Nalebuff and Brandenburger (1997)

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Nalebuff and Brandenburger (1997) - Co-opetition

The authors use game theory to show when firms should compete or collaborate to increase their own and each other’s success. For example, when there is a demand for complementary products, firms should collaborate.

They discuss a value net (value system), a web of interdependent relationships between a firm and parties which affects its business, including customers, competition, suppliers and complementors.

To succeed in the game, a firm must be able to offer value. The rules of the game depend on recognising what others believe and what they value as important.

Changing the rules – for example, an entrant can become a competitor in a monopoly market, but if the incumbent has strong brands, then it is not worth it. Another example is a supplier strengthening its position by limiting its supply to increase demand.

An action plan is recommended for bringing about change:

• Look at your own value net and identify opportunities for co-operation and competition
• Change the players and assess the implication for these changes
• Identify added value and how value can be furthered
• Identify other players’ added value
• Look at the helping and hindering roles you have and want to adopt
• Consider how you want to change the rules
• Work out how other players perceive the game