According to the evolutionary theory the market competition creates an environment, which is similar
to the natural selection: always the stronger individual survives. It also explains the adaptive behaviors
of firms through the tension between innovation. And to further explain evolutionary theory, There are
three concepts in evolutionary theory which are the routines, searching and selection. Since madaming
mga uncertain behaviors, events or problems that are way too complicated. They use rule or routines.
Routines are regular and predictable patterns of the firm. Example ng routines is yung hiring and firing
of employees. Routines is nagbabase din sa decision ng manager’s to either sustain or search for better
solutions.
So before we continue with the other two concepts. Let’s futher discuss muna yung routine.
1. Routine and change – they come hand in hand kasi due to changes and new conditions, the firm
adapt new routines.
2. Routine as memory – routine is an organizational memory which is a knowledge that stays with
the firm.
3. Routines as truce - existing routines provide guidelines for good behavior, and hiring/firing
routines provide enforcement mechanisms. For example, there’s a rude employee and putting
up with him was incorporated within the firm’s existing routines but there are limits. Kaya the
problem in breaking truce nga lang is it prevent firms from making "efficient" changes.
4. Routine as target – routines is about keeping things up and running so usually yung mga
managers that became their objectives or target. Maximization is the goal of the entity but for
individuals or employees, maintaining routine became their target.
In terms of inheritable naman is because yung mga routines today look like routines from the past. Yung
selectable naman is about those firm that has profitable routine will survive and those who have
unprofitable routines will not survive. It also focuses on the irreversibility in time and continuous events,
long-term development, qualitative and quantitative changes, variations and diversity, disequilibrium
and equilibrium situations, systematic and permanent possible failure, and non-optimalized behaviour.
Since the theory sees the firm as a reactor to change and a creator of change for competitive advantage.
1. It explains how a firm can be defined: through the set of routines and competencies
that the firm encompasses.
2.
It explains why firms differ: because entity rely on a different set of routines which are
firm-specific. The routines that work for an entity may not work for others.
3.
It explains the dynamics of firms: the combined mechanisms of searching and selection and the
possibility of transforming a set of secondary routines into the core activity explains the
development of an entity. It gives the routines that make an entity profitable.
Therefore, Evolutionary theory is the understanding of how routines are formed and change is central
and needed as foundation for an evolutionary theory of the firm that integrates the views of the firm as
repository of knowledge and of the firm as a network of incentives and power.