The burgeoning research on coopetition – simultaneous cooperation and competition between rival firms – provides a unique opportunity to examine a key theoretical tension in the classic literature on relational embeddedness. While scholars of relational embeddedness emphasize that cohesive ties between social actors that are built on relational attachment foster value creation, the empirical evidence remains inconclusive overall. The mixed findings can be attributed to the tension that exists between the “pull” forces of relational capital and the “push” motivations to improve firms’ competitive position, which tension is especially pronounced in coopetition. In the present paper, we draw on the insights from research on coopetition and product market strategy to uncover the conditions under which relational embeddedness creates or destroys firm value. We acknowledge the contingent role of several product market characteristics, such as product differentiation and product obsolescence, which may smooth or exacerbate the tension. We test our predictions on a sample of publicly listed software firms observed from 1997 to 2021.
