Customer-specific synergies and market convergence

• Autores: Jens Schmidt, Richard Makadok, Thomas Keil
• Localización: Strategic management journal, ISSN 0143-2095, Vol. 37, Nº 5, 2016, págs. 870-895
• Idioma: inglés
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• Resumen

  • We use an analytical model to study the effects of customer-specific synergies, i.e., synergies that arise when firms sell multiple products to the same customers. At the firm level, we show that the profitability of a customer-specific synergy depends upon cross-market correlation of customer preferences, differs when the synergy is cost-based versus differentiation-based, and can even be negative when the synergy is kept proprietary to a single firm. We also show that returns to imitating such a synergy may decline as it strengthens. At the industry level, we find that exploiting customer-specific synergies causes endogenous market convergence at a point that depends upon whether the synergy is cost-based or differentiation-based and whether it is imitated