Understanding New Trend in Business: Inter-Firm Cooperative Alliance Between Competing Organizations

Traditional economics-based framework suggests that firm cooperates with competitors to increase its market power or efficiency in transaction for the maximization of its self-interest profit. However, nowadays growing numbers of firm engage in alliance with competitors for non-economic purpose. This paper seeks to understand the nature of inter-firm alliance between direct competitors by discussing several critical issues regarding it. The issues are chosen by the criterion that useful perspectives from either organization theory or strategic management can be applied to this phenomenon so that scholars are encouraged and can be easier to do a research on this topic in the future. In this regard, I seek to answer the question of why firm cooperates with competitor by comparatively adopting four novel approaches, which, combined together, provide an excellent complementary view to the traditional economics-based approach. Also, by understanding the distinctive feature of decision-making process when firm conduct a collaboration with competitor this study provides a practical insight on how firm structures, manages, and makes a decision when it cooperates with competitors. Overall, several conceptual ideas suggested by this paper can be an interesting starting point for the future empirical research.