Exploring the Effects of Inter-Firm Coopetition on Firm Performance

Abstract

This purpose of this paper is to explain the mediating role of inter-firm coopetition in the relationships between competition and firm performance, and cooperation and firm performance. Studies on the effects of coopetitive relationships have mainly been based on developed economies, with a few focusing on developing economies. Further, the paper provides an assessment of how inter-firm coopetition affects performance in the context of developing countries, specifically, the emerging coopetitive relationships among the digital financial services providers (DFSPs) in Zambia. The financial services industry is undergoing rapid digitalisation and industry convergence. These developments have caused the entry of non-traditional financial services providers including mobile network operators and FinTechs. These are threatening the survival of traditional commercial banks through intensified competition in providing digital financial products. The intense competition has changed the business models of the digital financial services providers. Instead of competition, they now engage in nonconventional relationships which involve both competition and cooperation. Game theory’s stag-hare hunt was used to understand how the DFSPs engage in simultaneous competition and cooperation. The study employed a mixed method design to assess the effect of joint decisions and actions on market performance and financial performance. Purposive sampling was used in identifying the sample. 32 respondents were surveyed and 6 key informants were interviewed. Quantitative and qualitative data were collected from a sample of 14 digital financial services providers (DFSPs) in Zambia. Quantitative data were analysed using SPSS PROCESS, and qualitative data used Nvivo 12. The findings reveal that inter-firm coopetition mediates the relationships between competition and firm performance, and between cooperation and firm performance. Firm performance is significantly associated with inter-firm coopetition (β = .570; t-value = 3.862; Sig <.002). The key informants from the interviews, all confirmed the quantitative findings on inter-firm coopetition as a mediator in firm performance. The simultaneous combination of competition and cooperation improved both the...

Keywords: Competition, Cooperation, Coopetition, Firm Performance; Market Performance; Bank,Collaboration, Competition, Cooperation, FinTech, Inter-firm coopetition, Mobile Network Operators (MNO);Inter-Firm Coopetition, Digital Financial Services Providers (DFSPs), Financial Inclusion; Digital FinancialInclusion; Financial Technologies; FinTech

DOI: 10.7176/EJBM/15-12-10

Publication date:June 30th 2023