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An Introduction to Evolutionary Theories in Economics
Article in Journal of Evolutionary Economics · February 1994
DOI: 10.1007/BF01236366 · Source: RePEc
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J E v o l E c o n ( 1 9 9 a )a : 1 . 5 3 _ 1 7 2
Evolutionary
Econornics
@ Spr¡nger.Verlaglg94
I
An introduction
to evolutionary
theories
in economics*
GiovanniDosir and Richard R. Nelson2
¡ Dcpar!mcor
of EconomicsU
, n i v c r s r r yo f R o m c " L a s a p i c n a ' a n d V i s i t r n g
s c h o i a r ,c c n r c r f o r
M a n ¿ g c m c n t ,U n r v e n r r yo i C a l i t o r n i a ,B c r k é l e y ,C a t r f o r n i a ,
USn
-l : : 1 r . n , , n
L o J u m 5 r rU n l r e . . s r ra)n d N B E R , S l a n f o r dC
, ¿ l ¡ [ o r n r aL. S {
A b s t r a c L T h i s p a p e r p r e s e n ( st h e b a s i c r d e a s a n d
m e t h o d o r o g i e so f a s e t o f
c o n ( e m p o r a r yc o n t n b u t i o n s ^ w h i c h a r e g r o u p e d u n d e ¡ t h e
g e n i r a l h e a-dt o
i n-gt t o
.f
'evolulionary
e c o n o m i c s " . ,S o m e a c h i e v é m e n t s_ e s p e c i a l l yi i t t , . g " . a
a n a i y s i so f t e c h n o l o g i c a lc h a n g c a n d e c o n o m i c d y n a m i c sare iilusüated,some
unresolved
i s s u e sa r e d i s c u s s c da n d a f e w p r o m i s i n gi o p i c s o f r e s e a r c h
u." nuggJ"''
K e y w o r d s : E v o l u t i o n a r y e c o n o m i c s- T e c h n o i o g i c a lc h a n g e-
Econor¡ic chanse
J E l , < l a s s i f ic at i o n : O 0 - O 3 -B 4
l. Introduction
T h e r ea r e s i g n s r h a t e v o i u t i o n a r y a n a J y s i sa n d m o d e r sm a y b e m a k i n g
a comeback
i n e c o n o m i c sJ. u s t o v e r r h e l a s . td e c a d e ,t h e b o o k b y N e l s o n a n d w i n l e r ( r 9 g 2 )
has
been followed by severai orfer
also expioring evolutionary in.ory in
¡
v
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r
k
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e c o n o m r c (sa m o n g o r h e r s ,D o s i e r a l . ( l g g g ) ,S a v i o tt i a n d M e t c a l f e( l g g
i¡, Andeison,
, a y a n . d E l i a s s o n( 1 9 8 6 ) ,W i n t e r ( 1 9 8 4 )a n d i l 9 S t ¡ , W i t r
l l r _ g * T ¿ P i n e s 1 1 9 8 9 )D
( 1 9 9 2 )D
, e B r e s s o n( 1 9 8 8 ) ,L a n g l o i s a n d E v e r e t t ' ( 1 9 S 2 ¡ ,
üetcaife flSbZl,éiigriu
( 1 9 9 2 )T. h i s n e w J o u r n a l o f E u o l u t i o n o r y E c o n o m i c sh a s b c e n f o u n d e d
and sevi¡al
o t h e ¡ n e w o n c s h a v e a d v e r t i s e dt h e i r i n t e r e s t i n e v o r u t i o n a r y a n a r y s e s .
In fact,
e v , o l u [ i o n a r ya r g u m e n t sa r e n o t a t a l l n e w i n e c o n o m i c s .T h e y g o
b a ó k a t l e a s tt o
M a l t h u s r a n d M a r x a n d a p p c a r a l s o a m o n g e c o n o m r s ( sw h o h a v e
otherwise
'This articlc
draws on a chapter prcpared for thc book Markcr
and Organiation: The
Compctitivc Firm and rrs Envjronmcnr. edrredwirhin an
EEC,.fempus programmc by LATApSES,
N i c c ,F r a n c r ,a n d I s i d e .R o m c .
rForarcccntrcappraisalofMalthusasan-cvolut¡onaryeconomist.,cf.vonTunalmannflggl).
C o n e s p o n , l e n rcoe: c . D o s l . u n i v e r s i t dd e g l i S t u c r i d iR o i " , D i p a i i , . " n r o
d r s c r c n c .E c o n o m i c h c ,
V i a N o m c n r a n a4 1 , I - 0 0 1 6 1R o m a .I r a l v
128
lnnovatton, Organization
154
and Economrc Dynamics
Innovation, Organi.zationand Economic Dynamics 329
Evolutionary
thcoriain rconomics
C. Dosi and R. R. Nclson
c o n t r i b u t e d t o c q u i l i b r i u m t h e o r i e s :f o r e x a m p l e o n e o f t e n c i t e s A l f r e d M a r s h a l l o n
'the Mecca of economics
flying] in economic biology rather than economic
m e c h a n i c s "( M a r s h a l l I 9 4 8 , p . x i v ) ; a n d a l s o ( h e " a s . . . i f " a r g u m c n t b y M i l t o n
F r i c d m a n ( 1 9 5 3 )c a n b c c o n s i d c r e dt h e m o s t r u d i m e n t a r y u s e o f a n e v o l u t i o n a r y
p o i n t o I v i c w i n o r d e r t o j u s t i f y t h e a s s u m p t i o n so f e q u i l i b r i u m a n d r a t i o n a l i t y I. n
a d d i t i o n , o f c o u r s e s c h o l a r sl i k e V e b l e n , v o n H a y e k a n d , e v e n m o r e s o , S c h u m p c t e r ,
h a v e a n t i c i p a t e dm a n y o f t h e i d e a st h a ( c o n t e m p o r a r ye v o l u t i o n a r ye c o n o m i s t sa r e
s t r u g g l i n gw i t h . 2
H o w e v e r , t h e w a v e o f c u r r e n t e v o l u t i o n a r y t h e o r i z i n gi s p r o b a b l y f o s t e r e db y
s e v e r a lc o n v e r g e n t f a c t o r s .T h e r e i s c e r t a i n l y a g r o w i n g r e c o g n i t i o n o f t h e d i f l l c u l t i e s
t h a t e q u r l i b r i u mt h e o r i e sw h i c h p r e s u m ep e r f e c t l yr a t i o n a l a g e n t sf a c e i n i n t e r p r e t i n g w i d e a r r a y s o f e c o n o m i c p l r e n o m e n a- r a n g i n g f r o m t h e g e n e r a t i o no l t e c h n o l o g i c a lc h a n g e a l l t h e w a y t o t h e d i v e r s i t yo i l o n g - t e r m p a t t e r n so f g r o w t h B u t ,
of course, we know from the history of science that anomalies and falsifications
a l o n e a r c n o t s u f l " i c i e ntto s p u r a l t e r n a ( i v et h e o r i e s .I n a d d i t i o n , a r i c h e m p i r i c a l
l i t e r a t L r r ec,o n c e r n i n gt h e n a t u r e o f t h e p r o c e s s e o
s f i n n o v a t i o na n d t h e i n s t i t u t i o n s
s u p p o r t r n gt h e m , t o a g o o d e x t e n t i n s p i r e d b y e v o l u t i o n a r yi d e a s ,h a s s h o w n t h a t
a n e v o i u ( r o n a r y t h e o r e t i c a lp € r s p e c t i v ec a n p r o v i d e u s e f u lh e u r i s t i c sf o r a p p l r e d
r e s e a r c h .N o t o n l y t h a t : t h e e m p i r i c a l w o r k h a s s u g g e s t e df r u i t f u l i n d u c t i v e
g e n e r a l i z a t i o n sa n d t a x o n o m i e s f r o m w h i c h e v o l u t i o n a r y t h e o r r e s c a n d r a w
b e h a v i o r a la s s u m p t i o n s a n d " s t y l i z e d [ a c t s . " ] F i n a l l y , t h e d e v e l o p m e n to f q u i t e
g c n e r a l f o r m a l m a c h i n e r i e sa b l e t o a c c o u n t f o r t h e p r o p e r t i e s o f d y n a m i c a l s y s t e m s
d i s p l a y i n gv a r i o u s f o r m s o f n o n - l i n e a r i t i e si n c r e a s i n g l ya l l o w s r i g o r o u s a n a l y t i c a l
t r e a t r n e n t so f e v o l u t i o n a r y p r o c e s s e s .T' h i s , t o g e t h e r w i t h t h e p o s s r b i l i t yo f c o m p u t e r i m p l e r n e n t a t i o n so f f o r m a l g e d o n k e n e x p e r i m e cnof n c e r n i n gd i v e r s e" a r t i ñ c i a l
e c o n o m i c s "( L a n c 1 9 9 3 a b
, ) , h o l d s t h e p r o r n i s eo f e s t a b l i s h i n ga l s o f o r m a l l v s o u n d
b a s e sf o r e v o l u t i o n a r y a n a l y s e so f e c o n o m ¡ cc h a n g e .
