Coopetition-driven success: boosting financial performance through dynamic capabilities

Abstract Purpose This study aims to investigate the mediating role of coopetition (CO) in the relationship between dynamic capabilities (DCs) and financial performance (FP) in Palestinian corporations, with a focus on the unique geographical and political context of the West Bank. Design/methodology/approach This study employs a quantitative approach to achieve its purpose, utilizing the structural equation modeling technique (SEM). Furthermore, a judgment sampling method was employed, and a cross-sectional design was adopted to collect data from a sample of 308 Palestinian corporations. Findings The findings indicate that DCs have a positive impact on CO, and CO, in turn, has a positive effect on FP. Additionally, the results show that CO mediates the influence of DCs on FP. These outputs underscore the centrality of inter-firm communication, a core element of CO, as a vehicle for deploying capabilities in a complex and turbulent environment. The study also provides a theoretically grounded explanation for coopetition’s mediating role, bridging CO literature and extending DC’s research by contextualizing it within the constraints of a developing economy. Originality This study advances Dynamic Capabilities Theory (DCT) and Resource-Based View (RBV) by demonstrating CO’s mediating role in the DC–FP relationship within the under-researched context of Palestinian corporations. It offers novel empirical insights into strategic management under institutional and economic constraints. Implications The findings suggest that Palestinian firms can enhance FP by leveraging DCs through concrete policy mechanisms such as targeted tax incentives for cooperative R&D, grants for capacity-building in CO management, or government-backed platforms for inter-firm collaboration. Given the modest explanatory power of the model ( R 2 = 0.240; small f 2 of CO on FP = 0.029), these implications are positioned as illustrative and exploratory directions rather than empirically validated policy prescriptions and do not warrant strong predictive or causal policy claims. Downstream firm outcomes also reflect macro-level political, institutional, and capital-market factors not captured in the present model. This provides actionable governmental strategies for firms in volatile environments.