Trading with the enemy: A coopetitive perspective of resource exchange at arm's length

Abstract Research Summary Research on inter‐firm cooperation often focuses on long‐term strategic alliances while overlooking the distinct form of arm's‐length resource exchanges. Our study addresses this gap using the National Basketball Association (NBA) data for precise resource exchange measurements. Contrary to strategic alliances, where competitive pressure fosters cooperation, we find that competitive pressure reduces cooperation in arm's‐length exchanges. However, relational capital helps to facilitate resource exchanges. We also found that while resource bundling exacerbates the negative effect of competitive pressure, it amplifies the positive effect of relational capital. Interestingly, relational rivalry intensifies the impact of competitive pressure but does not diminish the effect of relational capital. These insights have important implications for the coopetition and the Strategic Factor Markets (SFM) literature. Managerial Summary In competitive environments, organizations may cooperate to reduce competition, often through long‐term strategic alliances. However, our research reveals different behaviors in arm's‐length resource exchanges. Analyzing NBA player transaction data, we found that competition generally discourages resource exchanges due to opportunism concerns, particularly when multiple resources are involved. Interestingly, organizations are more likely to engage in arm's‐length exchanges when key members have prior cooperative histories, especially in complex scenarios. Historical rivalries also heighten the competitive impact on resource exchanges but do not significantly diminish the benefits of prior cooperation. This study offers valuable insights for managers, helping them navigate resource exchange dynamics among competitors and make more informed strategic decisions.