2 . E v o l u t i o n a r y( h e o r y :p r i n c i p l ec h a r a c t e r i s l i c as n d a p p l i c a t i o n s
( o t h e s o c i a ld o m a i n
I n o r d e r t o p r e s e n ta n e v o l u t i o n a r y v i e w o f e c o n o m i c s ,i t i s o b v i o u s t h a t w e h a v e
t o e x p l a i n w h a l a n e v o l u t i o n a r y t h e o r y i s a n d w o r k o u t g e n e r a l c o n c e p t sa n d
v a r i a b l e s .F o r t h e p u r p o s e o f t h i s s p c c i a li s s u el e t u s f i r s t m e n t j o n t h a t w e u s e t h e
t c r m " e v o l u t i o n a r y " t o d e l i n ea c l a s so f t h e o r i e s o, r m o d e l s ,o r a r g u m e n t s ,t h a l h a v e
r h c f o l l o w i n g c h a r a c t e r i s t i c s .Fs i r s t , t h e r r p u r p o s e i s t o e x p l a i n t h e m o v e m e n to f
s o m e t h i n go v e r t i m e , o r t o e x p l a i n w h y t h a t s o m e ( h i n gi s w h a t i t i s a t a m o m e n ti n
t i m e i n ( e r m so f h o w i t g o t t h e r e ;t h a ( i s , t h e a n a l y s i si s e x p r e s s l yd y n a m i c .S e c o n d ,
t h e e x p l a n a t i o n i n v o l v e s b o t h r a n d o m e l e m e n t sw h i c h g e n e r a t eo r r e n e w s o m e
í a r i a t i o n i n t h e v a n a b l e si n q u e s t i o n ,a n d m e c h a n i s m st h a t s y s t e m a t i c a l l yw i n n o w
on extant variation. Evolutionary modcls in the social domain involve some
155
'
processes
o[imperfect(mistake-ridden)learninganddiscouery,
on the one hand,and
.. someselection
mechanism,
on the other.With respectto the latteran evolutionary
:. theoryincludesa specification
of thc determinants
of somecquivalentof a no(ion
' of fitncss- implyingthc identiñcation
of a unit of sclectionand cert¿inmcchanisms
.¡ throughwhichselcctionoper¿tes.Mp.-qqfSI,_ir1gfr"4-lggy
wl!h evolq!19¡.a¡y
b,io_lpgy6
one is able to identify four morc concrete Drincipal buildine blocks of an
cibfuiionarytheory:(í)á f-undambntátünii
genes¡;
of sciéction'(lhe
[ii¡ a mechanism
linkingthegenotypiclevelwith theentities(thephenotypes)
whichactuallyundergo
''' cnvironmental
(iii) someprocesses
selection;
of interaction,yieldingthe selection
, dynamics;
and,ñnally,(iyl somemechanisms
generatingvariationsin the populationoi genotypes
and, throughthat, among phenotypes.
I t i s q u i t es t r a i g h t f o r w a rtdh a t o n e c a n n o tc o n s t r u cat s a t i s f a c t o rt yh e o r yo f
c c o n o m iecv o l u t i o ns i m p l yb y w a y o f a n a l o g yw i t h t h e b i o l o g i c am
l o d e l .S r i l l ,a
r e f e ¡ e n tcoet h e s ef o u r m a j o rb u i l d i n gb l o c k so I t h e b r o l o g i c aml o d e lm i g h th e l pi n
i l l u s t r a t i nt hg es p e c i f i c i t i e
o sf e v o l u t i o ni n t h es o c i adl o m a i n .
2.1 Ltnitsof selectíon
F i r s tc, o n s r d et rh e n a t u r eo f t h e f u n d a m e n t aul n i t o l ' s e l e c t i o n
I n. a v e r y i n t u i t i v e
fashion,
one may spot quite a few potentialcandidatesto be looseequivalentsoi
the genesin biologicaltheory. For example,technologies,
policies,behavioral
' pa(terns,
culturaltraits are obviouslyinfluentialin dcterminingwhat the agents
e m b o d y i ntgh e m- e i t h e r i n d i v i d u a l so r o r g a n i z a t i o n- sd o . ( ' f h e " a g e n t s "h e r e
: s h o u l d i m p r e s s i o n i s t i c am
l l ya p i n t o t h e p h e n o t y p i cl e v e l ) .A n d t e c h n o l o g i e s ,
culturaltraits,etc. are also somethingthat can be modilled,and improved,from
generatio
t ong e n e r a t i o n
a ,n dw h i c hh a si t so w nr u l e so f t r a n s m i s s i oInn.f a c t s, e v e r a l
s c h o l ahr sa v ep r o p o s e ad r g u m e n tosf a n e v o l u t i o n
a r yt y p ei n t h ed o n l a i n o
sfculture,
l a w i,n s t i t u t i o n h
a il s t o r ys, c i e n caen d ,o f c o u r s ee, c o n o m i c(sf o ra c r i t i c aal p p r a i s a l ,
s e eN e l s o n1 9 9 3 )W
. e d o n o t h a v ea n y p r o b l e mw i t h t h c a t t r i b u t i o no f t h e r o l eo i
"fundamental
unit" to difle¡ententitiesaccordingto the objectsunderconsideratron.
F o r e r a m p l ew, h e n o n e t a l k sa b o u t ( h e " e c o l o g yo [ t h e m i n d " o n e r e f e r st o t h e
c h a n g eosi s o m eu n d e r l y i n gc o g n i t i v es t r u c ( u r eos c c u r r i n ga l o n gt h e h i s t o r yo f
; . r i i n t er a c t i o n sw i t h o t h e r h u m a n b e i n g s a n d t h e e n v i r o n m en t o i a r t i f a c t s .H e r e t h e
" p r i m i t i v e sw"h i c ht h e e v o l u t i o n a r py r o c e s iss s u p p o s e tdo s t r u c t u r em, o d i f ya n d
I s e l e cat r e n o t g e n e sb u t p l a u s i b l ym e n t a lc a t e g o r i e sr e, p r e s e n t a t i o nr u
s ,l e s .I n
; doma¡nsnearerto our conc€rnsherc, evolutionaryprocesses
have o[ten been
as dynamicsin some technology-space
¡ represented
and, lessoften, a spaceof
behav¡ors
or organizational
fo¡ms(weshallcomeback to someexampleslateron).
o social
B u ti n a l l t h e s ei n s t a n c eosf a p p l i c a t i o nosf a n e v o l u t i o n a r py e r s p c c r i v( e
change,
a crucialrssue- in our view, not yet sumcientlyexplored- concernsthe
* p r i m i t i v e s("s o
r e l a t i o n s hbi e
ptween
t h el e v e o
l fthe
t o s p e a kt,h eg e n o t y p i lce v e l )
a n dt h e b e h a v i o rosf t h e u n i t sw h i c he m b o d yt h e m a n d u p o n w h i c hs e l e c t i o n
is
Í : l s u p p o s e dt o o p € r a t e . T h e e x a m p l e o f " t e c h n o l o g i c a l e v o l u t i o n , " w h i c h w e s h a l l
i 2 : ' c o n s i d e ra t s o m e d e t a i l , i s a g o o d i l l u s t r a t i o n o f t h i s p o i n t .
¿ Fordrscussionsoftheroleofevolutionaryrdeasinthehistoryofeconomicthought,seeHodgson
( 1 9 9 3 )a n d C l a r k a n d J u m a ( 1 9 8 8 ) .
' On thc
e c o n o m i c so f i n n o v a t i o n , c f . F r c e m a n ( 1 9 8 2 )a n d D o s i ( 1 9 8 8 ) .
¿
M o r e d e l a i l e d s u r v e y s a n d d i s c u s s i o n so f e c o n o m i c a p p l i c a t i o n s a r e i n S i l v e r b e r g( 1 9 E 8 )a n d
, nd for economic
D o s i a n d K a n i o v s k i ( 1 9 9 4 ) .F o r e g e n e r a ia p p r a r s a l ,N j c o l i s a n d P r i g o g r n e( 1 9 8 9 ) a
applrca{ronR
s ,o s s c r( I 9 9 l ) .
l ForathoroughdiscussionofthispointwerefertoNelsonandWinter(1982)andDosietal.(198E).
It doesnot alwayshappenthat one can say that the economyor the society
directly"select"among competingtechnologies
(hencealso the modelsbasedon
this premiseshould be consideredas a fi¡st approximationto more complcx
ó Note,
h e r e a n d t h r o u g h o u t , t h a t , w h r l e u s i n g s o m e t i m e sb i o l o g t c a l a n a l o g i e sf o r i l l u s l r a t i v e
c ¡ n r e n r e n c ew,e a r e n o ( a t a l l c l a i m i n g a n y p r r c i s e i s o m o r p h i s mb e t w c n b i o l o g i c a ia n d e c o n o m l c
t h c o r i e so f e v o l u t r o n .
