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The justification attributed to cooperative strategy may be based on several different economic theories and as such, this chapter attempts to take on an economic perspective in examining a company's actions and strategies. Although none of the theories discussed in this chapter are sufficient enough to be able to explain competitive advantage, usefulness, and credibility alone, the chapter is able to look into the features of each theory and how these may contribute to the strategy and operations of a particular organization. It attempts to look into the following economic theories and explains how each of these theories may be applied: market-power theory; transaction-cost analysis; agency theory; resource-based theory; transaction-value theory; real-options theory; and increasing-returns theory.

This chapter examines how existing managerial accounting mechanisms and conceptual frameworks can be brought to bear on the coordination and integration of (accumulated and generated) knowledge. The resource-base theory (RBT) and the roles of learning processes, knowledge, and the generation of organizational capabilities are briefly discussed. The intellectual capital framework is introduced and the place that management accounting takes within that framework is considered. The implications of the intellectual capital concept for the management accounting field are discussed, focusing on the concepts of connectivity and relational networks.

An analysis is made of a firm's evolutionary capabilities using the car industry in general, and Toyota in particular, as an example. The resource view of the firm is extended to look in detail at how capabilities change over time, and attempt to explain inter‐regional and inter‐firm differences. However, instead of applying the concepts of resource‐based theories or capability theories on the firm as a unit, the analysis is applied at the operational level. In the process, the author makes an argument for not only interpreting capabilities as something directly affecting the level of competitive performance and the improvements of performance but also as the accumulation of these static and improvement capabilities; in other words, successful firms are not only competitive and know how to improve to stay competitive, they also know how to sustain these skills over time. The chapter goes on to explore, in some depth, this novel interpretation of evolutionary capability as a firm‐specific ability to acquire both static and improvement capabilities, and includes a table summarizing the evolution of selected production–development capabilities at Toyota, to accompany the discussion in the text.

This chapter considers how core strategic management theories (resource-based theory, positioning theory and the theory of the firm) could be impacted by incorporating stakeholder considerations. Resource-based theory would need to adopt a model of profit appropriation in which stakeholders in addition to shareholders would have residual claims on a firm’s profits. Positioning theory’s traditional focus on threats would broaden to a focus on stakeholder-generated opportunities for profit generation. And stakeholder logic brings into question the importance of a theory of the firm for strategic management theory. These ideas (and others) are explored in this chapter as well as the implications for strategic management topics such as corporate diversification, mergers and acquisitions, and corporate governance. Last, the chapter briefly considers some broader implications for other fields of scholarship that use and apply strategic management theories to develop applications and explain phenomena of interest in their own respective fields.

Chapter 2 addresses cooperation from economic perspectives, namely market-power theory, transaction cost economics, agency theory, resource-based theory, transaction value theory, dynamic capabilities theory, real-options theory, and increasing-returns theory. Cooperation can engender market power. Transaction cost economics views cooperation and alliances as potentially cost-reducing methods of organizing business transactions. Agency theory is concerned with the behavior of alliance partners. Both are “agents” of the other and as such systems must be set up to reduce the risk of self-serving opportunism. The resource-based perspective suggests that partners set up alliances to tap into each other’s specialized resources and strategic assets. Transaction value theory focuses on joint value maximization for the collaborative transaction. Alliances can be considered a real option to invest under conditions of uncertainty. Increasing returns are the norm in knowledge-based industries, and the formation of a network of alliances enables companies to operate as significant players in such markets.

This chapter details the architecture and strategies of Franklin and Armfield, the most successful slave trading firm of the 1830s. It was composed of Isaac Franklin, John Armfield, and Rice C. Ballard, among others. Much of that success owed to Franklin’s resource-based theory of the firm. The movement of money and not merely enslaved people posed great challenges to achieving an economy of scale in the domestic slave trade. Franklin and Armfield organized vertically and built a supply chain that funnelled a thousand captives per year from the Chesapeake to the lower Mississippi Valley during its peak years. Armfield incorporated a shipping business within the firm and built a small fleet of company-owned ships. Franklin expanded credit to buyers in Louisiana and Mississippi and used domestic bills of exchange along with bank drafts, including with Louisiana property banks, to make remittances to purchasing managers, who disbursed banknotes to purchasing agents. Because of such financial and transportation innovations Franklin and Armfield drove out competitors like Austin Woolfolk.

This lead chapter defines competitive, cooperative, and coopetitive strategies, and provides an overview that complements the two following chapters which focus on gaining competitive advantage and creating value through alliances. This lead chapter suggests that although cooperation counters competition, in practice, firms simultaneously compete and cooperate in markets and value chain functions. The chapter reviews theories on competitive and cooperative strategies, such as market power, transaction cost economics, and resource-based theories, and highlights game theoretical, relational, and social perspectives. The chapter then considers the changing context of strategy, including the rise of emerging economies, political intervention, technological disruption, and growing social demands on businesses. The text points to new forms of cooperation and competition, including global value chains, cross-sector alliances, technology platforms, and ecosystems, with new models of public-private collaboration. This new business reality has important implications for the future focus of research on cooperation, competition, and coopetition.