Analysis of Evolution of Economic Populations

This chapter explains the salient characteristics of the analytical approach for understanding and explaining economic evolution in Modern Evolutionary Economics (MEE). The evolution of economic populations of profit-seeking firms, which does not render itself amenable to being explained as a ‘Darwinian’ evolution by natural selection, must be understood as quasi-Darwinian evolution. Evolutionary theorizing in Economics (a.k.a. Evolutionary Economics) and Strategy (a.k.a. Evolutionary Perspectives on Strategy) features a quasi-Darwinian conceptualization of the evolutionary selection processes, firm growth and consequently the overall economic growth. The concepts featured therein explain various types of economic changes (i.e., industry-level structural changes and firm-level strategic changes) as an outcome of evolutionary processes. The explication of the quasi-Darwinian evolutionary mechanisms that cause evolution of economic populations significantly depart from the ‘Darwinian’ evolution by natural selection on two issues that remain somewhat unresolved: (a) replication of economic traits, and (b) inheritance of economic traits. A quasi-Darwinian approach to evolutionary theorizing infuses elements of agential thinking into the broader framework of population thinking. The agential view of evolution entails thinking about it in terms of competing entities (i.e., agents) with their own agendas, goals, purposes, and strategies. Agential thinking enables a teleological outlook on economic activity. (By treating economic activities in terms of intent, purposes, goals, functionality, etc.) It is warranted to better capture the hybrid nature of the processes that are associated with the long-term management of profit-seeking firms.