330
Dynamrcs 331
andEconomic
lnnovation,
Organization
Innot'ation, Organtzation and Economic D1'namtcs
15Ó
G D o s ia n d R R N c l s o n
in
d y n a m i c s ) . S o m e t i m e s ,s o c i e t i e sd o d i r e c t l y s e l e c t o n t e c h n o l o g i e s :f o r e x a m p l e ,
j
u
d
g
m
e
n
t
s
t
h
e
b
a
s
e
d
o
n
p
r
o
f
e
s
s
i
o
n
a
l
t
h
r
o
u
g
h
i
t
o
c
c
u
r
s
J"ny -.ái""t technologies
p e e r r e v i e w s y s t e m ; s o m e w h a t s i m i l a r l y , p r o c u r e m e n t a g e n c i e si n m i l i t a r y t e c h '
nologies perform as direct selcctors among alternative technological systcms
Howiver, quite often altemative technologies are incorporated within organizations,
t y p i c a l l y f i i m s - w h o s e r e l a t i v e c o m p e t i t i v e n e s s( i . e . ," l i t n e s s " ) i s m e d i a t e d t h r o u g h
t í l e i r b e h a v i o r a l p a t t e r n s - c . g . , t h e i r d e c i s i o n r u l e s c o n c c r n i n g r n v e s t m e n t ,R & D ,
p r i c i n g , s c r a p p i n g ,d i v e r s i l l c a t i o n ,e t c . ' M o r e o v e r , o n e t y p i c a l l y o b s e r v e sa m u l t r p l r o i s e t . . i i ó n é n v i r o n m e n t s a f l e c t i n g t h e p r o b a b i l i t y o f g r o w t h a n d _ s u r v i v a lo f
"eiat yó h o r g a n i z a t i o n - f i r s t , o f a l l , t h e p r o d u c t - m a r k e t s a n d t h e m a r k e t f o r f i n a n c e
in social dynamrcs that the ob.lects
Indeed,it hap
- ápre. n s i n b i o l o g y a n d e v e n m o r e s o
not single elementary traits but structures of much higher
of selection
dimensions in which they are nested.So, for example, markets choose relatlYely
complex products or technological systems, and not individual elements of
technological knowledge; and penalize or reward whole organizations and no(
specilic bihaviors. Therefore, assuming some underlying space of technology and
o r g a n i z a t i o n a lt r a i t s a s t h e a p p r o p r i a t e " p r i m i t i v e " d i m e n s i o n so f e v o l u t i o n ,o n e
l e v e l o p m e n ti n o r d e ¡ ( o r e l a t e" e v o l u t i o n "
s t i i n e e d ss o m e t h e o r y o f o r g a n i z a t i o n a d
a n d " s e l e c t i o n . "T h t s i s a l s o a m a j o r a r e a o f c o m p l e m e n t a r i t yb e t w e e ne v o l u t i o n a r y
t h e o r i e sa n d b u s i n e s se c o n o m i c s .N o t i o n s l i k e t h o s e o f " o r g a n i z a t i o n a lr o u t i n e s "
a n d , . c o m p e t e n c i e s "b e g i n t o f o r g e t h a t l i n k , b u t , c e r t a i n l Y ,a n i t e m h i g h o n t h e
r e s e a r c ha l e n d a i s t h e e l e r g e n c e a n d e v o l u t i o n o f r o u t i n e st h e m s e l v e s . E
2 . 2 M e c h a n i s m so n d c r i t e r i a o J s e l e c t i o n
A n o t h e r o b v i o u s b u i l d i n g b l o c k o f e v o l u t i o n a r y t h e o r r e sc o n c e r n st h e m e c h a n t s m s
to be
a n d c r i t e r i a o f s e l e c t i o ni.t h a s a l r e a d yb e e n m e n t i o n e d t h a t " f i t n e s s "i s l i k e l y
j u d g e d o n d i f f e r e n t a n < 1p o s s i b l y c o n f l i c t i n g .c r i t e r i a F o r e x a m p l e , f i r m s m i g h t b e
i u t i á n e ¿ t o d i f f e r e n t d e g i e e so n t h e f r n a n c i a l m a r k e t s a c c o r d i n g t o t h e i r c a s h - f l o w ,
or their accounting proñts, or the expectations that investors hold about fulurc
p r o f i t s ;a n d i n t h e p r o d u c t m a r k e t s ,t h e o p p o r t u n i t i e so f g r o w t h a n d s u r v i v a l m a y
pnces'
b e d e t e r m i n e do n t h e g r o u n d s o f t h e r e l a t i v eq u a l i t y o f t h e i r p r o d u c t s ,t h e i r
m
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s i o n a l r t y o f s e l e c ñ o nc r i t e i i a c l e á r l y d e m a n d s t h a t e v o l u t i o n a r y m o d e l s
through
t e c h n o l - o g i c a lo r e c o n o m i c c h a n g e s p e c i f y t h e i n t e r a c t i v e m e c h a n i s m s
which selectionoccurs
"lltness"
S e l e c t i o ni n t h e s o c i a l a r e n a a n d i t s r e l a t i o n s h i pw i t h s o m e n o t i o n o f
r¡a
i m m e d i a t e l y c o n f r o n t s t h e q u e s t i o n o f t h e e n d o g e n e i t yo f t h e s e l e c t l o n . c r l t e
l( ls the
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themselves.
ln
seneral case that what is selected in favor or against might be determined
? E v o l u t i o n a r ym o d e l ss u c ha s N e l s o na n d W i n t e r( 1 9 E 2 )S, i l v e r b e rcgt a l ( 1 9 8 8 )C, h i a ¡ o m o n t e
t e c h n o l o g i u la n d
a n á D o s i ( 1 9 í t ) , M c t e l f e ( 1 9 9 2 ) ,a l l i l l u s t r a l et h i s c o m p l e m e n t a r i toyf
s sn,d a l s o ,a d m i t t e d l yt ,h er u d i m e n t a rnya l u r €
b e h a u i o r ai .l a t u r . si n d e t e r m i n i ncgo m p e t i t i v e n e a
o f s o m eb e h a v i o r aal s s u m P t i o n s
, o s i a n d M a r e n g o( 1 9 9 3 )D' o s t
; i o * e p r . l i , n i n a r yi d e a sa n d m o d e l sa r e i n M a r e n g o( 1 9 9 2 )D
e t a l .( 1 9 9 3 a ) .
, A d m l t t e a i ym
y o d e l sd e v e l o p esdo f a r i n ^ e c o n o m i casr e b a s e do n r e l a t i v e l y
, o s te v o l u t i o n a r m
p r i c e sa n d d e k v e r yd e t a t l s
. i r n p l . r . t . . í i o n c r i t c r i a ,e . g . ,p i o f i r s( N e l s o na n d W i n r e r . l 9 8 2 )o r
. o w e v e rt,h e ys h o u l db eu n d e r s r o oadsf i r s ta p p r o x r m a t r o n s
f S i L í . r b . r go, o r , r n d O r s e n i g ol g g g ) H
t o m o r ec o m p l e xs e l e c t l odny n a m i c s
Evolu(ionary
in economics
thcorics
157
somecomplicatedand nonlincarways by tt¡e distributionof actual populations
presenr
at a point in time and by their history.However,one might stitl hold that
the selectioncriteria- that is, the variablesultimatelyaffectingprobabilitiesof
survival- remainrelativelyinvariant:for example,the ratesof reproduction,
or the
efficiency
food.On the contrary,this might not beso in manyeconomlc
in accessing
andsociaIcircumstancrs.
2.3 Adaptationand uariation
Thelastfundamentalbuildingblock ofevolutionarytheories
concernstheprocesses
by whichagentsadapt,Iearnand at the sametime noveltiesare alwaysproduced
i n t h e s y s t e m .W e s h a l l a r g u e t h a t , a t t h i s l e v e l ,a n a t u r a l i n g r e d i e n it s a
r e p r e s e n t a t ioofnd e c i s i o nasn d a c t i o n s- o f i n d i v i d u a lasn d o r g a n i z a t i o n- sw h i c h
departs
in most respects
from "rational" neoclassical
models.Our basichypothesis
is that agentsfollow variousforms of rule-guidedbehaviorswhich are context(in the sensethat actionsmight be
specrfcand, to some extent,euent-independent
i n v a r i a nt(o f i n e c h a n g e isn t h e i n f o r m a t i o nr e g a r d i n g( h ee n v i r o n m e n tO
) .n t h e
o t h e rh a n d a
, g e n t sa r ea l w a y sc a p a b l eo f e x p e r i m e n t i nagn dd i s c o v e r i nnge wr u l e s
a n d ,t h u s ,t h e yc o n t i n u et o i n ( r o d u c eb e h a v i o r anl o v e l t i eisn t o t h e s y s t e m(.M o r e
i n N e l s o na n d W i n t e r1 9 8 2D
, o s i a n d E g i d i1 9 9 1M
, a r c ha n dS i m o n1 9 9 3 )I .n o r d e r
t o r l l u s t ¡ a t teh e s ep o i n t s ,¡ t i s u s e f u lt o c o m p a f ee v o i u t i o n a ray n d n e o c l a s s i c a l
b e h a v i o r a sl s u m p t i o n s .
