Evolutionary Theory of the Firm

Evolutionary Theory of the Firm

A theory that no one business model or strategy ensures a company's survival over the long term. According to the evolutionary theory, success or failure is determined by how well the business model fits the needs of the present moment. Sheer chance also plays a large role.
References in periodicals archive ?
Nelson and Winter (1982) established the foundations of the Evolutionary theory of the firm in their book 'An Evolutionary Theory of Economic Change.' The evolutionary theory of the firm rests on the idea that companies cannot be considered as homogeneous units since they differ from one another in terms of their internal organizations, knowledge bases, capabilities and also in terms of their respective strategies for confronting change.
This leads us to a second major concept of the evolutionary theory of the firm, which is "path-dependency." Firms evolve following a path determined by past routines, practices and knowledge that need to be adapted to new contexts and realities.
The importance given to implicit or tacit knowledge links the evolutionary theory of the firm with another important theoretical framework.
The same way that internalization theory claims that firms are superior because of their distinct characteristic of creation of hierarchies, the evolutionary theory of the firm as put forward by Cantwell (1989), and Kogut and Zander (1992, 1993) characterizes a firm's superiority because of its geographically dispersed networks of production units, and its social community respectively.
Firm-specific advantages are also the centre of analysis for the subsequent theory of internalization, the OLI paradigm (partially at least) and the evolutionary theory of the firm. Those theories focus mainly on the firm as a closed-system.
A most comprehensive summary of transaction costs, principal-agent, and evolutionary theory of the firm can scarcely be found elsewhere.
The evolutionary theory of the firm brings together contributions from fields as varied as general economic theory, strategy, organization and management theory, and industrial organization and economics.
The contractarian approaches mentioned by Hodgson are in a tenuous relationship with what he identified as recent lessons in the evolutionary theory of the firm. They are more focused on measurable results, tangible rather than somewhat elusive factors of production, clear relationships with efficiency and effectiveness, explicit contracts or contracts that can be made explicit between agents, and managerial responsibility.
These findings are in line with the evolutionary theory of the firm outlined previously.
The evolutionary theory of the firm is explored also in Randall Bausor's essay.
Again, the concept of the meme as the unit of selection allows for a more general evolutionary theory of the firm because memes are the mode of thought corresponding to any replicating element of culture and thus encompass the various interdependent elements of firms proposed in these earlier works.
Full browser ?