Product diversification in an artificial strategy environment

The paper studies the impact of a diversification vs. a core-competence oriented strategy using an agent-based simulation model. The aim of the paper is twofold: first, we analyze whether agent-based models are a viable tool for analyzing questions related to corporate strategy. We show that standard results from the strategy literature can indeed be reproduced and refined by using this type of models. Second, the agent-based model allows us to formulate more precise hypotheses and more precisely delineate the scope of situations in which standard results from the strategy literature apply. For the problem of diversification analyzed in this paper, the results from the agent-based simulation lead to the conclusion that in addition to environmental dynamics, overall market size is also an important factor, which was not considered in the previous literature.