Risky business or strategic advantage? The varying effects of vertical coopetition on firm risk

Wenbin Sun (), Rahul Govind () and Mahabubur Rahman ()
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Rahul Govind: UNSW - University of New South Wales [Sydney]
Mahabubur Rahman: ESC [Rennes] - ESC Rennes School of Business

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Abstract: This study explores the under-researched area of vertical coopetition in business-to-business markets. Drawing on the resource-based view of the firm and signaling theory, we develop a conceptual model linking vertical coopetition to a supplier firm's systematic risk (SR) and idiosyncratic risk (IR) profile and incorporating coopetitionspecific attributes as the boundary conditions. Using a dataset of over 20,000 observations from more than 4000 firms spanning 29 years, employing a novel measure of vertical coopetition and a robust analytical method, we document that vertical coopetition with customers reduces a firm's SR. Additionally, we uncover an inverted Ushaped relationship between vertical coopetition and IR, suggesting that moderate levels of coopetition heighten firm-specific risks due to competitive tensions, while higher levels mitigate risk through improved resource coordination. We also identify that the length of the coopetitive relationship amplifies the risk-reducing effects on SR. In contrast, competition intensity within the relationship increases SR but has a non-monotonic effect on IR. The support for the results is further validated with several additional measures of the key variables, ensuring the robustness of our results. These insights contribute to the theoretical understanding of vertical coopetition and offer practical implications for B2B managers in strategic risk management, emphasizing the importance of balancing cooperation and competition to achieve long-term stability and competitive advantage.

Keywords: Vertical coopetition; Firm performance; Relationship length (search for similar items in EconPapers)
Date: 2025-07-24
New Economics Papers: this item is included in nep-com, nep-cse, nep-rmg and nep-sbm
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Published in Industrial Marketing Management, 2025, 129, pp.50 - 65. ⟨10.1016/j.indmarman.2025.07.002⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-05224431

DOI: 10.1016/j.indmarman.2025.07.002

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