Cooperation and competition among subsidiaries in a business group: their impacts on innovation

Purpose: The purpose of this paper is to document the relationship between intra-group coopetition and subsidiaries' innovation performance and the moderating impact of the intensity of external competition. Design/methodology/approach: Data were collected from 75 subsidiaries in China through a questionnaire survey of their R&D and general managers. The total number of individual respondents was 205. We tested our hypothesis by using ordinary least squares regression. Findings: Intra-group cooperation was found to promote a subsidiary's performance in product and process innovation. Intra-group competition was found to have a U-shaped relationship with product and process innovation. Intra-group cooperation strengthens the U-shaped relationship between intra-group competition and process innovation. Research limitations/implications: This study involved firms from more than one industry. Studies of specific industries might reach more specific conclusions. And all of the data were self-reported by the managers of the firms concerned. Future studies would be well-advised to consider more objective data describing pairs of parent firms and subsidiaries. Practical implications: Subsidiaries ought to build their internal networks to cooperate with each other. That can bring significant advantages in terms of information and synergy in innovation. Subsidiaries are also suggested to take full advantage of the opportunities that intra-group competition brings. Originality/value: This study is the first one to explore coopetition phenomenon in the context of business group. By taking Chinese business group subsidiaries as the research samples, this research not only extends the coopetition research but also reveals that cooperation and competition are co-existed and exert influence in subsidiaries.