Dynamic Strategy as Perpetual Search

This chapter contributes toward a theory of dynamic search that explains firstly the firm’s higher-order perpetual search for the right ontology that will enable it to achieve its evolutionary potential and secondly the operational-level perpetual search for new economic actions that will enable it to grow its economic profits and thereby enterprise value. A compelling need to explain how the hybrid nature of evolution by economic selection plays out from an evolutionary rule book motivates the comprehensive theory of dynamic search that underpins the evolutionary theory of dynamic strategy. The section following the introduction captures the notion of dynamic search as one that entails a single- or multi-business firm search in a continuously evolving multi-dimensional ‘design’ space of reason. Think of a representative firm as a purposive system that is continuously engaged in the search for the right ontology. The subsequent section captures the notion of dynamic search as one that addresses a major constraint to the development of an evolutionary theory of dynamic strategy. This constraint concerns the inadequacy of extant conceptualization of strategic search to provide the conceptual wherewithal to specify the variety generating mechanism(s) to explain the following: (a) how do firms arrive at their idiosyncratic economic choices (i.e., entrepreneurial and strategic choices) in dynamic competitive environments? (b) how do firms come to possess the underlying competences (i.e., economic traits) that enable them to enact the array of economic actions? (c) how do firms come to possess the underlying strategic assets (i.e., adaptive economic traits) that enable them to enact those strategic actions that represent ‘adaptive behavior’?