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In what sense do firms evolve?

  • Bart Nooteboom

Does evolutionary theory help, for a theory of the firm, or, more widely, a theory of organization? In this paper I argue that it does, to some but also limited extent. Evolutionary theories of economies, and of culture, have acquired considerable following, but have also been subject to considerable criticism. Most criticism has been aimed at inappropriate biological analogies, but recently it has been claimed that a 'universal Darwinism', purged of all such mistaken analogy, is both useful and viable. Why should we try to preserve evolutionary theory, and will such theory stand up to sustained critical analysis? How useful is it for theory of the firm? Evolutionary theory appears to be the most adequate theory around for solving the problem of agency and structure, avoiding both an overly rational, managerial 'strategic choice' view of organizations and a 'contingency' view of organizations as fully determined by their environment. Whether universal Darwinism stands up to critical analysis remains to be seen. Here, the focus is on evolutionary theory of organization and of knowledge. Use is made of a constructivist 'embodied cognition' view of cognition and of elements of a cognitive theory of the firm.

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Paper provided by Philipps University Marburg, Department of Geography in its series Papers on Economics and Evolution with number 2008-12.

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Date of creation: Nov 2008
Date of revision:
Handle: RePEc:esi:evopap:2008-12
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  1. Wuyts, S.H.K. & Colombo, M.G. & Dutta, S. & Nooteboom, B., 2004. "Empirical Tests Of Optimal Cognitive Distance," ERIM Report Series Research in Management ERS-2004-007-ORG, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.
  2. Nooteboom, B. & Vanheverbeke, W.P.M. & Duysters, G.M. & Gilsing, V.A. & Oord van den, A,J,, 2005. "Optimal cognitive distance and absorptive capacity," Working Papers 05.05, Eindhoven Center for Innovation Studies.
  3. Hodgson, Geoffrey M. & Knudsen, Thorbjorn, 2006. "Why we need a generalized Darwinism, and why generalized Darwinism is not enough," Journal of Economic Behavior & Organization, Elsevier, vol. 61(1), pages 1-19, September.
  4. Richard Nelson, 2008. "Economic Development from the Perspective of Evolutionary Economic Theory," Oxford Development Studies, Taylor & Francis Journals, vol. 36(1), pages 9-21.
  5. Geoffrey Hodgson, 2002. "The Legal Nature of the Firm and the Myth of the Firm-Market Hybrid," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 9(1), pages 37-60.
  6. Ulrich Witt, 2004. "On the proper interpretation of 'evolution' in economics and its implications for production theory," Journal of Economic Methodology, Taylor & Francis Journals, vol. 11(2), pages 125-146.
  7. G. Hodgson., 2007. "What Are Institutions?," VOPROSY ECONOMIKI, N.P. Redaktsiya zhurnala "Voprosy Economiki", vol. 8.
  8. Geoffrey M. Hodgson, 2002. "Darwinism in economics: from analogy to ontology," Journal of Evolutionary Economics, Springer, vol. 12(3), pages 259-281.
  9. U. Witt, 2003. "The Evolutionary Perspective on Organizational Change and the Theory of the Firm," Papers on Economics and Evolution 2003-07, Philipps University Marburg, Department of Geography.
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