Holistic Innovation, Market Structure, and Performance—Research on a Computer Decision-Making Method

Abstract

Unlike the traditional SCP (Structure-Conduct-Performance) model, several Holistic Innovation ( HI ) policies formulated by policymakers under strategic guidance can optimize the market structure and performance. Owing to the value and difficulties of issues, controversies (especially those from abroad) abound. Few scholars have conducted interdisciplinary research in this domain using IT technology. This study begins with a simple firm theory model, extends the Cournot duopoly model, then constructs a theoretical model referring to HI, the market structure, and performance. Results of this study revise the traditional view that “firms/enterprises with market advantages (monopoly firms and oligarchs) are harmful to the market structure and its performance and reveal the boundary conditions for monopoly and oligopoly firms harming the market structure and performance.” In this study, we design the research model as an application software (with obtained patents). Through data calculation, we conclude that “if no more than eight oligarchs exist, then the market structure and performance will not be hurt.” Using firms’ data, the application software can accurately calculate and measure the market structure and performance in the context of HI, thereby helping firms and policymakers make precise strategic decisions. This study contributes to research on HI as well as on the market structure and performance. Moreover, this study expands the academic understanding on the tripartite relationship. The traditional SCP model regards the market structure as a difficult construct to change, and by merely conforming to it, innovation can influence improved performance. By contrast, this study argues that when HI becomes increasingly crucial and shared in the future, the market structure can be influenced and will demonstrate spectacular market performance.