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Heidelberg Knowledge and Coopetition
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Heidelberg Knowledge and Coopetition


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Sixth Interdisciplinary Symposium on Knowledge and Space » Knowledge in Organizations - Learning Organizations « …

Sixth Interdisciplinary Symposium on Knowledge and Space » Knowledge in Organizations - Learning Organizations «
Learning Strategies in Co-Opetitive Environments
Philippe Baumard (Management Research), University of Paul Cézanne (France)
Situations of “co-opetition” may well become the dominant logic of many industrial sectors. Their common feature is a strategy that obstructs independent and discretionary innovation by forcing companies to share the exploitation and / or exploration of critical assets with competing firms. These new co-opetitive dynamics raise the question of adapting innovation strategies of small and medium firms that can enable them to maintain their place in the co- opetitive game, without losing their individual capacity for innovation. It also raises the issue of formulating innovation strategies that can integrate the co-opetitive component as a strategic advantage, rather than enduring its puzzling architecture. This article proposes to explore two original processes of innovation, which attempt to respond, in their different ways, to the transformation of firms’ environments into co-opetitive arenas.

September 17-20, 2008 Villa Bosch Studio, Heidelberg
Organized by the Department of Geography, University of Heidelberg Supported by the Klaus Tschira Foundation

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  • 1. Philippe Baumard Professor, Ecole Polytechnique CRG & UC Berkeley Institute of Business and Economic Research [email_address] Sixth Interdisciplinary Symposium on Knowledge and Space Sept. 17-20, 2008 Villa Bosch Studio, Heidelberg
  • 2.
    • Spaces where firms compete and cooperate simultaneously
      • Situations of double-bind strategic interdependency (Phillips, 1960)
    • Cooperation and competition define those spaces
      • Firms (CEOs, Boards) and people define the boundaries of their organizations on the basis of the existence of relations, and if these relations are antagonistic, cooperative, neutral …
      • So, do animals (Lorenz, 1966)
    • E .g. Ethnic migrations in the US in the 18th Century, through ethnic communities confrontations, defined the M form before Chandler’s « visible hand » of managers ever did.
  • 3.
    • Reciprocal adverse selection
      • Alike Akerlof’s ‘market for lemons’ (1970), firms competing and cooperating for the same market space are in a situation of adverse selection and asymmetric information
    • Intrinsic value doesn’t really matter
      • In ‘signaling’ (Spence, 1973), social conventions (Lewis, 1969) are sufficient substitutes for an appraisal of the information value
    • Co-opetition requires to accept to fool and be fooled (Hesiod’s Theogony)
      • Hesiod relates how Greeks tricked Zeus when faced between the choice of their self-starvation and satisfying the God’s demand. Prometheus assembled a pack of bones and fat made of the sacrificial animal, keeping the meat aside, hence cooperating the Gods, while not totally betraying them.
  • 4.
    • Using ecology and ethology to understand co-opetition
      • Organizational litterature have borrowed from ecology and biology:
        • McKelvey (1982) organizational systematics (natural selection) – management « sociobiologists »
        • Nelson and Winter (1982) routines as genetic components
        • Astley and Fombrun (1983) collective strategy (commensalism)
        • Much inspired by Amos Hawley (1950)’s biotic communities studies
    • Animal behavior in face of contradictory incentives (Buckhardt, 2005)
      • Ontogenic learning (Lorenz, 1970) : population ecology (Hannan & Freeman, 1977)
      • Mimetic learning (Lorenz, 1970): institutionalism (Meyer & Rowan, 1977)
      • Immediate response (Lorenz’s instincts): action generators (Starbuck, 1983)
      • Functional learning / adaptation ( ibid. ): organizational learning (Cyert & March, 1963)
    • « Adverse learning » and « antagonistic learning » embedded in nature
      • Mosquito fishes’s trade off between feeding and attack specialization (1986)
      • Charles River’s rats continue their learning despite taste aversion teaching (Krane and Wagner, 1975)
      • Only 37% of Tolman (1948)’s rats retry their « cognitive maps ». Others try new « antagonistic learning »
  • 5.
    • Contrary to humans, animals have the advantage of not talking
      • Organizational resarch on learning over-emphases the role of heuristics:
        • Because researchers give too much attention to talk
        • Because human beings defend their humanity, and exaggerate, ex-ante and ex-post their cognitive abilities over their behavioral ones
    • ‘ Screening’ (Stiglitz, 1975) in animal uncertain co-opetitive space
      • Animals reduce information asymmetries through « behavioral screening  » (cf. Parker et al. (Eds), Cognitive Animal , 2002)
      • Provoked by an aggressive female, the male would feint to engage in confrontation, to « redirect » its aggression to the closest neighbor (Lorenz, 1966; Parker, Mitchell & Miles, 1999)
      • The Gorilla’s dilemma: Fight and lose the companionship; redirect and risk his social rank in the social structure (if redirection fails)
      • Same dilemma in interorganizational learning in alliances with competitors (Larsson et al, 1998 – fear of opportunistic behavior)
  • 6.
    • This screening is a result of an etiology of fear …
      • In choosing options, people react to fear, not love (Machiavelli, 1979)
      • A « primal, subpolitical emotion » (Aron, 1968: 21) => Games do not apply
      • Imaginary spiders are perceived as uncontrollable, unpredictable and dangerous by 42% of subjects (Armfield, 2006)
    • Co-opetition is driven by the fear of breaking a fragile equilibirum
        • So is maybe also the case of the Spence (1973)’s employer when he / she gives a blind faith to an Ivy League diploma.
  • 7.
    • Co-opetitive learning « normalize » incongruities
      • If incongruity is defined as a mismatch in expectations (R.V. Jones, 1975), then the constant dualities of expectation (‘compete + cooperate) reduces the capacity to detect the incongruous
      • This has been observed in innovative cooperative environments (Hennart, 1988)
  • 8.
    • Co-opetitive learning creates an internal « adverse learning » environment
      • Learning with the adverse party, is learning while « believing we learn from a source that is not trustworthy », i.e. similar of learning studies of children in « adverse learning » situations
      • Economists have translated this phenomenon as a mixed-motive game, with conflict between private and common interests (Gulati, Nohria & Zaheer, 2000)
    • If children do, organizations do not
      • Hence, firms need to acquire « postional knowledge » (Hirsh, 1977) through antogonistic learning (learning against their core beliefs or premises)
      • The reason people do not learn from failures, is precisely that they do not engage in learning against their core beliefs (Baumard and Starbuck, 2005)
  • 9.
    • The trouble with co-opetitive economies
      • The permanent incentive to shift from fair game to deceit exaggerates the role of information asymetries in market’s life cycles
        • Subprime Market Crisis: (1) Every player compete and cooperate downward and upward (2) Every player believe he can deceive its coopetitor through asymetric informational gain (3) When the initial deceit is unveiled, the chain reaction is unstoppable
    • Winner’s curse (after Cappen et al, 1971, Wilson, 1969)
      • All players in coopetition try to get their independent estimates of the outcome (while maintaining the momentum)
      • The one with the most positive estimate bids the highest, hoping to diminish the value of the information held by its competitors …
    • Dominant male gorillas usually end up redirecting their aggression to a way too powerfull neighbor!
  • 10.