Discussion Paper Details

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Title: Co-opetition and Disruption With Public Ownership

Author(s): Arnoud W A Boot and Vladimir Vladimirov

Publication Date: April 2021

Keyword(s): Co-opetition, Competition, Cooperation, Disruption, Innovation and public and private ownership

Programme Area(s): Financial Economics

Abstract: Do mandatory disclosure requirements make public firms less disruptive and competitive? Not necessarily. We offer a new perspective showing that mandatory disclosure facilitates "co-opetition" --- a strategy of competing on some dimensions while avoiding competition on others. Co-opetition encourages disruption by elevating profitability and lowering financing costs. However, it may undermine commitment to intermediately attractive investments, making the benefit of being public U-shaped in investment attractiveness. Being public is most beneficial when firms compete intensely on disruption and, at the other extreme, when protecting cash-cow businesses. Our results explain evidence that stricter disclosure requirements increase the profitability of disruptive public firms.

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Bibliographic Reference

Boot, A and Vladimirov, V. 2021. 'Co-opetition and Disruption With Public Ownership'. London, Centre for Economic Policy Research.