Doctor Jako Volschenk, senior lecturer in Strategy & Sustainability at Stellenbosch Business School, recently published a study on “The value implications of coopetition”. We interviewed him for the CoBS Mag.
Sweeping with the Enemy: Coopetition as a strategy for a better world by Dr Jako Volschenk with kind acknowledgements to Prof. Adrian Zicari. Related work: The Value Implications of Coopetition included in the Routledge Companion to Coopetition Strategies.
The CoBS: Dr. Volschenk, in your study you present the idea of coopetition in an attractive light. How would you distinguish coopetition from collusion? How to make sure it is not the case?
Dr. Jako Volschenk: One could see coopetition and collusion as respectively the virtuous and non-virtuous sides of the same phenomenon. In fact, some authors argue that while some level of competition remains, one should see collaboration as coopetition rather than collusion.
Moreover, there are a number of characteristics that one can use to identify collusion versus competition. For instance, collusion usually requires a level of concealment. Thus, members of cartels often have to deal with the trade-off between secrecy and efficiency. There are other traits that we could discuss, but in short – I would ask whether the collaboration between competitors is for the benefit or the detriment of consumers.
Collusion usually entails either an agreement around geographic areas where partners may agree not to operate, or to agree on prices (i.e. price-fixing) in some other cases. This means that consumers are robbed from choice in a specific region or they are robbed from a lower price, or even sometimes of quality. But this does not need to be the case. For instance, when Toyota, Citroen and Renault worked together to design a more fuel-efficient small car, consumers benefited from a better product as well as a lower-cost vehicle.
One aspect that I find very interesting is that both collusion and coopetition often happen away from consumers. For instance, it is usually not in the interest of companies like Citroen, Toyota and Renault to tell consumers that they are essentially buying the same vehicle. This would dilute the brand value for each of these car companies. The same is true for collusion – companies for obvious reasons would not like it to be known that they work together.
My own research, on the other hand, is focused on how companies collaborate with competitors to solve environmental problems of mutual interest. Quite often it is to the benefit of these companies to publicly announce their collaboration in order to maximize brand image benefits. Take environmental certifications like the Marine Stewardship Council as an example. It is an initiative of a number of companies in the fishing industry working together to protect the reputation of the industry. There would be no point in hiding the collaboration from consumers.
Valuing intangibles for optimised decision-making
The CoBS: You point to the creation of other forms of value, not only financial. How would you estimate those forms of value?
Dr. Jako Volschenk: This question is continuously under focus, not only in business schools, but also in industry. It is an important question because unless we include other forms of value in our decision-making we may be making sub-optimal decisions. Climate change is one of the biggest market failures in the history of mankind because we failed to value the damage we do.
How do we value one litre of recycled water? For someone living next to a clean mountain stream that water may be worth very little, whereas that water may be priceless to someone in a region that is suffering from heavy oil pollution in their drinking water. How do we even start measuring quality of life? The same ambiguity in value is present when we value good health and the happiness of a community.
Furthermore, when it comes to environmental value we should admit that nature has value – even if there is no-one counting. We are unfortunately prone to think of nature only in terms of anthropogenic value. The objective is not to put value on all these different categories but to acknowledge their existence in our decision-making.
Besides, a litre of clean recycled water could protect the reputation of a mining company in the same oil polluted region and hence it can be valued to some extent.
Having said all that, whether companies should reduce their environmental impact is unquestionable from an ethical point of view. But I believe the corporate world will act much quicker if we can show the value of those actions.
Coopetition: Competitors as allies in responsible business
The CoBS: You raise the issue of stakeholder salience (i.e. who the stakeholders are). Particularly, you emphasise the role of competitors as stakeholders. This is unusual! Could you please explain this interesting point?
Dr. Jako Volschenk: I’m happy you noticed this aspect in my research. In an ever-more complex world our competitors are often also our customers. Take for instance Apple and Samsung and how they both collaborate and compete with each other.
I believe we are in a post-competition era. While competition brought us more efficiency, lower prices and choice, collaboration with competitors can further deliver on these. Furthermore, there are problems that we are unable to solve on our own.
Specifically, when it comes to solving environmental or social issues of mutual interest, my competitor is also often my ally. In South Africa, the fishing companies on the West coast of the country collaborate to protect the fishing resources by helping government with determining and enforcing of quotas. They do this for the protection of their own interest, but they also realise that they would not be able to accomplish this on their own. We could use this as evidence that the tragedy of the commons can be avoided by the “citizens” of the industry when they collaborate.
Another example is the Glass Recycling Company in South Africa, that acts as an industry body to raise awareness amongst people about glass recycling. By raising public knowledge about recycling they ultimately reduce the cost of glass for the industry as well as provide a source of legitimacy for glass users. Again this is an example of industry players collaborating around a common concern.
The CoBS: At the very beginning of the chapter, you put forward the case of a wine bottling company that wanted to reuse empty bottles. Could you tell us how it went? How did they create value for themselves, for competitors, and for society?
Dr. Jako Volschenk: Sadly, that example was never successful. It did however stimulate my own thinking around what could be done when industry players collaborate and it did pave the way for my research in this area. In fact, it was the frustration about the lack of progress that galvanized me to investigate further.
I do believe there is scope for such an initiative still, but vested interests and poor reverse logistics hamper the idea. Fortunately, 80% of glass in South Africa is reverted away from landfills, and ultimately find their way back to the glass producers.
Useful links:
- Link up with Dr. Jako Volschenk on LinkedIn
- Read a related CoBS Insights article: From the Power of “And” to the New Normal
- Discover the Routledge Companion to Coopetition Strategies featuring Dr. Volschenk’s chapter on The value implications of coopetition
- Study at Stellenbosch Business School, South Africa.
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The Council on Business & Society (The CoBS), visionary in its conception and purpose, was created in 2011, and is dedicated to promoting responsible leadership and tackling issues at the crossroads of business and society including sustainability, diversity, ethical leadership and the place responsible business has to play in contributing to the common good.
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