Thc.lglJrglpfe_s_qmp_ti-o_n
tbqcrLr; Ihat theo-bservcd,configulation.
in neoclassical
q_f_eco_!_on-r-c,v-atiab_lgs.pll
the-res-ult
o,frqtionalac(ers.- individuals,
be e,x,p.lained-as
househoids.,-l¡rmr_,
ot,|rqi-fglp-q.!.-o_lg.g.!iZa"tianLhaving made.choices.tha
t maximize
lheir,utility,
lhal theyhavemadeno systematic
gjyel !h. qqnst_r{rnlsjhef
.fqqq,.and
m i s t a k easb o u tt h a t .T h e o u e s t i o no f h o w t h e s co D t i m adi e c i s i o ncsa m et o b e i s n o t
a , 6 á l ipéi a i t ' ó l t h . i h é o r yS o m e t i m etsh et h e o r vi s r a t i o n a l i z ei n
c lt e r m so f t h ea c t o r s
a c t u a l lh
y a v i n gc o r r e c t l yt h o u g h tt h r o u g ht h e d e c i s i o nc o n t e x i S
. o m e t . i m et hs e
r a ( i o n a l i z a t iiosnt h a t t h eo p t i m a lr e s p o n shea sb e e nl e a r n e d
o r h a se v o l v c dr a t h e r
t h a nh a v r n gb e e ni n s o m es e n s ep r e c a l c u l a t ebdu, t i n a n y c a s ec a n b e u n d e r s t o o d
" a si f ' t h e a c ( o rh a d a c t u a l l yc a l c u l a t e d .
U n c e r t a i n tayn d u n f o r t u n a t ree s u l t s( i r o m t h e p o i n t o i v i e wo f t h e a c t o r )t h a t
comeabout becauseof bad luck of the draw can be admittedr¡nderthis theory,
undereitherinterpretation.Thft-heory als_q__c"an,[g¡dle
actor errors that occur
because
theactor hasoniy limitedinformationabouiiCitainkéy-paiámeters
which
d e t e ¡ m i nteh e o ' l t c o m e so f m a k i n g v a r i o u sd e c i s i o n sa,n d i n e l l e c tb e t s w r o n g
regarding
theseparameters.
However,systematic
with ignorance,
mistakes
associated
o r w f o n g h e a d e du n d e r s t a n d i n g
o ,f t h e b a s i cf e a t u r e so f t h e s i t u a ( i o na r e n o t
admitted.TJ'.t}g_scy-:wo¡(sll..by-p¡esunt$. !h9
a basically..correct
.ha^ve
"4._c"ta$
as the theoristmodels
unde¡rtg¡dittg
_o_i
thetr_eSlUgl
al-d_thpirconsequences,
Sl'qtSS-s
"inside.theacl.or'shead,"as
thalqh,o_icg._9.o_n!-S¡-1..
Il il q9! A thgo¡y.that.lripsto get
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l
An associated
notion is that of equrlibrium.In most economicanalysesthere
area number of actors.Eachis assumedto optimizc,and theoptimizationdecisions
arepresumedto be consistentwith each other, in lhat each actor's action is
o p t i m i z i ni g
n t h es e n s e
a b o v e g, i v e nt h e o t h e ra c t o r ' so p t i m i z i n g
actions.
T h i s b a s i cm o d e o f e x p l a i n i n gb e h a v i o ri,n c l u d i n gt h e m a k i n go I p r e d i c t i o n s
a b o u th o w v a r i o u s p o s s i b i ed e v e l o p r n e n tm
s i g h t c h a n g eb e h a v i o r ,h a s b e e n
332 Innovation, Organization and Economic Dynamics
158
Innovation, Organtzatton ond Economic Dynamics
C. Dosi and R R. Nelson
E v o l u t i o n a r yt h e o r i e si n c c o n o m i c s
333
I 59
action'from analyscs
wouldbe locally optimal too, some of thesein fact much betterfrom thc actor's
employedregardinga vastrangeof humanand-organizational
of thc effectsof the
to
analyscs
1970s,
pointofvrew than the acrualbehavior.Thus a "rationalchoice"explanationis, at
of
the
price
ihocks
of ihe eflects-ofrhe oil
crime'
bcst,incomplete,
because
it doesnot explainhow the particularlocalcontextwhich
Dresenct
''-i¡r"i. of the deathpenaltyupon
kindsofreasonswhy evolutionframes
choicesc¿meto bc the point of rest,As we shallsee,this point of view is a
ur. severaldifferent(but not inconsistent)
adopteda quite
majormotivationfor evolutionary
modelingof "pathdependent"
dynamicproccsses.
ary iheorirtshavebackedaway from rationalchoicetheory'and
c h o i c et h e o r y
What about the argumentthat competitionwill forcelirms eitherto learn the
d i f f e r e na
t l t e r n a t i v eF. i r s t , i t c a n b e a r g u e dt h a t w h i i e r a t i o n a l
bestwayofdoing thingsor go out ofbusiness?
Cannotonearguethat,ifcompetitive
provides useful insights into certain kinds of situationsand phenomena'tt iir
for evolutionary
forces
areverystrong,firmsthat are nol as efficientas thebesttirmsmay be forced
s h e d so n l y l i m i t e d l i g h t o n o t h e r s .A n i m p o r t a n tm o t ¡ v a t i o n
a u t h o r si n
o u to l b u s i n e s sP?e r h a p o
s n ec a n .B u t n o t et h a t t h es ( a n d a r h
d e r ei s d e l i n e db y t h e
i n . o r i . i n g a b o u ( ,f o r e x a m p l e ,t e c h n o l o g i c aald v a n c ei s t h a t m o s t
p
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o
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c
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And that
t h i s f i e l c l - b e l i e vt hea r t h e
multiple
in many casesmodelspossess
Second,
benchmark
level
ofefliciency
may
be
determined
by
processes
the
actual
learning
subject
rhat
of
study
for
;;'d;;.b e h a v i o ¡a n d
thatareoperativeand how far they haveproceeded.
Thus analyses
that do not deal
e q u i l i b r r a I. n e a c h ,o n e c a n s p e c i f yt h e o p t i m i z i n gc h o i c e 'b u t
t h e n ^ iwsh y
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u
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s
a c h i e v e m ed
n itl l e rg r e a t l y
o n ew a yo i t r y i n g
p r e v a i l i negqu i l i b r i u m .
t h ep a r t i c u l aer q u i ñ b r i u mt u r n e do u t t o b et h eo p e r a t i v oe n e .a n d
T
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I n a d d i t i o ni ,n m a n yi n d u s t r i etsh e r ea r es t r o n gr e a s o ntso d o u b t t h a t s e l e c t i o n
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f o r b e h a v i o trh a t t a k e st h e a c ( o r ' 5
p r e s s u raerse s t r o n ge n o u g ht o d r i v e o u t a l l f i r m s t h a t a f e n o t a s e f i l c i e nat s t h c
f a t i o n a cI h o l c et h e o r yp r o v i d e s , aenx p l a n a t i o n
nat
l e a d eE
r .m p i r i c asl t u d i e s h o wt h a t t h c d i s t r i b u t i o no f ñ r m si n a n i n d u s t r ya t a n y
a s g i v e n O n e c a n a r g u e t h a t a n e x - p l a n a t i ot h
;;j;;;i""; án¿
"oocnirai rlvuailnutessa n i i n s t i t u t i o n sh a v ee v o l v e da n d a f l e c (t h e c h o i c e s
t i m er ¡ f t e n
c o n t a i n sv e r yc o n s i d e r a b dl ei v e r s i t yo f p r o d u c t i v i tayn d p r o f r t a b i l i t y .
h
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considers
under'
F u r t h e rm, a n yo I t h c a c t o r si n t h ee c o n o m ya r c n o t l l r m s T
. h e r ea r eu n i v e r s i t i e s ,
p i . r . n t i y a v a i l a b l et o a c t o r sm a y p r o v i d ea d e e p e ra n d m o r e i l l u m i n a t i n g
e v e ni I t h el a t t e cr a n
l c g as) y s t e m lsa, b o r i n s t i t u t i o n se,t c .A n d t h e s eg e n e r a i i ay r e n o t s u b j e c t o s h a r p
i i " " a i " i o f b e h a v i otrh a n a r a i i o n a cl h o r c e x p l a n a t i oanl o n e .
