GAME THEORY

Module Overview

  • Module Name: Strategic Network and Business Ecosystem Management

  • Course: Master in Business Administration

  • Instructor: Uta Jüttner, Prof. Dr. oec. publ.

  • Email: uta.juettner@hslu.ch

  • Date: November 16, 2025

Module Framework

  • Focus areas include:

    • Introduction to Strategic Network & Business Ecosystems Management

    • Systems Thinking I

    • Game Theory & Coopetition

    • Systems Thinking II

    • Platform-based Business Models

    • Sharing Economy Business Models

    • Business Ecosystem Design

    • Sustainability - Shared Value Creation

  • Important Dates:

    • Exam with Use Case: March 29, 2025

    • Workshop – Own Business Case

Key Questions and Focus Areas

  • What are Networks, Platforms, and Ecosystems?

  • How does the philosophy of entrepreneurship in networks evolve?

  • What methodologies can we use to analyze network systems?

  • How do we establish and operate businesses within Networks, Platforms, and Ecosystems?

  • What strategies can ensure business sustainability?

  • What tactical alternatives exist, and how can we navigate them?

  • How can we apply learned principles to a specific use case and develop a network-based business idea?

Game Theory and Coopetition

Learning Objectives

  • Understand cooperative game theory concepts.

  • Familiarization with the PARTS framework:

    • Players

    • Added Value

    • Rules

    • Tactics

    • Scope

  • Use the PARTS framework to describe and analyze business games and their evolution over time.

  • Define the concept of complementors and evaluate competition among them.

  • Differentiate between "hard" and "soft" power strategies to influence complementors.

  • Understand principles of co-opetition-based business models and analyze Amazon's co-opetition model.

Introduction to Cooperative Game Theory

  • In strategic networks and ecosystems, businesses must determine whom to cooperate or compete with in dynamic coalitions, often simultaneously (coopetition).

  • Definition of Coopetition: A business strategy combining cooperation and competition.

    • Derived from work by Professors Adam M. Brandenburger and Barry J. Nalebuff (published in Co-opetition, 1996).

    • Example: Pfizer and BioNTech collaborated on the COVID-19 vaccine, where they combined resources to develop and manufacture the vaccine rapidly.

PARTS Framework

  1. Players: Entities engaged in transactions or interactions within networks.

  2. Added Value: The benefit or worth derived from a player's involvement in transactions (AVi = v(N) - v(N\i)).

  3. Rules: Frameworks established by laws, traditions, or contracts that govern player interactions.

  4. Tactics: Strategies utilized to influence perceptions and decision-making processes within the network.

  5. Scope: The boundaries and operational space of the game or network, where shifts in scope can impact player interactions and strategies significantly.

Analysis of Cooperative Games

  • Coalitions: Potential alliances among players to maximize advantages.

  • Value Creation Example:

    • In a game where:

      • Seller A has costs of CHF 4.

      • Buyer B1 values the product at CHF 7.

      • Buyer B2 values the product at CHF 9.

    • Value creation achieved through transactions can be defined as the difference between buyer willingness= to pay and seller costs.

  • Possible Coalitions and Value Created:

    • {A}: v(S) = 0

    • {B1}: v(S) = 0

    • {B2}: v(S) = 0

    • {A, B1}: v(S) = 3

    • {A, B2}: v(S) = 5

Cooperative vs Non-cooperative Game Theory

  • Cooperative Game Theory: Focuses on forming alliances and coalitions; examines the potential for cooperation as a side effect of the game.

  • Non-cooperative Game Theory: Pertains to strategic interactions without collusion among players where cooperation is not formalized.

  • Most business scenarios are represented as non-zero-sum games, where multiple players can derive benefit, thus allowing for win-win strategies.

Strategic Value Creation

  • Game theory provides tools to analyze:

    • Interplay between cooperation and competition.

    • Assess positioning within the network.

    • Anticipate competitors’ reactions and discover strategies to gain advantages.

  • Illustrates how best strategies can be determined and what boundaries to cooperation exist.

Key Strategies in Coopetition-Based Business Models

  • Goals of Coopetition-Based Business Modelling:

    1. Increase market size

    2. Develop new markets

    3. Efficient resource utilization

    4. Improve competitive position

  • Example of Successful Coopetition:

    • Sony and Samsung in LCD TV development.

    • BMW and Toyota’s collaboration on electric vehicles.

Complementors

  • Definition: Complementors are entities whose involvement increases a player’s value (distinguished from competitors, who diminish it).

  • Players can exert influence over complementors through:

    • Hard Power: Coercive influences based on market control or authority.

    • Soft Power: Persuasion and aligning interests without coercion.

  • Recognizing and managing relationships with complementors can provide significant strategic advantages.

Challenges and Considerations in Game Strategies

  • Avoid Thinking Traps:

    • Acceptance of the game as unchangeable.

    • Viewing success solely through a competitive lens.

    • Failing to consider the full landscape of player interactions.

  • Investigative Questions for Business Models:

    • Understand the motivations and strategies of complementors.

    • Assess potential conflicts and collaborative strategies.

Conclusion

  • A comprehensive understanding of cooperative game theory and the PARTS framework facilitates the effective navigation of strategic networks and business ecosystems, allowing for enhanced value creation and competitive positioning.

References

  • Brandenburger, A. & Nalebuff, B. (1995). The right game: Use game theory to shape strategy. Harvard Business School Review, 73(4), 57-71.

  • Brandenburger, A. & Nalebuff, B. (1996). Co-opetition. New York: Currency Doubleday.

  • Ritala, P.; Golnam, A.; Wegman, A. (2014). Coopetition-based business models: The case of Amazon.com. Industrial Marketing Management, 43, 236-249.