Coopetition-based open-innovation and innovation performance: Role of trust and dependency evidence from Malaysian high-tech SMEs

Waseem Ul Hameed; Farrukh Naveed Article Coopetition-based open-innovation and innovation performance: Role of trust and dependency evidence from Malaysian high-tech SMEs Pakistan Journal of Commerce and Social Sciences (PJCSS) Provided in Cooperation with: Johar Education Society, Pakistan (JESPK) Suggested Citation: Waseem Ul Hameed; Farrukh Naveed (2019) : Coopetition-based openinnovation and innovation performance: Role of trust and dependency evidence from Malaysian high-tech SMEs, Pakistan Journal of Commerce and Social Sciences (PJCSS), ISSN 2309-8619, Johar Education Society, Pakistan (JESPK), Lahore, Vol. 13, Iss. 1, pp. 209-230 This Version is available at: https://hdl.handle.net/10419/196194 Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. 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If the documents have been made available under an Open Content Licence (especially Creative Commons Licences), you may exercise further usage rights as specified in the indicated licence. https://creativecommons.org/licenses/by-nc/4.0/ Pakistan Journal of Commerce and Social Sciences 2019, Vol. 13 (1), 209-230 Pak J Commer Soc Sci Coopetition-Based Open-Innovation and Innovation Performance: Role of Trust and Dependency Evidence from Malaysian High-Tech SMEs Waseem Ul Hameed School of Economics, Finance & Banking, College of Business Universiti Utara Malaysia Email: [email protected] Farrukh Naveed (Corresponding author) School of Economics, Finance & Banking, College of Business Universiti Utara Malaysia Email: [email protected] Abstract In a highly competitive environment, the phenomenon of coopetition is emerging rapidly among various firms as well as markets which is significant to enhance firm‘s open innovation performance (FOIP). However, Malaysian High-Tech SMEs are unable to develop a well-managed coopetition mechanism which influence negatively on open innovation (OI) performance. To address this problem, the objective of this study is to investigate the effect of coopetition-based OI on the FOIP. To achieve this objective, a survey was conducted by using cross-sectional research design. Managerial employees of Malaysian high-tech SMEs were selected as the ultimate respondents of this study. While analyzing the data through PLS-SEM, it is revealed that coopetition has major contribution to enhance FOIP. Likewise, it is highlighted that the role of trust and dependency is crucial to develop a good coopetition platform. The study contributed in the body of literature by investigating the mediating role of trust and dependency to enhance the positive effect of coopetition based OI on FOIP, particularly in Malaysian high-tech SMEs. Thus, the current study has major importance for Malaysian high-tech SMEs to look on the vital factors to expedite coopetition and innovation activities. Keywords: coopetition, open innovation, firm performance, trust, dependency, high-tech SMEs. 1. Introduction In highly competitive environment, the phenomenon of coopetition is emerging rapidly among various firms. This phenomenon is based on collaboration with competitor (Klimas & Czakon, 2018). The notion of coopetition first presented by Ray Noorda, the chief executive officer (CEO) as well as the founder of Novell. After initial announcement, further encouraged by Nalebuff and Brandenburger (1996) and provided a novel explanatory model related to the inter-organizational relationships among firms Coopetition-Based Open-Innovation and Innovation Performance 210 (Lechner et al., 2016) which is lonely based on cooperation and coopetition (Mead, 2018). Coopetition has drawn a substantial consideration as it linked two different or opposite concepts: collaboration and competition. According to Coy (2006), coopetition is better described as ―sleeping with the enemy.‖ It is a significant strategy which insures major benefits (Bengtsson & Kock, 2000) in the field of OI. Now companies have started to use coopetition as one of the tools to enhance open innovation (OI) activities, however, Malaysian High-Tech small and medium-sized enterprises (SMEs) requires further intention, because the OI activities are at initial level in these SMEs. Hence, the current study considered the Malaysian High-Tech SMEs to examine coopetition-based OI. The engagement in various activities of so-called ‗coopetitive‘ environments, basically depends upon communications in which collaboration as well as competition take place simultaneously (Bengtsson & Kock, 2000), generally, can result in various valuable knowledge-related practices among firms (Chin et al., 2008). These knowledge-related activities have key position in the process of OI. As OI is two-way procedure where external knowledge outside the firm enters inside the firm and goes outside in shape