s e l e c t i opnr e s s u r east, l e a s tn o t o f a " m a r k e t "v a r i e t y .
e x'pLl.a, i na t o n e l e v e l .
e o m a i no f r a l i o n a i
F r o ma s i m i l a rb u t s l i g h t l yd i f l e r e n at n g l e t, h e n e o c l a s s i cwaal y o f e x p l a i n i n g
u , l l r s t c o n s i d etrh e i s s u eo f r h e l i m i t so f t h e p l a u s i b l d
h e p o w e ro i
c h o i c e t h e o r y ' [ ( ¡ s l m p o r t a n t t o r e c o g n i z e , p r e c l s e l y b e c a u s e i t i s u s u a l l ¡ ' r e p r e sbseehda'v i oarn d a c t i o nc a n b e f a u l t e dn o t s o m u c h f o r e x a g g e r a t i nt g
c o m p l e xc o n t e x t '
in
h u m a na n do r g a n i z a t i o n ianl t e l l i g e n c- ea s a r g u e da b o v cm o s te c o n o m i s tbse l i e v e
t h a t m o s te ó n o m r s t su n d e r s t a n vde r yw e l l h o w d u b i o u s , a n y
( h e" a c ( o r sh a v ec o r r e c l l Y
t h et h e o ¡ e t i c a
ca
l s ef o r " r a t i o n a lc h o i c e "i s e x p e r i e n t r a
l el a r n i n gn o t c a l c u l a t i n g
i s t h e r a t i o n a l ef o r r a t i o n a cl h o i c et h e o r yt h a t p r e s u m e s
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itougr't ir all
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guidedand constrainedby socially held and enlorcedvalues,norms, beliefs,
u n d e r s t a n d- ii h
nt.gh a t a c t o r sa r e o n l y " b o u n d c d l yr a t ¡ o n a l " ' t o
- nt h a t t h e a c r o r sh a v es o m e h o we l i m i n a t e d
c u s t o masn, dg e n e r a l lay c c e p t epdr a c t i c e sT.h i sa r g u m e n t j o i nws i t h t h e o n ea b o v e
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i e i r nt l S S O l .
b e h a v i o r t h a t w a S n o t u p t o s t a n d a r d - . i s t h e a . r g u m e n t m o s t e c o n o m i s t s r e a li ln¡p' r o p o s i ntgh a t t o u n d e r s t a nbde h a v i o ro n e m u s tc o m et o g r i p sw i t h t h e f o r c e s
W i n t e r1 9 8 6 ) '
thah
t a v em o l d e di t , a n d i n r e j e c t i n tgh a t s u c ha n a l y ' sci sa nb es h o r tc u t b y a s i m p l e
U . t , . u . ( F o r a g o o dd i s c u s s i ooni t h i sp o i n t s e e
a r g u m e tnht a t ,h o w e v elre a r n i n gh a p p e n e dt h, eu l t i m a t er e s u lct a nb ep r e d i c t eadn d
h e o r y , w o u lsde e ma p p l i c a b lteo c o n t e x t s
B u t w h e np u t t h l sw a y ,r a t t o n a l c h o i ct e
t h e o r e t iacr g u m e n t s
e r p l a r n eadso p ( i m i l i n gb e h a v i o r .
t o w h i c ht h ea c t o r sc z , nb e p r e s r m e df a m i l l a ra, n d e v o l u t i o n a r y
w h e r et h i s p r e s u m p t i o n
C o n v c r s e l ye,v o i u t i o n a r yt h e o r i e si n e c o n o m i c sc o m f o r t a b l ym a t c h t h o s e
d s u n l , r . n - , p ,t o d e a l w i t h s i ( u a t i o n s
canbe understooa
to be
. a n a l y sfer so m s o c i a lp s y c h o l o g ys,o c i o l o g yo, r g a n i z a t i o tnh e o ¡ y ,s u g g e s t i ntgh e
. p a r t i c u l a re' v o l u t i o n a r tyh e o r yc a n b e a r g u e d
á á . , n o t s e e ma p p l i c a b l eI n
of
g e n e r aolc c u r r e n c oe f v a r i o u sr u l e - g u i d e db e h a v l o r so, f t e n t a k i n g t h e f o r m o f
o f b e h a v l o ri n c o n r e x r sr h a r i n v o l v es i g n i f i c a netl e m e n t s
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e
s
r e l a t i v eilnyv a r i a n rt o u t ¡ n e(sN e l s o na n d W i n t e r 1 9 8 2 )w, h o s eo r i g i ni s s h a p e db y
t
h
a
t
p
r
e
s
u
m
e
d
n o u e l t y s, o t h a t i t c a n n o t b e
(o
t h e) e a r n i nhgi s t o r yo i t h ea g e n t st ,h e i rp r e - e x i s t i nkgn o w i e d gaen d ,m o s tl i k e i y a, l s o
learneá,but ratherthat they are still be learned
t h e o r ya b o u th o * '
theirvalucsystemsand (hcirprejudices.'0
Preciselybecause
the¡eis nothingwhich
,
M o r e s e n e r a l l Y. u' o i u i í o n u t yt h e o r yc a n b e v i e w e da s a
l e a d st o t h ec o n v e r g e n c e
g u a ¡ a n t e iensg, e n e r a lt,h e o p t i m a l i t yo f t h e s er o u t i n e sn, o t i o n a ol p p o r t u n i t i eiso r
r o . ' l i u . o r ? n . . . o n o * y ' l e a r ni:n v e r ys p e c i acla s e lse a r n i n g
thediscovery
of "better"onesare alwayspresent.Hence,alsothe p€rmanentscope
ueÉauiors";normally it entails more or less
;i'iftimal
'and
l''; ;;l;il."';p;;;;;;;r'
f o r s e a r c ha n d n o v e l t y( i . e . i,n t h e b i o l o g i c aal n a l o g y ", m u t a t i o n s " )P. u t t i n gi t
adaptationto what are perceivedto be thc
tuúlpti*^r'
highly
i;rnpo;;ry,
a n o t h ewr a y ,t h e b e h a v i o r af lo u n d a t i o n os f e v o l u t i o n a rtyh e o r i e rse s to n l c a r n i n g
' da l s oa l o t o f s y s t e m a t i c
p r e v a i l i negn v i r o n m e n t caol n s t r a i n tasn d o p p o r t u n i t i eas n
processes
involvingimperfect
adaptionand mistake-ridden
discoveries.
This applies
discovertes.
and
i errors,trials,
theorytheanaly'
for neoclassical
e q u a l ltyo t h ed o m a i n so I t e c h n o l o g i ebse, h a v i o ras n d o r g a n i z a t i o nsael ( u p s .
This lineofargumentwouldappearto preserve
stableand.actioflsrepeti(rve
W i t ht h e s ce o n s i d e r a t i o innsm i n do n t h eb a s i c" b u i l d i n gb l o c k s o
" fe v o l u t i o n a r y
,¡, oi J"clsion*iking in situarionsthat are relatively
therearc
learning'
accumula(ed
on
theories,
letusturn to someapplicationsto technological
andeconomicdynamics.
theory
choice
rational
bases
However,if one
e v e ni n t h e s ec a s e lsn
a p p a r e nlti m i t a t i o n s , ot f , . . * p f u n u t o r yp o w á ro , ft h e t h e o r y
W
h e r et h e ye n du p m a y
d
e
p
e
n
d
e
n
t
p
a
t
h
v
e
r
y
b
e
m
a
y
p
r
o
c
e
s
s
e
s
l
e
a
r
n
i
n
g
particular,
I 0 O n ( h c s ep o r n t s ,s e ea l s o W i n t e r ( 1 9 8 6 )a n d ( 1 9 8 ? ) D
in the steadystale
While
got
there
, o s j a n d E g i d i ( 1 9 9 1 )D
, osi and Marengo
they
how
on
degree
dependto a cons¡cleraDle
patternsthal
behavror
other
be
fl99l)
might
m^v b. iocalívoptimal'there
;;ili;;;;i;
Innovation,Organizatíon
andEconomtcDynamics 335
3 3 1 l n n o v a t i o n ,a r g a n i z a t i o na n d E c o n o m t cD y n o n t t c s
160
G D o s ia n d R R N c l s o n
3. Technological ¡nd economic chrnge: somc exBmples of evolutionary dynamics
3 . 1 T e c h n í c a la n d o r g a n i z a t ¡ o n a lc h a n g e
Anumberofanalystshaveproposedthattechno|og}9vo|vgTheanalysesof
Nelsonand
1rizo, lg82),Basalta(1988),Mokyr (1990),
Freeman(1g82),Rósenbcrg
a )n d V i n c e n t(i 1 9 9 0a) r es t r i k i n g l ys i m i l a ri n m a n y
W i n t e r( t g l l ) , ó o s i ( 1 9 S 2 , 1 9 8 4
r e s p e c t(sA. s u r v e yi s i n D o s i 1 9 8 8 )A. s a n i l l u s t r a t i o lne t u s c o n s i d etrh ed i s c u s s t Ó n
of Vincenti.
