Co-opetition and the Firm’s Information Environment

Jessica Kim-Gina, UCLA Anderson School of Management; Brian Bushee, Accounting, The Wharton School; and Thomas Keusch, INSEAD

Abstract: Some firms in the technology sector choose to cooperate with competitors (“co-opetition”) in Standards Setting Organizations (SSOs). These SSOs create technology standards that facilitate rapid market penetration of new technologies such as Wi-Fi, Bluetooth, and Blue-Ray. Active participation in the standard setting process requires the exchange of proprietary information with competitors. While the goal of such information sharing is to further a technology or a market, firms potentially receive an unintended benefit from access to competitor and industry information. We examine whether active SSO participation enhances a firm’s information set and allows managers to better predict future sales and earnings. Comparing firms that actively contribute information in SSOs with firms that passively participate (i.e., do not share information), we find that SSO-contributing firms are more likely to issue annual sales forecasts after initiating their collaboration. We also find the SSO-contributing firms experience an improvement in the accuracy of their annual sales and earnings forecasts and a reduction in the dispersion of analysts’ earnings forecasts. Our findings contribute to the literature by showing that collaborating with competitors in the product market provides an important unintended benefit of improving the manager’s information set.

Read the full working paper here (PDF).