of final idea. Lichtenthaler (2008) explained that, OI is the both outside-in and inside-out transference of latest technologies and ideas. OI can be defined as ―it is the use of purposive inflows and outflows of knowledge to accelerate internal innovation, and expand the markets for external use of innovation, respectively (Chesbrough, 2006)." Therefore, coopetition-based OI could improve the firm‘s open innovation performance (FOIP). Various prior studies demonstrate the phenomenon of coopetition and innovation (Barney et al., 2017; Liu & Tan, 2017; McCarthy et al., 2018; Rodríguez et al., 2017), however, most of the studies did not fill the gap of coopetition and OI in High-Tech SMEs, particularly in Malaysia. Hence, the current study filled the literature gap by examine the role of coopetition to enhance the FOIP. This study is performed to address the problem of low OI in Malaysia High-Tech SMEs. As literature shows that most of the companies are unwilling to open up various innovation strategies (De Wit et al., 2007; Lichtenthaler & Lichtenthaler, 2009) which effect negatively on OI success. That is the reason; the overall performance of Malaysian High-Tech SMEs is low as compared to the High-Tech SMEs related to developed nations like United States (US) and United Kingdom (UK). Example of coopetition include DELL, Sony, HP and Matsushita (Watanabe et al., 2009). However, coopetition requires trust on competitors and dependency on each other‘s. Trust has an imperative character in coopetition phenomenon (Devetag, 2009). Different partners involved in coopetition faces risks and lack of trust that decline performance (Ritala, 2009) and various innovation activities (Nieto & Santamaría, 2007). Dependency is equally important with trust and significant role in trust (Bouncken & Fredrich, 2012). Most of the times, powerful or big firms develop the mechanism of dependency when they have their own resources and become more powerful (Pfeffer, 1981). Therefore, trust and dependency play a mediating role between coopetition and FOIP. To date, however, it is remained unclear whether that involvement in the process of coopetition accelerates the FOIP, particularly in High-Tech SMEs. Hence, this study has intentions to partially fill this literature gap. Thus, the objective of this study is to Hameed & Naveed 211 investigate the effect of coopetition-based OI on the FOIP in Malaysian High-Tech SMEs. The other two objectives are as follows;  To investigate the mediating role of trust between coopetition and FOIP.  To investigate the mediating role of dependency between coopetition and FOIP. The current study is one of the pioneer studies which filled the literature gap by introducing the phenomenon of OI and coopetition in Malaysian High-Tech SMEs. Particularly, this study introduced trust and dependency as major element of coopetitionbased OI. This study highlighted that trust and dependency are essential to carry out coopetition-based OI phenomenon. This phenomenon is not possible without trust and dependency. Moreover, the current study investigates the vital role of coopetition to promote OI in high-tech SMEs. Furthermore, it investigated the mediating role of trust and dependency between coopetition and FOIP. Therefore, the current study has major significance for Malaysian High-Tech SMEs to look on the vital factors to expediate OI activities through coopetition activities. It provides the valuable insights to increase firm‘s performance through well managed coopetition-based OI. This study is also one of the attempts to present valuable idea to boost SMEs performance. Selection of SMEs is based on various reasons. Because it is evident from the literature that SMEs has noteworthy contribution in the Malaysian economy (Aris, 2006; Saleh & Ndubisi, 2006). SMEs has significant contribution to the economic development of Malaysia (Abdullah, 2002). However, these SMEs are struggling to develop effective OI mechanism, the lower OI distressing their overall performance as well as competitiveness in local and international markets (Hameed, Basheer, Iqbal, Anwar, & Ahmad, 2018). In contrast to the large corporations, SMEs have more issues to adopt OI due to lack of resources and small scale. Therefore, it is easy for large corporations to get success in OI as compared to SMEs. SMEs needed the collaboration with their competitors to get significant success in OI. That is the reason this study introduced coopetition-based OI in SMEs. 2. Review of Literature Relationships of cooperation among various competitors characterized by simultaneous cooperative as well as competitive ties are generally defined as coopetition, a mixture or combination of two key words cooperation and competition as mentioned by Nalebuff and Brandenburger (1996). This is also supported by Bengtsson and Kock (2014), generally in the various fields such as management as well as business. This coopetitionbased innovation has great importance for various competitors, particularly in high competition markets where the survival is challenge for companies. However, less attention has been paid to High-Tech SMEs. Most of the High-Tech SMEs are facing problems related to OI in Malaysia. SMEs are unable to carryout OI practices solely in a competitive environment. Therefore, these High-Tech SMEs need coopetition-based OI in which the role of trust and dependency is vital. As the OI has considerable importance in SMEs (Chesbrough, 2006). 