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Abstract: This research studies the impact of inter-organizational strategies on performance of innovation. We distinguish three kinds of strategies: 1) individual strategy, 2) cooperation strategy and 3) coopetition strategy. We introduce two types of product innovation: 1) radical innovation, 2) incremental innovation. We study innovation at the product level and we analyze the market performance. We develop and test the hypotheses comparing the effects of these three strategies on the market performance of radical and incremental product innovation. We conduct empirical research in the video games industry. We perform quantitative analyses based on a sample of 822 video games launched between 2006 and 2011. As a general rule the results show that coopetition is the most fruitful strategy for not only the market performance of radical innovation, but also of incremental innovation. In this process, a direct competitor becomes the best and the most viable partner for that type of innovation.

Keywords: individual strategy; cooperation strategy; coopetition strategy; radical innovation; incremental innovation; market performance

1.Introduction

The current environmental pressures, such as uncertain demand, and technological and economic turmoil (Cooper, 2000) are forcing companies to develop more innovative products. Innovation enables firms to increase their turnover, profits and their competitive strength (Govindarajan and Kopalle, 2006).

The previous empirical works that attempted to study the impact of the different interorganizational strategies on innovation performance are highly controversial. This research question is even more important when considering to type of innovation radical and incremental innovation. Hoonsopon and Ruenrom (2009) define radical innovation as "products that involve a different set of features and performance attributes which create a novel set of benefits available from existing products in the customer's perspective ". On the other hand, incremental product innovation refers to "products that have minor changes in attributes, which the sets of usefulness or benefits from these changes are minimal in the customer's perspective".

On the one hand, approaches such as open innovation (Chesbrough, 2003), are consistent with a questioning of individual strategies for the benefit of cooperation strategies, while others argue for virtues of competitive confrontation (D'Aveni, 1995). Because, they argue that cooperation strategies have enabled firms to undertake more ambitious projects where research and development have taken a very important place in the development of products. The inter-organizational...

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