8. Sufficient Conditions that Lead to Synergistic Innovations

This chapter, which is mainly based on (Forrest et al., 2019, Proceedings of the 2019 Annual Conference of Decision Sciences Institute (pp. 2061–2080)), investigates issues related to the following questions: (1) how can producer-side synergies be created by employing the strategy of economies of scope? And (2) how can demand-side synergies be developed by making use of simultaneous consumer utilities and multi-sided markets? Because of the different approach taken, we are able to describe how resources interact with each other and how simultaneous consumer utilities, two-sided markets and consumers’ willingness to pay react to each other. We first look at how such economic entities and basic concepts as business firm, resource, innovation, diversification, synergy, segment of consumers, etc., can be respectively modeled as interacting systems. We then address the previous two questions by establishing a series of 8 propositions by examining how relevant systems exert forces on each other so that some general conclusions follow. Because of the systemic certainty our discussions offer, this chapter is expected to provide practically useful guidance for managers, entrepreneurs, and retailers to create values for consumers and capture values for their companies.