A Framework for Evolutionary Analysis of Dynamic Strategy

This chapter lays out the salient characteristics of Evolutionary Strategy Dynamics (ESD), which is proposed as a framework, firstly to understand dynamic strategy as an evolutionary process, and secondly to provide the conceptual wherewithal for an evolutionary analysis of dynamic strategy. The first objective is to employ principles of economic evolution to understand the strategic logic of the spatial and temporal diversity of economic actions in an evolving population of profit-seeking firms. The continuously emerging streams of strategic (and entrepreneurial) actions, which are elemental to the dynamic strategy of the firms in the evolving population, lend themselves to being explained as both outcomes and drivers of evolutionary processes. The second objective is to provide the conceptual wherewithal to specify the causal mechanisms that generate firm-level outcomes in terms of the dynamic interplay among the evolutionary processes that play out in the firm’s external and internal environment respectively. The purpose of evolutionary analysis of a given economic population of profit-seeking firms is to capture long-term changes to its structure. It requires identifying structural changes as a statistical phenomenon within some common environmental setting. It lends itself to serve as a general tool of analysis to account for all the competition-related changes that occur in a population over a period. Evolutionary Strategy Dynamics, which is underpinned by a quasi-Darwinian evolutionary theory of dynamic strategy, provides conceptual wherewithal to specify evolutionary mechanisms for dynamic evolutionary models that feature both firm and industry dynamics.