2.1 Game Theory and Resource Dependency Theory Nalebuff and Brandenburger (1996) used game theory as one of the bases that will "make it easier to explain the reasoning behind a proposed strategy." They use the term coopetition, which is generally constant with their message that cooperation is suitable in Coopetition-Based Open-Innovation and Innovation Performance 212 different situations, however, competition is suitable in others (Armstrong & Clark, 1997). Coopetition conceptualizes valuable relationships comprising of two conflicting elements, namely; cooperation as well as competition. Based on game theory arguments, Nalebuff and Brandenburger (1996) suggested that the coopetition powerfully improves the firm performance. The reason of performance improvement is that firms execute various activities in a good value net of different stakeholders like clients, suppliers and competitors (Bouncken & Fredrich, 2012). All firms in this valuable network play numerous roles in business games. In coopetition, firms collaborate with their enemies which enhance the OI performance through new ideas. Consequently, they can utilize collaborative as well as competitive relationships in the pursuit of success within the field of OI. Cooperation is quite similar with game theory in which various competitors play games of business by trusting on each other‘s and get success. It is not only guiding to play a business game but also guides to think that how to play the game and how to change various rules by involving their competitors (Bouncken & Fredrich, 2012). It leads managers to play a game like coopetition between competitors. However, in this situation, one competitor needed to depend on other with trust. Thus, dependency and trust are major factor in smooth coopetition as shown in Figure 1. Deficiency in any one element will lead towards collapse. Applying different ideas from resource dependency theory to coopetition, suggests that most of the organizations requires various types of resources from other competing organizations (van den Broek et al., 2018). It demonstrates the degree to which coopetition creativities draw on joint resources between competing firms (Stentoft et al., 2018). Thus, dependency in competition is essential to collaborate, exchange resource and OI performance. Consequently, resource dependency theory is in line with the role of dependency in competitors on each other. To handle resource dependency: this indicates that various cooperative firms can share their knowledge as well as exchange access to different resources (Ghanbari et al., 2017). Hameed & Naveed 213 Figure 1: Research Framework 2.2 Hypothesis Development Coopetition refers to the ―strategic and dynamic process in which economic actors jointly create value through cooperative interaction, while they simultaneously compete to capture part of that value‖ (Bouncken et al., 2015). This coopetition strategy is most important for global competition (Luo, 2007). A vital predecessor is external knowledge as it promotes innovation activities and implementation of innovation process (Pittaway & Rose, 2006). It also plays a key part in achievement in firm‘s innovativeness (Parra‐Requena et al., 2015) which is the base of OI. External knowledge expedite internal innovation activities which has direct effect on overall OI system (Chesbrough, 2006). It has various forms like relationships with different external partners consists of suppliers, competitors, customers etc. (Covin & Slevin, 1988). These external partners have major importance for OI. External knowledge from competitors through coopetition accelerate the FOIP. Because OI need both internal and external knowledge (Chesbrough, 2006). As Pollok, Lüttgens, and Piller (2018) investigated that external knowledge through crowdsourcing is significant to promote OI. But knowledge attributes could align efficiently with specific OI mechanism (Zhou, Yao, & Chen, 2018). However, coopetition is not possible without trust and dependency on each other by different competitors. In coopetition, competitors are always requiring high level of trust and dependency to get success in their operations. Specifically, cooperation between competitors looks to play a positive contribution in progressing firm‘s technological development as well as to enhance the innovation capabilities (Gnyawali & Park, 2011) among competing firms. Due to the high uncertainty in markets, competitors must put on more flexible activities of collaboration to expedite innovation (Bengtsson & Kock, 1999) which ultimately boost the OI performance. However, based on misconduct of any partner in coopetition activities directly leads towards decline in these collaborations and it has strong negative effect on OI. In this condition‘s firms do not trust on each other‘s and collaboration comes to an end in no time. As it is the matter of trust and dependency on each other‘s. Moreover, coopetition H6 H2 H4 H1 H3 H5 H7 Trust Coopetition Firm’s OI Performance Dependency Coopetition-Based Open-Innovation and Innovation Performance 214 can also be significant to develop new product (Bouncken et al., 2018) as well as numerous product lines (Quintana-Garcia & Benavides-Velasco, 2004). Prior researchers have stressed the significant positive relationship among coopetition and innovation activities among various firms (Ritala et al., 2013). All these previous studies favor the positive contribution of coopetition in innovation practices (Ritala, 2012) which is ultimately beneficial to expedite OI activities. It helps to open up their strategies by licensing their ideas. More specifically, coopetition has significant positive association with incremental as well as radical innovation practices as mentioned by different researchers (Bouncken & Fredrich, 2012; Le Roy & Czakon, 2016; Ritala et al., 2013). This strategy of coopetition is important for both early as well as late stages of various activities related to incremental innovation (Bouncken et al., 2018). However, again it requires high level of trust and dependency. This is more important in High-Tech SMEs, because these SMEs requires more OI activities to enhance their performance in highly competitive environment. Those SMEs having employees less than 250 (European Commission, 2005), are limited in coopetition activities due to small in size (Akdoğan & Cingšz, 2012), which is major constraint in innovation performance (Camisón-Zornoza et al., 2004). Thus, these SMEs have fewer resources to get success in OI. Hence, to promote OI performance for HighTech SMEs is more important than small scale SMEs. Sometimes coopetition becomes mandatory activity to survive in a competitive environment through OI. Therefore, these firms must trust and depend on other competitors. Mention (2011) carried out a research on OI and coopetition, the study provides the results that coopetition has significant role to encourage OI practices. Furthermore, a research performed by Estrada et al. (2016), provides valuable insights that coopetition increases the innovation related to the new product development. Moreover, it is proved that coopetition has significant role to increase firm performance (Raza-Ullah et al., 2018), as it has significant association with market performance (Ritala, 2018) and shows positive outcomes for SMEs (Kraus et al., 2019). Above literature demonstrates that coopetition has positive relationship on FOIP. Coopetition provides external knowledge which is most important in OI. Moreover, various SMEs do not have sufficient ability due to small size that is why OI is a crucial challenge. This challenge could be handled through coopetition. Hence, it is hypothesized that;  H1: There is a positive relationship between coopetition and FOIP Coopetition is one of the most important elements of business (Bengtsson & Kock, 2000) which is fundamentally developed through different logics of interaction in which one of the factor include that various individuals performance to exploit their interest related to business activities (Luo et al., 2006). It is a phenomenon in which firms take on information leakage as well as exploit power over various partners (Bouncken & Fredrich, 2012). Collaboration is second factor, in which individuals play their role to promote mutual interest. In fair collaboration practices, firms exchange knowledge with each other‘s and built a strong relationship through trust and dependency (Diekola, 2016). Hameed & Naveed 215 Trust is the most significant part of every coopetition activity (Castaldo & Dagnino, 2009; Kraus et al., 2019). It is considered as building block of relationship activities (Bradach & Eccles, 1989). Since coopetition is not only developed on different types of competition, but also on various activities of alliance (Devetag, 2009). Therefore, trust has significant relationship with coopetition which effect the performance of firms, particularly FOIP. According to Ireland and Webb (2007), social force like trust interrelate with various economic forces by effecting significantly on firm performance. As the OI is based on the use of internal as well as external resources (Chesbrough, 2006) and coopetition is also one of the ways to utilize external resources. Moreover, dependency is