Lecture 8 (Evolutionary theory) Flashcards
Two evolutionary approaches
-Population ecology > Oranizational ecology > industry level
-Theory of evolution > evolutionary economics > firm level
Population ecology 3 main concepts
- Carrying capacity
- Niche partitioning
- Inertia
Carrying capacity meaning
Maximum load of firms given the scarce resources
Niche partitioning meaning
The environment is shared in various areas to give room for all
members, which are selected by natural selection
Inertia meaning
Evolution from generalists to specialists, it is slow, difficult, and often
unsuccessful
Theory of evolution focus
Focus on genes which evolve over time and are selected out by the environment or transmitted to
offspring
VSR principle
Variation of a given species
Selection of the fittest variants
Retention of heredity (features retained and passed on)
Evolutionary economics focus
focuses on firm evolution, drawing upon assumptions made by the Behavioural Theory of the Firm. It explains this evolution by applying the VSR principle
Evolutionary economics assumptions
-Incomplete information
-Bounded rationality
-Satisfying rather than optimizing
Two types of searches:
-Exploitation - firms refine existing processes
-Exploration - firms try out new ideas
Organizational Ambidexterity meaning
Balance between exploitation and exploration, they must co-exist
Factors driving variation in theory of evolution
-prior routines
-information available & bounded rationality
-satisfying rather than optimizing
selection meaning in theory of evolution
misfit firms go bankrupt
retention or inheritance meaning in theory of evolution
today’s choices are rooted in past choices
Lamarchian explanation of evolutionary theory
the inheritance of acquired
characteristics and the principle of use and disuse (those parts of a body that are used grow larger. Those parts that are not used tend to wither away)
Darwinian explanation of evolutionary theory
cumulative natural selection, variations, selection, retention
legitimation meaning
Social ‘acceptance’ of the organizational form
Tacit knowledge
Knowledge gained through personal experience
Truce meaning
Agreement between enemies/opponents to stop fighting over smth
Dynamic capabilities of organization meaning
the capacity of an organization purposefully to create, extend or modify its resource base
Operational capabilities of an organization meaning
the ability to align critical processes, resources, and technologies according to the overall guiding vision
External fitness meaning
The match between organizational and environmental characteristics
Evolutionary fitness meaning
how well a dynamic capability enables an organization to make a living by creating, extending or modifying its resource base
Technical fitness
How effectively a capability performs its intended function when divided by its costs.
(quality per unit of cost)
Icarus paradox
Large firms finding it hard to adapt
Organizational ecology - where it derived from, unit of analysis?
Derived from population ecology
Unit of analysis - industry and population of firms
Niche partitioning phases
Emergence phase
Transition phase
Maturity phase
Emergence phase in niche partitioning meaning
new generalist firms enter with competetive technologies
Transition phase in niche partitioning meaning
selection of the fittest firms
Maturity phase in niche partitioning meaning
a few “specialist” firms may sustainibly grow
Evolutionary economics - where it derived from, unit of analysis?
Derived from theory of Evolution
Unit of analysis - industry, but derived from firm-level data
Variation meaning
firms alter their routins due to environmental challenges
