The Role of Leadership in Managing Tensions and Ambivalence in a Coopetitive Innovation Strategy. A Case Study from the Insurance Industry

Abstract

In today’s dynamic, competitive, and complex business world, cooperating with your competitor is increasingly used as a firm-strategy to achieve innovation. However, such a relationship, known as coopetition, is paradoxical, as it involves firms cooperating and competing at the same time, creating paradoxical tensions. While prior literature has proposed different approaches to manage coopetitive relationships, such as juridical and structural solutions, a framework that explains the role of leadership in managing these tensions in interfirm coopetitive relationships is missing. To bridge this gap, I carry out an inductive study interviewing leaders in three firms in the Fintech industry, participating in an insurance industry coopetitive project. Drawing on grounded theory and temporal mapping, I examine how leaders manage the tension present in coopetitive relationships and the emotional ambivalence arising from it. The findings demonstrate the tensions and ambivalence experienced by leaders, represented by different and dynamic emotional trajectories in each firm. Further, the findings show how leaders throughout these trajectories manage tensions by engaging in specific leadership functions. This in turn appears to influence how the leaders perceive the coopetitive relationships as well as innovation outcome potential. Based on these findings, I propose that leadership plays a significant role in achieving the desired outcomes of inter-firm competitive relationships. I develop a model that explains how emotional ambivalence caused by paradoxical tension affects the emotional state of leaders, and how leaders engage in specific functions aimed at managing such states, which in turn influences sustaining inter-firm relationships, and ultimately innovation potential. The findings have theoretical implications for research on organization paradoxes arising from coopetition, and practical implications for leaders responsible for the success of coopetition projects.