The Functions of Leadership in Managing Paradoxical Tensions in Coopetitive Interfirm Strategies. A Qualitative Case Study from the Fintech Industry

The term coopetition describes a situation where companies cooperate and compete with one another at the same time, typically to achieve innovation. However, the simultaneous pursuit of cooperation and competition between firms create a paradox in the relationship, which in turn has the potential to cause tensions. The field of research about different aspects of coopetition and the paradoxical tensions that could arise is nascent, and particularly the research on how the individual leader can manage these tensions is limited. In particular, this study looks further into the emotional ambivalence leaders may experience when exposed to paradoxical tensions while participating in coopetitive relationships. We seek to explore the research question: How do leaders manage paradoxical tensions in the different phases of a coopetitive project?

Our study is a qualitative case study of a coopetition project initiated by the NCE Finance Innovation Cluster in response to the PSD2-regulations imposed by the EU. Drawing upon seven semi-structured interviews, the data analysis reveals leadership behaviors critical for sustaining a coopetitive relationship, particularly in high-tension phases. We first identify three critical tension points and then key emotional-relational and task-performance leadership behaviors that leaders engage in to manage the emotional ambiguity that arises from the paradoxical tensions. Lastly, we examine a possible relationship between leadership and the exploitation of a project’s innovation potential.

Even though the Covid-19 pandemic made it impossible to conduct in-person interviews, and the project was ended two years before we collected the data, we were able to establish trusting contacts with informants to gather rich data.

Trough our research we contribute with new insights to how functional leadership can sustain a coopetitive relationship by managing paradoxical tensions in different phases of the project when engaging in a coopetitive interfirm innovation strategy. A practical implication is the importance of leadership in sustaining a coopetitive relationship, not only to foster coopetition success but also for achieving the project’s innovation potential.

Keywords: Coopetition; innovation; leadership; interpersonal tensions; paradox