also equally important with trust. Dependency has crucial role in coopetition success (Bouncken & Fredrich, 2012). It is described by resource dependency theory, firm exchange their resources like knowledge and depend on each other‘s (van den Broek et al., 2018). In line with resource dependence theory, sometimes influential companies make dependency situation when they take the control of concerned resources and hold power over other firm‘s (Pfeffer & Villeneuve, 1994) which effect on OI activities. Therefore, dependency in coopetition is most crucial element in OI activities. Furthermore, dependency affects the relationship between the alliance activities of HighTech SMEs and coopetition (Bouncken & Fredrich, 2012). In the process of coopetition, various competitive firms depend on each other‘s to accelerate the process of OI. It is one of the important elements in coopetition success. Hence, in line with trust, dependency has also key importance for coopetition success. Castaldo and Dagnino (2009) revealed valuable findings by examining the relationship between strategic role of trust in coopetitive dynamics and found a significant positive association. Literature proved that trust is one of the most crucial part of OI which is based on coopetition. Thus, High-Tech SMEs requires a certain level of trust and dependency among competitors. On the basis of trust and dependency, coopetition works smoothly. As in coopetition, one competitor trust on their competitor and allow to run operations smoothly. A high level of trust and dependency requires for better communication and to run operations without disturbing each other‘s. Hence, from above discussion, it is hypothesized that;  H2: There is a relationship between coopetition and trust.  H3: There is a relationship between coopetition and dependency. This study claimed that trust shows a significant role in various coopetition type relationships (Devetag, 2009) and FOIP. Trust is one of the social lubricants which can enhance the collaboration between various partners (Brolos, 2009) and increases the OI performance through exchange of knowledge. Apart from trust, dependency is also important for OI. Study assumes that dependency is an additional significant factor which has significant impact on firm‘s OI activities. Both elements, trust and dependency effect positively on coopetition‘s which effect on OI success. Trust as well as dependency always effect the relationship between coopetition and different innovation activities (Bouncken & Fredrich, 2012). OI is based on new ideas which facilitates internal innovation (Chesbrough, 2006) and coopetition based on Coopetition-Based Open-Innovation and Innovation Performance 216 trust and dependency brings new ideas from competitors. It positively influences the OI performance, particularly in High-Tech SMEs. Nalebuff and Brandenburger (1996) suggested with the help of game theory that coopetition powerfully improve firm performance. With the help of trust and dependency on each other‘s, firms collaborate with their competitors and enhance the OI activity by introducing external knowledge in shape of new ideas. Thus, they can utilize collaborative as well as competitive relationships to get success in the field of OI. However, various partners in coopetition activities face risk characteristic to opportunism as well as lack of trust on each other which weaken the rate of achievement (Ritala, 2009) and different innovation activities (Nieto & Santamaria, 2007). Nestle et al. (2018) found that trust has significant relationship with OI. Another study by Brockman et al. (2018) also found that trust has direct relationship with OI performance in various organizations. Therefore, generally the coopetition phenomenon has two different faces: it can foster the FOIP but need to compete with opportunism risk and misinterpretation, thereby dipping the FOIP. Thus, trust and dependency have a relationship with FOIP. However, this relationship may discourage the OI performance. Therefore, it is hypothesized that;  H4: There is a relationship between trust and FOIP.  H5: There is a relationship between dependency and FOIP Additionally, above discussed literature demonstrates that, there is a significant relationship between coopetition and FOIP. It is also clear that there is a significant relationship between coopetition and trust, trust and FOIP, coopetition and dependency, dependency and FOIP. Therefore, by following the concept of Baron and Kenny (1986), it could be concluded that trust and dependency could be used as mediating variables between coopetition and FOIP. Hence;  H6: Trust mediates the relationship between coopetition and FOIP  H7: Dependency mediates the relationship between coopetition and FOIP 3. Research Methodology The study took place in Malaysia and covered all the states of Malaysia. This study is grounded on cross-sectional research design