I n V i n c e n t i 'tsh e o r yt,h ec o m m u n i t yo f t e c h n o l o g i sat st a n yt i m ef a c e as . n u m b e r
o f p r o b l e m sc, h a l l e n g éas n, d o p p o r t u n i t i e sH. e d r a w sm o s t o f h i s e x a m p l eisr o m
knew
aircraftdesigners
Thus,in the iate 1920sand early 1930s,
aircrafttechnology.
w
i
n
g
s
.
c
o
u lbde
o
r
f
u
s
e
l
a
g
e
w
h
e
e
l
s
t
o
o
f
h
o
o
k
i
n
g
p
a
t
t
e
r
n
s
t
a
n
d
a
r
d
t
h
e
wellthat
improvedupon,giventhe higherspeedsplaneswerenow capableof' with thene*
that had come lnto exlstence.
boiy and wing designsand more powerfule_ngines
incorporatingwheelsintoa
possibilities
ior
different
of-several
if-l.y *.r" awáre
Vinccntiarguestha( trialsof thesedifferentalternatives
rJesign.
moá streamlrned
thc
w e r es o m e w h abr l i n d .I t t u r n e do u t t h a t h a v i n gt h e r v h c ebl e r e t r a c t a b lseo i v e d
T
h
u
s
,
s
e
a
rch
t
i
m
e
.
t
h
a
t
a
t
e
x
p
l
o
r
e
d
a
l
t
e
r
n
a
t
i
v
e
s
o
t
h
e
r
t
h
e
d
i
d
t
h
a
n
b
e
t
t
e
r
p-u1.n1
t a yb e c o n s i d c r eads d i l l e r e n t i a" fl i t n e s sT" h c
a n d l e a r n i n gl e a dt o w h a t e x - p o sm
p r o b l e m bs e t t e r '
l a r t e rh e r ei i d e f i n e dr n t e r m so i s o l v i n gp a r t t c u l atre c h n o l o g i c a l
a
n
a
l
y
t
i
c
apl r o b l e mb a c ka
t
h
e
p
u
s
h
e
s
c
r
i
t
e
r
i
o
n
,
i
s
o
o
f
t
h
i
s
i
d
e
n
t
i
f
i
c
a
t
i
o
n
But,
s h e t h e ro n e s o | u t i o oi s b e t t e rt h a n a n o t h e r ?A t t i m e s ,
, t o g . . w h u t d e t e r m i n ew
p lr o b l e mo' r
V i i c e n t i w r i t e sa s i f t h e c r i t e r i o nw e r e i n n a t ei n t h e t e c h n o l o g i c a
Evolutionary
thcoriain eonomics
tól
involvesearchingfor betterways of doing things,also are viewedas guidedby
roul¡nes.
Ihe.concepl9f a tech.4ological
paradigrryr(Dosi
1982,1988;Nelsonand Winter
1 9 7 ?1, 9 8 2a) r r e m p t sr o c a p r u r eb o i l i i h é n a t u r eo f r h e t e c h n o l o g i c a
l owledge
kn
uponwhichinnovativeactivitiesdraw and the organizationalproceduresfor the
s € a r cahn de x p l o i t a t i o on f t h e i n n o v a t i o n sF. i r s t ,i t r e f e r st o t h e s e to f u n d e r s t a n d ingsabout particular technologiesthat are shared by l'irms and engineering
c o m m u n i t i easb o u t i t s p r e s e n at n d i n n a t el i m i t a t i o n sS. e c o n da, n d r e l a t e d l yi ,t
e m b o d i et hse p r e v a i l i n vg i e w sa n d h e u r i s t i cosn " h o w t o m a k et h i n g sb e t t e r .A
" nd,
lhrrd,it is often associated
with sharedideasof "artifacts"which are thereto be
improved
in their performances
and madecheaperin their production.
'ti.ih,4ological
We have used the term
rájec.tory)to refer to the path of
t m p r o v e m etnatk e nb y t h a t t e c h n o l o g yg,i v e nr e c h n o l o g i s p
t se' r c e p t i o nosf o p p o r l u n r t l eas n, d t h e m a r k e ta n d o t h e re v a l u a t i o nm e c h a n i s mt sh a t d e t e r m i n e w
d hat
kj n d so f i m p r o v e m e n t w
s o u l d b e p r o f i t a b l e(. S a h a l 1 9 8I e m p l o y sa n a l o g o u s
c o n c e p t sN. o
) t e a l s o t h a t t h e f u n d a m e n t adl i m e n s i o n o
s [ t h e t r a j c c t o r yi n t h e
a p p r o p n a ttee c h n o l o g ys p a c ea r e a n a l o g o u st o t h e " f i t n e s sc r i t e r i a "d i s c u s s e d
earlrer,
By lhe technologícal
regimewe mean the complexof firms, professional
d i s c i p l i naensd s o c i e t i e u
s ,n i v e r s i t tyr a i n i n ga n d r e s e a r cphr o g r a m sa, n d l e g a a
l nd
r e g u l a t osr yt r u c t u r etsh a t s u p p o r ta n d c o n s t r a i n
d e v e l o p m e nwti t h i na r e g i m ea n d
a l o n gp a r t i c u l atrr a j e c t o r i e s .
3,?Eoolutionary
modelsof growthfuelledby technicaladuance
determinedbyconsensusoiatechnologlcalcommunitywhoarecooperativeL
l ye t u s n o r r , c o n s i d ear s e t o f m o d e l so f e c o n o m i cg r o w t hi n w h i c h t e c h n i c a l
i 'n v o l v e di n a d v a n c r ntgh e a r t .
advaoce
isthedliving force,and w'ithinwhichtechnologies
and industrialstrucrures
are
explicitly,that the aircraftdesigners
However,Vincenii also recognrzcs,
c
o
e
v
o
l vTeh. e o u t c o m e so f t h i s p r o c e s s easr e a g g r e g a tpeh e n o m e n sau c ha s t h e
profitabiiitv
wh-ere
companies,
aircraft
of
óompeting
a
number
in
largelyemployed
growth
o f l a b o rp r o d u c t i v i t ay n d p e r c a p i t ai n c o m e sr ,e l a t i v e l rye g u l a rp a t t e r n so f
theyar€
,nul ú. ufi..i"d by the relativequality and cost o[ the aircraftdesigns
innovation
diffusion,persistent
fluctuationsin (heratesof incomegrowth,a secular
*
h
a
t
"
i
s
B
u
t
.
t
h
e
n
c m p l o y i n g. .o r n p u r i n gw i r h r h o s ee m p i o y e db y t h e i rc o m p e t i l o r s
increase
in
capital
intensities,
and
other "stylizedfacts"whichtraditionallypertain
p a r t l a l l yb y t n e
b e t i e r - o r - w o r s ien a p r o b l e ms o l u t i o ni s d e t e r m i n e da t l e a s t
t ot h ee c o n o m i cosf g r o w t ha n d d e v e l o p m e n( nr o s i n g l ee v o l u t i o n a rm
y o d e li s a b l e
.,market,"the propertiésof an aircraftcustomersare willing to pay for, the costs
aloneto accountfor all theseregularitiesat the same time, but (he degreeo[
thc
suppliers'
of
the
associatedwith differentdesignssolulions,the strategies
c o n s i s t e nbceyt w e e nt h e d i f f e r e n m
t o d e l sf o c u s s i n o
gn s u b s e t o
s f themis quite
c- h-Ái
a n g eisn t h e r e q u i r e m e n ot sf t h e b u y e r se' t c "
remarkabie).
thc
in
evolution
link
between
the
previous
section,
ufr.ooy meiltionedin the
V i r t u a l l ay l l s e r i o u s c h o l a rosf t e c h n i c aald v a n c e
h a v es t r e s s etdh eu n c e r t a i n t y ,
s d m a r k e td y n a m i c sr e s t st o a g r e a te x t e n t
s p a c eo f t e c h n o l o g i ccahl a r a c t e r i s t iac n
the
differences
of opinion among experts,the surprisesthat mark the process.
evoluttonary
much
of
which.in
flrms,
traits
of
and
behavioral
the
orgunizatiJnal
á'n
M e c h a n i caanl a l o g i eisn v o l v i n gm o v i n gc o m p e t i t i veeq u i l i b r i ai n w h i c ht h i a c r o r s
mated wit h rou¡ines.Mqe-cpqcl[c3llf-J.9!son-g{!111
üi"ru,ur."it approxi
a i w a ybse h a v e" a s i f " t h e s c e n ew e r ef a m i l i a rt o t h e ms e e mq u i t e i n a p p r o p r i a t e .
