1050: Slipstream Strategy: How Product-Focused Incumbents Cooperate and Compete in the Face of Platforms (13548)

Product-focused incumbents such as engineering companies and carmakers increasingly create and capture value with digital extensions for their physical products. Concurrently, these incumbents also face platform entrants such as Google and Apple providing substitutes for these digital extensions. Scholars suggest that a viable strategic response to the entry of platforms is coopetition, the interplay of cooperation and competition. However, little is known about which coopetition strategy can best protect the digital extensions of product-focused incumbents. We address this gap with a longitudinal case study of “InnoCar,” a European carmaker whose digital extensions – car-specific digital services that enhance the driving experience, such as real-time navigation and infotainment – were attacked by Google and Apple. InnoCar defended these extensions with the distinct slipstream strategy, which comprises two phases. An incumbent first cooperates with platform entrants and product rivals to establish shared demand-related complementary assets and then competes with platform entrants on the quality of digital extensions. We develop a conceptual framework for how to execute the slipstream strategy and provide boundary conditions for its application. Our paper contributes to the coopetition literature and research on incumbent-platform entrant dynamics.

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