Cooperation vs Competition

Knowledge@Wharton has a recent article [requires free subscription] on start-ups and cooperation. According to David Hsu, co-author of “When Does Start-up Innovation Spur the Gale of Creative Destruction”, some industries are more open to collaborative efforts between start-ups and established players. The key factors being:

1) the strength of the startups’ intellectual property rights; 2) whether they have relationships with intermediaries such as venture capitalists; and 3) whether their industry requires big investments in things such as manufacturing and distribution.

The biotech sector is described as an optimal industry for cooperation, but I’m wondering if our e-learning sector is also one. I would guess that intellectual property rights would be strongest for the technology companies, especially those with something unique. Now in the e-learning business there is not a lot of unique technology. One LCMS is similar to another, and there are many synchronous environments as well. A start-up that launched something like Groove, with few existing competitors, would have better chances of cooperation with the big guys. Now for point 2, the e-learning industry in New Brunswick does not have access to much VC financing, which is why the government plays that role. On point 3, the e-learning industry is OK, because there is not a lot of infrastructure necessary, mostly good people.

So it seems that, according to Hsu, the e-learning sector in NB could be fertile ground for cooperation between companies. A recent article on the industry in New Brunswick lists the cooperative environment as one of its strengths. For a region with many small companies, and few large ones, Hsu’s cooperative model may provide more impetus for growth.

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