r
o
u
t
i
n
e
s
'
(' 1 9 8 2d)i s t i n g u i ibhe t w e etnh r e ed i f l e r e nkti n d so f
Mostscholars
agreethat thc processmust be understoodas an evolutionaryone,
eírii; it'Éi. are rhosethat might be called"standardoperatingprocedures,
in thesense
sketchedearlier.
various
produces
under
firm
much
a
and
how
how
and
deñne
thoséthát determine
The problemaddressed
by the authorsconsideredin this sectionhas been(o
givenits capitalstockand other constraintson its aclionsthatare
circumstances,
devrse
a
theory
growth
of
capableof explainingthe observedmacroeconomic
fixed in the sho'rtrun. Seiond, there are routinesthat determinethe investment
p a t t e r nbsu, t o n t h e b a s i so f a n e v o l u t i o n a rtyh e o r yo [ t e c h n i c aclh a n g er a t h e rt h a n
growth
or
its
affect
which
generally
behaviors
the
behaviorof the llrm, and more
onethatpresumes
continuingneoclassical
equilibrium
profits,and
decline(mcasuredin rerms of ñs capitál srock)as a function of its
It
would
seem
inevitable
that, in any such theory,lirms would be key actors,
that
those
lrrm.
the
of
processes
deliberative
the
Third,
p.rtupr'ott., variables.
bolhin themakingofthe investments
neededto developnewtechnologies
and bring
theminto practice,and in the use of technologies
to producegoodsand services.
I n d e eidt i s n o t h a r d t o t e l la q u i t ec o m p e l l i n g
s t o r ya b o u te c o n o m i g
c r o w t hb a s e d
o n f i r m sw h o c o m p e t e , w i t he a c h o t h e r l a r g e l yt h r o u g ht h e t e c h n o l o g i etsh e y
¡ ¡ T h i s c o - c v o l u t i o n a r y a r g u m e n t r e g a r t J i n g t e c h n o l o g i e sa n d o r g a n i z a t i o n s i s p r o m r . n e n t l y
i n t r o d u caen d e m p l o y J. o s e p hS c h u m p e t el ra i d o u t t h a t a n a l y s i o
of Chandler'scon(r¡bullor
s v e r f i f t yy e a r s
i l l u s ( r a t e d i n t h e w o r k b y A l i r e d C h a n d l e r ( 1 9 6 21
, 9 9 0 )A r e a p p r a i s a l
( 1993)
a g oa, n dm o d e r na n a l y s elsa r g e l yb u i l d u p o nh i sc o n j e c t u r e s .
i n t h e l i g h t o f c o n t e m p o r a r y t h e o r i e so f t h e f l r m ' i s r n T e e c c
336
t62
lnnovalion,
Organization
Innovation,
and Economic Dynamrcs
G . D o s ia n d R . R . N c l s o n
E v o l u t i o n a r yt h c o r i c s i n e c o n o m l c s
Organization
and Economic Dynamics
337
163
-rational"
challenge
facingthe *rational" models,Iet alonea supposedly
actorsis
whatit meansto 'fully understand"the context,whencvcrthe latter dependsrn
somecomplex,nonlinearwayson thedistributionof microdecisions,
aod on chanc",
andis alwaysfull of surprises.
can bejudgedby the appcalofthe theoryoftechnic¿lprogressbuilt
,rnto
. lhernode.l
it. The view is certainly"evolutionary,"rnd in that regardsquires-wellwith
t h ea c c o u n t sg i v e n b y s c h o l a r so f t e c h n i c aal d v a n c el i k e V i n c e n t i .H o w e v e r .
rr
c o n t a i ntsw o " e c o n o m i s tk" i n d s o f p r e s u m p t i o n os n
. e i s t h a t p r o f i t a b i l i td
yeterminesthe"fitness"ofa technology.
Thc othir is the centralrole playedbyifirms".
ln anycase,thecentralpurplseof this typeo[ modersis to explain'ecónomíc
growth
a t a m a c r o e c o n o mliecv e l T
. h u s ,a f u n d a m e n t aqlu e s t i o na b o u tt h e mi s t h i s :c a n
theygenerate,
hencein a senseexplain,e.g.,the riiing output per worker,growing
capital
intensity,risingrealwages,and a rálativelyconitantrateofreturno.i.upltul,
n e w p r o d u c t i o n t e c h n l q u e s o r t o i m p r o v e p r e v a i l i n g o n e s . I t i s t h e r e f o r e c o n v e n itehnatth a v eb e e nt h e s t a n d a r dp a t t e r n
i n a d v a n c e idn d u s t r i anl a ( i o n sT? h e a n s w e ¡r s
na'o. other authorsof srmilarmodelshaveinvokedrhererrn
i;;rÍi;;;h;"r.r,
t h a t h e yc a n ,a n d i n w a y st h a t m a k ea n a l y t i cs e n s e .
" l e a r n i n g t"o d e s c r l b ae n a l o g o u ism p r o v e m e npt r o c e s s e s '
w i t h i n N e l s o n - $ / i n t em
r o d e l sa s u c c e i s f ur er c h n o r o g i ci an ln o v a t i o n
generates
Éoth próvide the so¡rce of d¡flerentiallltness firms
Firms searchprocesses
p r o f i t fso r t h e l l r m m a k i n gi t , a n d l e a d st o c a p i t a lf o r r ñ a t i o nu n c g r o * i t . ,o r
grow
w
i
l
l
p
r
o
d
u
c
t
s
o
r
p
r
o
d
u
c
t
i
o
n
o
f
the
p
r
o
c
e
s
s
c
s
p
r
o
f
i
t
a
Ü
l
e
w h o s eR & D l u r r l u P m o r .
f i r m F i r mg r o w t hg e n e r a l liys s u f l i c i e nt to o u r w e i g ha n yd e c l i n e
a sa c o m m u n r t y
i n . m p l o y m " n tp . r
, . i u ¡ u " t o t h e i r c o m p e t i t o r- ; a n d a l s ot e n dt o b i n d t h e n it o g e t h e r
u n l to f o u t p u ta s s o c i a t ewdi t h p r o d u c t i v i t gy r o w t h a
, n d h e n c er e s u l t isn u n i n . r . " r "
o n i n n o v a t i n gc,o m t n g
i n i f , . * o ¿ . f , i n q u é s t i o na f i r m ' sR & D p a r t l y i s f o c u s s e d
i n t h ed e m a n df o r l a b o r ,w h i c hp u l l su p t h e i e a lw a g er a t e T
R
.
&
D
i
t
s
B
u
t
d
o
i
n
g
,
. h i sl a t t e r . o n r . q r . n . .
a
r
e
i
t
i
c
o
m
p
e
t
i
(
o
r
s
w
h
a
t
u p w i t h s o m e t h r n gb e r t e rt h a n
m e a nt sh a tc a p i t a u
l s r n gb u t l a b o r s a v i n g
innovar¡ons
proñrable
i n n o v a t i o nnso w b e c o m e
m o r ep r o f i t a b l e ,
^ á , i r i i i . , u i r o u t t . n " ¿r o w h a r i r sc o m p e t i t o r as r ed o i n g ,a n d
a n d . w h ebny c h a n c et h e ya p p e a a
r sa r e s u l o
t i a " s e a r c h ,t"h e yw i l l b ea d o p t e dt,h u s
a r e ,w i t h a l a g ,i m i t a t e db y o t h e rf i r m si n t h e i n d u s t r y
,
.
