street Journal When Sony considered a joint venture with Samsung

around 2003, itsTV business was in serious trouble. . .

Samsung had developed a huge lead in the LCD technology

while Sony lagged behind

February 9 07 Nikkei Report In the past, Sony was proud of standing alone in product

development. . .But to catch up with its rivals in the digital

age, the company finally changed course, joining hands

with Samsung Electronics Co. in LCD production.Faced

withthe need to introduce a never-ending supply of

advanced products, Sonys collaboration with othercompanies will likely continue to expand in the future.

April 24 03 Joins.com Samsung executives reportedly found they had much to

learn from Sonys technical know-how and global

marketing skills.

Partners technological

capability

October 17 03 Reuters Samsung would be the best choice, given itsability to

supply a large amount of high-quality panels in a stable

manner

October 17 03 Asahi Shimbun News With the new partnership,Sony expects to capitalize on

the technological prowess of Samsung, the worlds

leading LCD manufacturer.

July 16 04 Nikkei Report The alliance . . .is ideal because it combines our abilities

to develop large LCD panels into flat-panel TVs and

market them.


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Appendix B. Summary quotes from Factiva news reports on the dynamics of co-opetition

Date Source Quotes Process

January 3 06 The Wall Street Journal The new alliances dont come without conflict. Inside Sony, some engineers

worried that Samsung will eventually use Sonys TV expertise to beat the

Japanese company. At Samsung, some executives wondered whether its smart

to help such a big rival . . .Executives at both companies had concerns about

working so closely with a direct rival. Would this joint venture help us, as a

company that is competing in the TV sector? Mr. Chang recalls wondering.

Internal conflicts

July 11 08 The Japan Times Sony, other firms team up to develop organic displays: Sony Corp. and nineother domestic companies have decided to jointly develop with government

support technology by 2013 to mass produce large energy-efficient organic

flat-panel screens.

Competition for newtechnology and

products

July 16 08 The Korea Herald Samsung companies join for OLED venture: Samsung Electronics Co. and its

display affiliate Samsung SDI Co. are moving to set up a joint venture for

organic displays. . .

September 24 09 The Nikkei Weekly Samsung ridesLED-backlitTVs to the bank: . . .referring to LED TVs, the

name Samsung has coined for its LCD TVs that use white light-emitting diodes

instead of fluorescent tubes for the backlight . . .Samsung succeeded in

building an image of itself as a company with strong environmental

technologies. . .

January 8 10 Korea Times Korean, Japanese TV GiantsRenew Rivalry in 3D: Major manufacturers such

as Samsung Electronics, LG Electronics, and Sony have announced plans to sell

3D televisions to consumers in 2010. . .

February 27 08 Korea Times Challenge or Opportunity? Samsung Electronics . . .is concerned over a

partnership between Sony and Sharp. The two Japanese firms announced a

plan to team up to make flat panels for LCD television. . . .It can be interpreted

that efforts by Japanese companies to check the rise of their Korean rivals have

allegedly forced Sony to join hands with Sharp.

Cooperation with another rival

January 3 06 The Wall Street Journal . . .Mr. Murayama . . .concedes that Samsung could eventually use Sonys

technology to compete against him. But he adds that in consumer electronics,

its hard to keep secrets long anyway, and being open with Samsung is key to

making the joint venture work. If we put up barriers, theyll close up too,

he says.

Open-minded/win-win approach

November 29 06 Business Week Online Our alliance with Sony allowed us to benefit from a virtuous circle: Bravias

success boosted sales of LCD panels, and volume meant lower costs which fed

greater sales of LCD TVs, says Cho Yeong Duk, vice-president at Samsung.

January 18 07 Business Week Online At leastSonys success isnt necessarily bad news for Samsung. The two have

a joint venture in LCD panels, which means Sonys gains also benefit its Korean

partner.

Appendix C. Summary quotes from Factiva news reports on the outcomes of co-opetition

Date Source Quotes Outcomes

Octo ber 29 03 New Yor k Tim es The all iance.. sh ould lead th e way t owardstandardizing the global TV

monitor format, the companies saidIndustry:

Standardization battle

between LCD and PDP

TVs

July 15 04 Dow Jones Intl News The cooperation offers an opportunity to lead the rapidly growing LCD TV

market andstandardization of glass substrate and LCD TV sizes, S.W. Lee,

president and chief executive of Samsungs LCD business said. . .

November 29 06 Business Week Online The alliance has also had an industry-wide impact, especially in the TV

market for sets in the 40-inch screen class. The large screen segment had

been dominated by plasma TVs until S-LCD started providing LCD screens . . .

In thethird quarter of 2006, . . .for the first timeovertook plasma TV sets. . .

August 21 07 Dow Jones Newswires Currently, PDP technology is well suited for big flat TV panel of over 40 inches,

butits competitive edge in that segment has been slipping as large LCD

screens become cheaper to produce.

September 22 03 Joins.com A sense of alarm that they cannot survive without cooperation seems to have

encouraged Samsung and Sony to come together, the industry official said.

There will bemore alliances among rivalsto ensure mutual survival.

Industry: More

alliances among other

competitorsOctober 20 03 Nikkei Weekly Sonys move from being a corporate customer to a producer will likelyforce

smaller LCD makers into alliances.

June 30 04 Asia Pulse As competition increases in the market, the companies will try to increase

their shares bycooperating with each other. Its a trend that can be seen in

other countries as well, an industry official said.

July 15 04 AFX Asia He said that increased production of LCD panels will result in lower prices

and in turn boost demand for LCD TVs . . .Industry: Price decline

July 15 04 AFX Asia We are highly positive about our businesses outlook.If LCD TV prices fall to

levels, the LCD TV market will grow and the oversupply will change to a

supply shortage, Chang said.

August 29 07 The Electronic Times In response, Samsung SDI announced that it developed the worlds first

50-inch Full HD PDP using single scan technology . . .This technology enables

to reduce the manufacturing costas much as 30 percent . . .

Industry:

Technological

developmentSeptember 20 07 The Korea Herald To win over LCD TVs,PDP TVs have evolved in technology, as well.

June 25 07 The Korea Herald Samsung Electronics will create various app lications to meet the demand and

become a market creator rather than a market leader,Common: Market

creation


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Appendix C (Continued)

Date Source Quotes Outcomes

June 13 05 Nikkei Weekly . . .the steep drop in LCD panel prices has made the retail cost of computer LCD

monitors andLCD TVs seem more reasonable to consumers, and this has

begun to stimulate demand.

November 5 06 AP Newswires We created the 40-inch LCD TV market with Sony . . .Sonys role in opening

that market and realizing growth in the market . . .is important.

September 3 07 Korea Times According to DisplaySearch, the competition between LCD and PDP makers

would boost the demand for 50-inch LCDs. . .

July 16 04 Korea The cooperation between Samsung and Sony is awin-win situationfor both

companies, said Chang Won-kie, President and CEO of S-LCD Corp.Common: Win-win

outcome

November 29 06 Herald Business Week Online The Sony-Samsung alliance is certainlya win-win, declares Sang Wan Lee,

president of Samsungs LCD unit.

January 3 06 The Wall Street Journal Mr. Chang (Samsung executive) says . . .competition with Sony is helping

Samsung hone its own TVdesigns.Private: Better product

development

November 28 06 Business week . . .says Cho Yeong Duk, vice-president at Samsung in charge of the companys

LCD business strategy. The rivalry with Sony also helped Samsung to bring

outbetter LCD productsto the market, he said.

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