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The article "Customer-specific synergies and market convergence" that Prof. Keil co-authored with Asst. Prof. Jens Schmidt (Aalto University) and Prof. Richard Makadok (Emory University) has been accepted at Strategic Management Journal (SMJ). The paper contributes to theories of competitive advantage and firm scope.
In particular, the authors 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 be negative even 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, the authors show 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.
