How Multi-business Firms Realize Physical and Digital Synergies Through Traditional vs Ecosystem-Like Governance Modes
Updated: May 14
We explore the mechanisms underpinning the realization of synergies within multi-business firms. Using unique data from a large GCC retail conglomerate, we distinguish between physical synergies and those drawing on digital features.
We also find that corporate value creation stems not from scope per se, but from firms’ ability to mitigate the inherent costs of broader scope while enabling the realization of synergies. Employing configurational theorizing, we show how similar synergistic outcomes emerge through traditional top-down or internal ecosystem-type governance configurations, each carrying different coordination costs and requiring specific enabling conditions.
We find that downsides of scope—including muted incentives and coordination failures—can be systematically addressed through alternative governance arrangements, suggesting corporate advantage lies in managing scope as opposed to merely broadening it.
Read the full paper here.
Interesting distinction between physical synergies and digital-enabled synergies in the GCC retail conglomerate data. The focus on mitigating scope costs is especially useful—I've been using https://hi3dai.pro
The distinction between physical synergies and digital-feature synergies in the GCC retail conglomerate is especially useful. The focus on mitigating scope costs makes the governance comparison practical—I've been using https://arcads.pro/industries/saas
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