Strategizing niceness in co-opetition: The case of knowledge exchange in supply chain innovation projects

• We explore determinants of supply chain innovation strategies.
• Strategies can generally be mean, if defecting without provocation or nice otherwise.
• Partner’s preference ordering is irrelevant in long-term innovation interactions.
• Gain from inducing partner's cooperation determines reciprocation of strategy type.
• There are four zones of innovation interaction: cooperation, abuse, tolerance and rivalry.

In this paper, we take a novel approach to address the dilemma of innovation sharing versus protection among supply chain partners. The paper conducts an exploratory study that introduces factors affecting a firm's optimum supply chain innovation strategy. We go beyond the conventional Prisoners’ Dilemma, with its limiting assumptions of players’ preferences and symmetry, to explore a larger pool of 2 × 2 games that may effectively model the problem. After classifying firm types according to collaboration motive and relative power, we use simulation to explore the effects of firm type, opponent type, and payoff structure on repeated innovation interactions (or, equivalently, long-term relations) and optimality of ‘niceness’. Surprisingly, we find that opponent type is essentially irrelevant in long-term innovation interactions, and focal firm type is only conditionally relevant. The paper contributes further by introducing reciprocation of strategy type (nice versus mean), showing that reciprocation is recommended, while identifying and explaining the exceptions to this conclusion.

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