Sascha Kraus, Jasmin Schmid and Johanna Gast
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Facing these constraints and seeking to tackle these problems, SMEs may opt for coopetition as a
new strategic option (Bouncken & Kraus, 2013; Levy et al., 2003). Through coopetition, competitors
typically attempt to combine the advantages of cooperation and competition (Bengtsson & Kock,
2000). While cooperation enables access to resources and technologies necessary to develop and
introduce new products/services or to access new markets, competition makes sure that creative
tensions between the competitors remain in force (Quintana-Garcia & Benavides-Velasco, 2004, Raza-
Ullah et al., 2014).
By sharing resources and capabilities, as well as costs and risks for innovation through
coopetition, coopeting resource-constrained SMEs may mitigate uncertainty, improve innovation, gain
strength against rivals, and realize economies of scale (Gnyawali & Park, 2009). Moreover, they may
be better prepared to react to business disruptions (Gnyawali & Park, 2009; Morris et al., 2007), to
improve their position and legitimacy in the current market (Bengtsson & Johansson, 2014) or to enter
a completely new market (segment) (Morris et al., 2007). When trust, commitment and strong
relationships are managed efficiently in coopetition, SMEs can even increase their survival potential
(Tidström, 2009) and outperform bigger competitors by enlarging their market share and improving
their financial performance (Gnyawali & Park, 2009; Levy et al., 2003).
2.1.3 Coopetition and innovation
Innovations are a long-term success factor for any type of company, including SMEs or large
companies (Filser, Brem, Gast, Kraus, & Calabrò, 2016; Tidd, Bessant, & Pavitt, 2001). This
importance stems from the fact that innovations usually allow companies to grow and perform better
and to offer a competitive advantage (Ireland & Webb, 2007) which is important in order to remain
competitive in rapidly changing and highly technological environments. Given today’s aggressive
competitive environment, it is crucial for all types of firms including SMEs to engage in ongoing
innovation processes to remain competitive over the long-run (Ritala, Kraus, & Bouncken, 2016).
Coopetition may positively influence the processes of creating and developing innovations
(Gnyawali & Park, 2009; Roig‐Tierno, Kraus, & Cruz, 2017). As coopetitors interact in the same or
closely related industry, they face similar market conditions, customer needs and uncertainty situations
which lead to a similar perception of future changes and the creation of innovations (Baumard, 2009).
Existing findings emphasise a positive relationship between coopetition and innovation in large firms
as well as SMEs, including a positive effect on incremental and radical innovations (Bouncken and
Kraus, 2013; Ritala & Hurmelinna-Laukkanen, 2013; Bouncken & Fredrich, 2012), product and
process innovations (Pereira & Leitão, 2016) and the number of product lines (Quintana-Garcia &
Benavides-Velasco, 2004). Further, coopetition can be of importance in innovation-intensive, dynamic
and complex industries with short product life-cycles, high R&D investments, and high technological
standards (Gnyawali & Park, 2009). Here, coopetition facilitates access to complementary resources
and know-how (Carayannis & Alexander, 1999) and diminishes knowledge asymmetries (Enberg,
2012). As a result, coopetiting firms may benefit from a win–win-situation of stronger innovativeness
(Quintana-Garcia & Benavides-Velasco, 2004), lower overall costs, higher resource and knowledge
stocks, and improved effectiveness and efficiency (Chin, Chan, & Lam, 2008).
This study focusses on the application of coopetition and its implications for innovation in the
financial service industries, in particular in the Liechtenstein trust industry, which represents a
collection of service-oriented companies. In the last decade, service industries have become an
important part of western economies (Snyder, Witell, Gustafsson, Fombelle, & Kristensson, 2016) as
they have been growing faster than manufacturing industries (Lusch & Nambisan, 2015) and still
possess huge growth potential (Zulkepli, Hasnan, & Mohtar, 2015). In service industries, innovations
and especially service innovations are crucial success factors (Steinicke, Marcus Wallenburg, &
Schmoltzi, 2012) and companies focus on innovating their services rather than their products (Parida,
Sjödin, Lenka, & Wincent, 2015).
Service innovation includes many different aspects which makes it difficult to develop one
universal definition (Martin, Gustafsson, & Choi, 2016). Snyder et al. (2016) define service innovation
as a construction or extension of companies’ services and processes. According to Witell, Snyder,
Gustafsson, Fombelle, and Kristensson (2016), technologies and new knowledge are the basic drivers
of service innovation. Therefore, service innovation is often associated with technology or product
innovation. Instead of innovating existing service models, most service companies innovate the
required products or processes which come along with their services. Kindström, Kowalkowski, and
Sandberg (2013) suggest that the focus should lie on innovating the services, markets, and business
models of companies operating in service industries. Business models are collections of services which
are offered to the customer as a collective entity. Business model innovation is understood as a type of