and quantitative research approach. All the High-Tech SMEs from Malaysia were selected for this study. Unit of analysis was individual and managerial employees who were directly involved in coopetition and innovation activities were selected as the respondents. The survey was carried out to the High-Tech SMEs via email. The email provided a link to the survey. First, respondents were informed regarding the objective of the current study. It was asked to confirm that the respondents are manager having direct involvement in coopetition-based innovation activities. Second, respondents were asked about their permission for participation. Employees not being involved in coopetition and innovation were not allowed to fill the survey questionnaire. Sample size is selected based on Comrey and Lee (1992) suggestions. ―Sample having less than 50 participants will observed to be a weaker sample; sample of 100 size will be weak; 200 will be adequate; sample of 300 will be considered as good; 500 very good, whereas 1000 will be excellent.‖ Consequently, 200 sample size was preferred. All answers were collected on 5-point Likert-type scales. Two hundred (200) questionnaires Hameed & Naveed 223 re-sampling procedure‖ and receiving more responsiveness because this technique is considered as most potential procedure to test and analyses the effect of mediation (Hayes, 2009; Zhao et al., 2010). Furthermore, by following the references of Hair Jr et al. (2014), PLS SEM by using PLS bootstrapping for mediation was performed as it is best for small sample. However, Hair Jr et al. (2014) suggested that the procedure of Preacher and Hayes (2004, 2008) is best to follow for mediation and the current study was followed this procedure. Therefore, effect of trust and dependency was examined as a mediating variable. Additionally, Table 5 explains the results of mediation through trust and dependency between coopetition and FOIP. It shows that trust and dependency mediating the relationship between coopetition and FOIP as the t-value is above 1.96 for both relationships. Table 5: In-Direct Effect Results Relationship (β) (M) SD T Statistics P Values Decision H6 COOP -> TRU -> FOIP 0.380 0.379 0.087 4.384 0.000 Mediation H7 COOP -> DEP -> FOIP 0.259 0.269 0.064 4.083 0.000 Mediation 4.3 Variance Explained (R2) More importantly, the R-square (R2) value has been resultant from the output of PLS which enlightens that by considering all the variables together have the propensity of explaining variance in endogenous latent variable, namely; FOIP by 55.1%, which is moderate (Chin, 1998). As it is shown in Table 6. Table 6: R-Square (R2) Construct R2 FOIP (FOIP) Trust (TRU) Dependency (DEP) 55.1% 69.6% 62.8% 4.4 Construct Cross-Validated Redundancy (Q2) Moreover, predictive relevance (Q2) of the model was examined through blindfolding technique. As explained by Hair Jr et al. (2014) that Q2-value is acquired ―to assess the parameter estimates‖ and also assess ―how values are built around the model‖. Q2 examined the capacity of framework (model) to forecast the relevance of endogenous variables and clarifies the quality of model. Therefore, Table 7 describes the predictive relevance (Q2). Table 7 also reveals that Q2 demonstrates the predictive relevance of 0.446 for FOIP, 0.503 for use of trust (TRU) and 0.409 for dependency (DEP) that confirms the model predictive relevance, as Q2 is greater than zero (Henseler et al., 2009). Table 7: Predictive Relevance (Q2) Total SSO SSE Q2 = (1-SSE/SSO) Firm‘s Open Innovation Performance (FOIP) Trust (TRU) Dependency (DEP) 360.000 216.000 216.000 199.507 107.400 127.701 0.446 0.503 0.409 Coopetition-Based Open-Innovation and Innovation Performance 224 5. Findings and Discussion Outcomes of the current study suggests that coopetition is one of the major determinants of FOIP in Malaysian High-Tech SMEs. Statistical analysis revealed that in case of coopetition and FOIP, t-value is 2.566 (t > 1.96) and β-value is 0.334. These results supported H1. It indicates that coopetition and FOIP has significant positive relationship with each other‘s. Increase in coopetition enhances the FOIP. Thus, the against major objective of this study, it is found that coopetition is one of the major contributors towards FOIP. Bouncken and Fredrich (2012) also found that coopetition has significant relationship with innovation. Thus, the current study is consistent with Bouncken and Fredrich (2012). Consistent with these results, Mention (2011) carried out a research on OI and coopetition, the study found that coopetition has positive role to promote OI activities. Another study conducted by Estrada et al. (2016), found that coopetition increases the product innovation. Moreover, the relationship of coopetition with trust is also significant. As in case of trust and coopetition, t-value is 24.696 (t > 1.96) and β-value is 0.834. In case of coopetition and