Your biggest rival could be your best technology partner, research finds

Companies developing new technology can favour competitors over suppliers when those rivals already have a strong grip on the target market, according to new research

Your toughest competitor could also be the company you should be working with when developing new technology, according to research challenging the instinct to keep rivals at arm’s length.

Researchers from NEOMA Business School, Texas Tech University and Western University found that procurement managers can prefer competitors to suppliers when choosing partners to co-develop new technology.

Competitors were more likely to be selected when they already had a strong foothold in the target market and when their products posed little risk of replacing those of the company seeking a partner.

The findings suggest that a rival’s proven ability to develop, manufacture and sell innovative products can make it a more credible technology partner than a conventional supplier.

Professor Dina Ribbink, of NEOMA, said: “A rival company with a strong market presence presents a more credible partner for collaborations when building new technologies. The reason is that these firms have already shown an ability to design, manufacture, and market innovative solutions successfully.”

Researchers carried out 17 in-depth interviews with experienced managers to identify three key factors influencing partnership decisions before testing them with a further 400 managers. Participants were asked to imagine they were procurement directors at a leading U.S car manufacturer choosing a partner to develop a new propulsion system.

They then had to decide whether to work with a competitor or a supplier.

But surprisingly, the degree of technological innovation involved had little influence on their choice. The research suggests that companies assessing potential technology partners may place considerable weight on whether a business has already proved it can bring innovative products successfully to market.

It also found that competitors became more attractive partners when the threat of their products substituting those of the contracting company was low.

The research, which was also conducted by Ribbink alongside Tingting Yan of Texas Tech’s Rawls College of Business and Hubert Pun of Western University’s Ivey Business School, and was published in the Journal of Operations Management.

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