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 Corporation. 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 also show that co-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.