The evolution of cooperation in the face of conflict: Evidence from the innovation ecosystem for mobile telecom standards development

Research Summary: How does interfirm cooperation in innovation ecosystems evolve in the face of conflict? We theorize that conflict propels firms to reconfigure cooperative relationships while maintaining and even increasing cooperation with aggressors because cooperation is the primary mechanism for value creation in such ecosystems. To empirically test our arguments, we study patent litigation and subsequent cooperation between mobile telecommunications firms within the 3GPP standards development organization. We find evidence of a dual cooperative strategy in the face of conflict: while cooperation increases between litigants, defendants also enhance cooperation with others to steer standards away from aggressors. We also highlight the contingent roles of technological complementarities and relational position underpinning cooperation after conflict. Our findings demonstrate that in innovation ecosystems, cooperation with adversaries persists despite conflict. Managerial Summary: Firms in innovation-driven industries cooperate to develop interoperability standards and compatible technologies. Yet, cooperative firms may disagree about what constitutes fair, reasonable, and non-discriminatory terms for licensing intellectual property. Thus, conflict and patent litigation arise even as firms cooperate to build technologies and industry standards. We find that in innovation ecosystems, firms commonly increase cooperative efforts in response to conflict. Less-connected firms or those with valuable complementary technologies will likely expand cooperation than well-connected firms or technological competitors. Well-connected firms may pursue alternative cooperative opportunities. We suggest that defendant firms' managers can adopt a dual cooperative strategy: (a) identify private and shared benefits from the joint development of complementary technologies with aggressors and (b) invest in alternative technological partnerships to influence the direction of future standards development.