Three Generic Policies for Sustained Market Growth Based on Two Interdependent Organizational Resources – A Simulation Study and Implications

Abstract

This article addresses the generic dynamic decision problem of how to achieve sustained market growth by increasing two interdependent organizational resources needed (1) to increase and (2) to sustain demand. The speed and costs of increasing each resource are different. Failure to account for this difference has been reported to lead to policies that drive a quick increase of demand followed by decline. Three generic policies derived from the literature have been implemented in a system dynamics model. Simulation shows that all three policies can generate sustained exponential growth but differ in performance. These results suggest that even policies which risk generating overshoot and collapse can avoid it. This poses two questions for further research: (1) what is the reasoning of human decision-makers when choosing between these policies and (2) how can the important but easily overlooked features of such decision situations be made sufficiently salient to be accounted for?