Co-developing a new technology: what if your toughest competitor turned out to be your best ally?

Can a company benefit from partnering with a competitor to create a new technology? Although the idea may seem odd at first glance, it can prove to be a smart move under the right conditions. Three researchers, including NEOMA’s Dina Ribbink, spell out the factors that might lead a procurement manager to take this path.

When the aim is to develop highly strategic, cutting‑edge technology, partnering with a competitor may seem counterintuitive. A rival, in principle, should be treated with caution and kept at arm’s length. Yet top-tier global companies still choose to team up: in 2013, for example, Apple tasked Samsung, one of the biggest names in mobile communications, with producing the microprocessors for its iPhones. Similarly, SpaceX turned to an outside company, MSE Supplies, to provide the advanced materials used in its marquee Falcon 9 rocket.

No company breaks new ground on its own in today’s market

What factors can lead to such a choice? This is the question that the article’s three authors set out to explore in order to help procurement managers think more clearly about this strategic issue. 

It’s an approach that makes even more sense in a world where no company innovates in isolation: technology is becoming too complex, and expertise is scattered across the world. The question is no longer “Should we innovate internally or with a partner?” but rather “Which partner, supplier or competitor should we innovate with?”

The research team began by conducting qualitative interviews with 17 experienced procurement managers, which highlighted the importance of three selection criteria. First, the innovative – even disruptive – nature of the technology to be developed. Secondly, the competitor's market share. And thirdly, to what extent the partner’s products could replace those of the contracting company, potentially cutting into the sales the latter expected from its innovation.

Partnering with a competitor: a matter of trust

Underlying these three factors is the decisive role that trust plays in procurement managers’ decision‑making: trust not only in the competitor’s competence (are they capable of delivering the development?) but also in their integrity (will they, for example, honour the terms of the agreement without misappropriating patents?). 

Once these hypotheses had been established, the researchers tested them on a sample group of 400 procurement managers experienced in complex industrial environments. Participants were asked to take on the role of procurement director for a leading US car manufacturer and to choose a partner – either a competitor or supplier – to develop the propulsion system for a new model. 

The tests concluded that a competitor is more likely to be selected if it has a strong foothold in the target market (criterion 2) and if its products pose little risk of substituting those of the contracting firm (criterion 3). Conversely, the degree of technological innovation (criterion 1) has little influence on procurement managers’ decision‑making.

The ideal scenario: a competitor with a strong market share and non-substitutable products

These dynamics can be explained. A rival with a significant market share signals its ability to design, manufacture and market innovative solutions. It enhances the credibility of the contracting company’s future product, and limits the risks associated with its launch. In addition, its turnover and market positions provide reassurance about its long‑term sustainability. These assets inspire a high degree of confidence in its capabilities, and outweigh any potential scenario where it might exploit the situation for its own gain.

By contrast, a high level of substitutability between the partners' products provides little incentive to form an alliance. In the long run, the risk of a price war would be high, leading to a clear winner and loser. Mistrust about the competitor’s integrity intensifies to the point that it surpasses trust in their expertise. 

Non‑substitutable products are essential to creating a favourable environment. Consequently, if the contracting company’s new product performs well, its competitor will not be adversely affected and will have no incentive to deviate from the partnership agreement.

Highly innovative technology makes the decision more complex

Among all the selection criteria, the innovative nature of the technology is the most difficult criterion to evaluate. We might have expected that a high level of technological novelty would deter procurement managers from collaborating with a competitor that is more advanced in the field, for fear of becoming overly dependent on them. This rival could, for example, withhold key information or keep the most promising development options to itself. This unsettling prospect undermines trust in the competitor’s integrity. 

At the same time, trust in their competence is high: teaming up with a frontrunner in the targeted technology, especially one operating at the cutting edge, provides solid support when venturing into uncharted territory. It also helps reduce uncertainty surrounding the development and market launch. Viewed from this angle, the competitor appears to be the ideal ally.

In the final analysis, low trust in integrity and high trust in competence cancel each other out. The authors conclude that the innovative nature of the technology has no significant impact on whether a firm selects a competitor or supplier. 

This research, which provides a simple analytical framework, highlights a correlation between factual elements (technological novelty, competitor market share and product substitutability) and more subjective trust‑related phenomena. Procurement managers have a clear interest in considering all these factors so they can make better-informed decisions.

Find out more

Tingting Yan, Hubert Pun and Dina Ribbink, Technology development outsourcing: When to join forces with a rival?  Journal of Operations Management, March 2026. https://doi.org/10.1002/joom.70042.