Digitalization-Based Competitive Pressure Originating From Coopetitors and the Focal Firm’s Digital Innovation

Prior studies have addressed the antecedents of digital innovation from the resource-based view. However, how the coopetition relationship in strategic alliances affects the focal firm's digital innovation is still largely unexplored. In this article, we theorize that the relative magnitude of the digital proximity between coopetitors and the focal firm is a source of competitive pressure for the focal firm, which we call ‘digitalization-based competitive pressure originating from coopetitors’ (DCPC). We then investigate the divergent effects of DCPC on the focal firm's radical and incremental digital innovation. Furthermore, we examine the moderating effects of the focal firm's technological and market overlap with coopetitors on the abovementioned relationships. A longitudinal dataset of the U.S. pharmaceutical industry over the period 2010-2020 and fixed-effects negative binomial regression models were used to test the hypotheses. The results show that DCPC has an inverted U-shaped relationship with the focal firm's radical digital innovation and a positive effect on the focal firm's incremental digital innovation. Moreover, technological overlap steepens the inverted U-shaped relationship between DCPC and the focal firm's radical digital innovation, whereas market overlap negatively moderates the effect of DCPC on the focal firm's incremental digital innovation.