Environmental uncertainties and reciprocal investments within coopetition: The contingent role of appropriability mechanisms

Abstract

This study investigates the effects of market and technology uncertainties on reciprocal investments and the subsequent moderating role of appropriability mechanisms (i.e., patents, contracts, lead time, knowledge complexity). The study forwards several hypotheses that draw upon transaction cost economics and contingency theory. These hypotheses are tested using survey data of 313 firms that engage in horizontal coopetition relationships. Results suggest that both market and technology uncertainties lead rival partners to commit to reciprocal investments. The results further indicate that partners’ use of formal appropriability negatively moderates the relationship between market uncertainty and reciprocal investments, while informal appropriability positively moderates this relationship. Alternatively, formal appropriability positively moderates the relationship between technology uncertainty and investments, whereas informal appropriability negatively moderates this relationship. Contrary to the prevailing practice of viewing appropriability as a standalone mechanism, our findings point towards the significance of viewing appropriability mechanisms dichotomously, especially in the case of uncertain environments. As the findings suggest, employing more relevant appropriability mechanisms based on the type of uncertainties in which partners operate could lead to better outcomes for the partners pursuing coopetition relationships.