dependency, t-value is 20.213 (t > 1.96) and β-value is 0.792. These results supported H2 and H3. These results suggested that coopetition has a significant positive relationship with trust and dependency. Increase in the level of trust directly increases the coopetition practices. Moreover, increase in dependency level increases the coopetition among Malaysian High-Tech SMEs. Prior studies, Bouncken and Fredrich (2012), and Wemmer, Emrich, and Koenigstorfer (2016) found a significant relationship between trust and dependency with coopetition. Moreover, Castaldo and Dagnino (2009) performance a study to examine the relationship between strategic role of trust in coopetitive dynamics and found a significant positive association. Therefore, the results of these studies are consistent with the results of the current study. Nevertheless, it is found that trust and dependency have significant positive effect on FOIP. The relationship of trust and FOIP found t-value 2.302 (t > 1.96) and β-value 0.272. These results are consistent with Brockman et al. (2018). In the relationship of dependency and FOIP, t-value is 2.062 (t > 1.96) and β-value is 0.193. These results supported H4 and H5, respectively. These results demonstrate that trust and dependency have significant positive effect on FOIP. According to the findings of Bouncken and Fredrich (2012), trust and dependency has significant positive influence on the relationship of coopetition and innovation. Thus, these results are consistent with Bouncken and Fredrich (2012). A latest study carried out by Nestle et al. (2018) in South West Germany found the similar results. This study found a significant positive relationship between trust and OI. Nonetheless, against the first sub-objective, it is found that trust mediates the relationship between coopetition and FOIP. Statistical results supported H6 as the t-value is 4.384 (t > 1.96) and β-value is 0.380. In case of second sub-objective, the same results were found. It is investigated that dependency mediates the relationship between coopetition and FOIP with t-value 4.083 (t > 1.96) and β-value 0.259. These results supported the H7. Thus, trust and dependency significantly mediate the relationship between coopetition and FOIP. It demonstrates that trust and dependency enhance the positive effect of coopetition on FOIP. Hence, trust as well as dependency has major contribution in FOIP through coopetition activities. Hameed & Naveed 225 6. Conclusion Majorly, the present study grounded on Malaysian High-Tech SMEs. Primarily, the role of coopetition in FOIP was examined. By following the cross-sectional design, survey was conducted to collect the data from various managerial employees of High-Tech SMEs. Valid responses were analyzed by using PLS SEM. Findings of the study revealed that coopetition is a most influencing mechanism towards FOIP. In a competitive environment, coopetition is one of the major elements to enhances OI activities. However, coopetition partners require a high level of trust to get success in coopetition. Moreover, apart from trust, dependency on each other‘s by competing firms is crucial. Thus, to get success in coopetition, trust and dependency has key importance. Therefore, to expedite OI practices, Malaysian High-Tech SMEs requires success in coopetition activities and to get success in coopetition, these SMEs requires a high level of trust and dependency. Therefore, it is recommended to the Malaysian High-Tech SMEs, to enhance OI performance, these SMEs should focus on coopetition. However, to enhance overall performance, SMEs are needed to build good relations with their competitors and develop a well-managed coopetition mechanism. Finally, researchers are invited to expand the current model by examining the effect of human capabilities like communication skills to build a reliable coopetition platform with competitors. Therefore, human capabilities could be used as a moderating variable. Secondly, researchers could compare the performance of various firms before and after coopetition, it will provide a better look on the effect of coopetition on OI or simply performance. 6.1 Contribution of the Study This study is one of the first attempt which filled the theoretical gap by introducing the role of coopetition-based OI in Malaysian High-Tech SMEs. This study presented two components; trust and dependency as key elements of coopetition-based OI. Both these factors, trust and dependency are indispensable to perform coopetition-based OI phenomenon. This process of OI is incomplete without trust and dependency. Besides, this study contributed in the field of research by investigating the vital role of coopetition to promote OI in Malaysian High-Tech SMEs. As the Malaysian SMEs are struggling to adopt OI, therefore, this study provided the solution by introducing coopetition-based OI. 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