From coopetition to courtroom: The role of litigation frequency in coopetition

Abstract

As coopetition among major business players intensifies, both scholarly and managerial interest in inter-firm coopetition has grown. While prior research has emphasized its potential benefits, an emerging stream of work highlights the risks it entails. Among these, litigation frequency remains an understudied yet consequential outcome. This study examines how firms' involvement in coopetitive alliances shapes their overall external litigation exposure. Specifically, we investigate how competition intensity and the presence of coopetition influence firms' litigation frequency. We further examine how balance within coopetitive relationships moderates this effect. We theorize that balanced coopetition mitigates litigation frequency, whereas intensified competition and the mere presence of coopetition increase it. Using a multi-source, cross-industry dataset of 1981 alliances formed by 322 S&P 500 firms between 2004 and 2021, our analysis indicates that both competition intensity and coopetition elevate litigation frequency, while balanced coopetition reduces it by approximately 29 % compared to non-coopeting firms. In doing so, this study contributes to coopetition and litigation research by empirically demonstrating how structural conditions shape firms' external legal exposure, offering a more nuanced view of the dynamics and governance of inter-firm relationships.