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 leads 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 they all can generate sustained exponential growth but differ in performance: even policies criticized in the literature for provoking overshoot and collapse can drive sustained growth. This leads to questions for further research regarding (1) the set of generic policies and its structure and (2) concerning the reasoning of human decision-makers when choosing between such policies and the salience of important but easily overlooked features of the decision situation.