Competition and Co‐operation between Small Firms and Their Competitors

The concept of co‐operation amongst competitors has been considered for some time in the marketing literature generally, and in the small firm marketing literature specifically. However, despite the recognition that small firms do co‐operate, there has been comparatively little attention paid to the ways in which such co‐operation takes place. Co‐operation amongst small firms tends to be only conceptualised as a group of competitors banding together to create a market presence and compete against larger, more established firms. Based on a series of in‐depth interviews with owner‐managers of small firms in a wide array of industry sectors, this paper examines the relationships that small firm owner‐managers maintain with their competitors. Specifically it reports that cooperation between competitors takes place at various levels with so‐called joint venture arrangements such as that described above, representing just one type of co‐operative behaviour. It further highlights the circumstances where co‐operation is likely to occur and how this co‐operation is manifest by examining the motivations for co‐operation and expected and actual outcomes. It also discusses the factors which may preclude cooperation between small firms and their competitors. Such factors include the nature of the industry sector, the level of competition in the market, the size of the competing firms, the age of the small firm, the existence of an association that represents the industry, the perceived level of professionalism within the industry and trust amongst firms.