.
i
^
.
p u l l i nu
g p t h el e v e lo f c a p i t a il n t e n s i t vi n t h ee c o n o m yA. t t h es a n l et i m ei h a t l a b o r
rnvolvLng.n€\r'
o, iurh.r the cóllectionof lrrms in the industry,perhaps
if," nrn-',,
p r o d u c t i v i t yr,e a l w a g e s ,a n d c a p i t a l i n t e n s i t ya r e r i s r n g ,t h e s a m e
within
vsi e w e da s o p e r a t i n g
e
x
i
t
i
n
g
'
,
i
m e c h a n i s m sh o l d
o
n
e
s
a
n
d
o
l
d
i
n
d
u
s
t
r
y
t
h
e
i
n
r
o
fi;;;;;-g
d o w n t h e r a t e o rf e t u r n o n c a p i t a l .I i t h e p r o ñ t r a t e r i s e s , s a y b e c a u s etohfe c r e a t i o n
Tne profiubility of any ñrm is determined
¿etermrnedln'uironment
an exogenously
o i e s p e c i a l lpyr o d u c t i v e n e w r e c h n o i o g y ,t h e h i g h p r o ñ r s w i l l i n d u c e a n i n v c s t m e n t
canbc
the envtronment
ur *rtí, it it dáing,and *¡i* l,' comp€titorsdo Generally
b o o m ,w h i c h w i l i p u l l u p w a g e s !a n d d r i v e c a p i t a l r e t u r n s b a c k d o w n .
o
f
m
a
r
k
e
t
s
'
"
m
a
r
k
e
t
,
"
s
c
t
o
r
a
s
a
interpreted
A t t h e s a m e t i m e t h a t t h e m o d e l g . n . r a t é s " m a c r o " t i m e s e r i e st h a t r e s e m b r e
"""ir1"
modeled
be
can
Ir
sys(em.
srochasric
áynamic
;;ñ;";
iági.".; ,t. *"¿.r
t h ea c t u a id a t a , b e n e a t h t h e a g g r e g a t ea t a n y t i m e t h e r e r s c o n s ¡ d c r a b l ev a r i a t i o n
At
"
follows
as
described
be
can
iterat¡on
as a conrplexMa¡kov pto*rt A stanáard
a m o n gf i r m s i n t h e t e c h n o l o g i e st h e y a r e u s i n g ,t h e i r p r o d u c t i v i t y ,a n d t h e i r p r o f i t b y t h e i rc a p i t a sl t o c k s
t h e e x i s t i n gm o m e n to l t ¡ m ea l l f i r m sc a n b e c h a r a c t e r i z e d
a b i l i t yw i t h i n t h i s s i m p l e m o d e l( w h i c h r . p r . s s . s d i f f c r e n c e s i n o i h e r a s p e c t s á i f i r r n
look to those
conditions
market
to
keyed
rules
o."¡rion
routines.
c a p a b i l i t i easn d b e h a v i o r ) ,t h e t e c h n o l o g i e se m p l o y e d b y f i r m s u n i q u e l y d e t e r m i n e
atl
firls
u1
produced
outputs
and
""¿1i."^íi"g"líst period."inp't' ttploved
ir"¿liit"r
lfen
t h e i rr e l a t i v ep e r f o r m a n c e .A n d w i t h i n i h i s m o d e l - m o r ep r o d u c t i v ea n i p r o f i t a b l c
ando(her
the technology
prices-.Given
ur. J.i"..¡nr¿..ihe marketihen determines
t e c h n i q u et se n d t o r e p l a c el e s sp r o d u c t i v e o n e s , t h r o u g r i t w o m e c h a n i s m s .F i r m s
i;
Oetermii¡!,^a¡i^fte
then
profitabrlity
f-rrm's
nt*,
each
by
r"r¡".t
u s i n gm o r e p r o f i t a b l et e c h n o l o g r e g
"uttt
s r o w . A n d m o r e p r o i t r b l , t e c h n o l o g i c st e n d t o
"r.O
f i r m e x p a n d so r c o n t r a c t sS e a r c h
i n v e s t m e nr tu l et h e nd c t e r m i n ehso w m u ó he a c h
h i m i t a t e da n d a d o p t e d b y f i r m s w h o h a d b e e n u s i n g l e s sp r o f i t a b r eo ñ e s .
a
n
d
c
a
p
a
b
i
l
i
t
i
e
s
,
a
n
d
b
e
h
a
v
i
o
r
ñ
r
m
'
s
o
f
t
h
e
a
s
p
e
c
t
o
n
a
o
,
o
n
f
o
c
u
s
routines
a n d r u r n e r ( 1 9 8 4 ) ,N ' e
f l c a l i e( ) 9 8 E , r 9 9 2 ) .S r l v e r b e r g( r 9 g 7 ) a n d M e r c a l i e
"noit..
s h i c h m a y o r m a y n o tb c
.Soete
( s t o c h a s t i c a l cl yo)m eu p * i , f , p ' o p o t t ¿ m o d i ñ c a t i o nw
a n d c i b b o n s ( 1 9 8 9 ) h a v e d e v e l o p e d s o p h i s r i c a t e dv a r i a n t sá n t h i s t h e m e . T h e s e
the
next
The iystemis.nowreády-fo.r
udopt.a.
ryriod-s-i1,11t1:1,
r,r-,--, "^,,.,. :,
""iir;r;;iá..r.iU.J
o i n e wt e c h n o l o g i et hsa t
i , a u t h o rrse p r e stsh es t o c h a s t iecl e m e nitn t h ei n t r o d u c t i o n
abonecán be evaluatédon a numberof differentcounts,
gtven,;
: * a sp r o m i n e ni tn - r h em o d e ld e s c n b e da b o v ea n d , i n e f f e c tw, o r k w i t h u j i u " n r . t
appealtng
is
form,
in
abstract
contains,
it
behavior
On. i, *ir.tt ., the viewof
rn themodel-l
However,within thesemodelseachoi the índividualtech;oiogres
andorganizations
r¡. individuats
ir of technologies.
;:.oJ#i;ü;;;,;';iyr".
r?'may
beimprovingover time,possiblya( di[Ierentra(es.At (hesametime,firmsare
disciplin:t^tilpti^l"iiiiT:;
social
orher
most
of
modejs
the
in
u.t,u, t'u*un, do
thesc
x
moder,all
¡ . t e n d i ntgo a l l o c a t et h e i ¡ i n v e s t m e npt o r t f o l i o sm o r e h e a v i l yt o w a r c i st h e m o r e
in theNerson-winter
beriefs;
;;'i;;;
:;',;: Hi;i;;ü;;;;
1 .p r o l r t a b tl e c h n o l o g i etsh a n t o w a r _ dtsh e l e s s .A s a r e s u l t ,p r o d u c t i v i t y
"' presumptron'.as
it,i" 1t¡,1¡1".t:lt:ljl::f
ift*t
in the
rs
no
certainly
There
routines.
dellne
t',:industry
as a whole, and measuredaggregated"technicaluduancr,"is ihe conthe*19t'1:i';
;;;; ;;;, ;h;t aoi, "opti*ailin unv*uv,iuutthatmetaphoricaltv
i ; . s e q u e noci e
t w o d i [ I e r e nkt i n d so f f o r c e so. n e i s t h e i m p r o v e m e notf t h e i n d i v i d u a l
a need,o qullu*11,i
recognizing
rhebesttheyknow how ro do. Someícholars,while
humansandhuman',:ri l , t e c h n o l o g iTehse. o t h e ri s t h ee x p a n s i o on f u s eo f t h e m o r ep r o d u c t i v tee c h n o l o g i e s
sees
modei
rhe_
thar
t
argue
;tsh
;;;;;;,
il;;'i:;:ii;üi
, f c l a t r \teo t h el e s sp r o d u c t r v oe r ) e s .
-r",i;"n;i"-th";tntv ^"
q:l:i:i:':Xl:::l',i
asfar less
organizations
1ld:{l"t
" ai;o,!elo¡v,r^9,r"'^T:'i
B o t hg r o u p so [ a u t h o r sp o i n t o u t t h a t t h e l a t t e rp h e n o m e n oins l i k e l yt o b e a
theorv
tsee
'uotutiónurv
i;;;.;;;;i'n
il5:;'i;;;';¿;;i",;
m o r ep o t e n ts o u r c eo [ p r o d u c t i v i t yg r o * , t hw h e n t h e r ei s l a r g ev a r i a t i o ni n t h e
thq
understand
fulty
the
actors
tirat
l¡i;;resumed
*Á;;h
if one wanrsa modeli"
productivia
t yc r o s st e c h n o l o g i ersn w j d e u s e .t h a n w h e n r h a h ¡ . r r - ^ r . - ^ r ^ ^ . ,
m o d e l .B u t t h e n t h e [ o r m r d a b h
c o n t e x to. n e m i g h t a s w e l l u s ea r a i i o n a lc h o i c e
modcl of growth'
L¡t us concentrate on the firsr formalized evolutionary
heterogene'
among
titionand
compe
search
miciofoundedinto an explicitproccssof
in 1982)'
developments
the
and
197¿
Winter
an¿
---f¡*
"",'^.i*riN.tsánactorsin this ¡nodelare businessfirms.Firms are,from one point
profitablc
the cntitiesthat are more or tess"fit," in this casemore or less
of view,""ntr"l
merelythe carriersof
But, from anotherpolnt of view, firms can be regardedas
it".inotogi.r," in the form of particular practicesor capabilitiesthat d_etermine
While in
..*t,ur tnó do" and "how próductively"in par.ticularcircums(anccs.
any one of the
prl".ipi",-íiÑn the model,searchbehaviorsc-ouldbe focussedon
or other standard
firms' prevarlingroutlnesáescribedearlier, its technologies'
searchprocedures
.r"r",i"- o*.?ur"t, its investmentrules,or evenits prevailing
to uncover
i^ pr".",iL, in all or rhe Nelson_winter models,searchis assumed
Innovation'
338
164
Organizarion
Innovation,
Organization
andEconomicDynamics 339
and Economic Dynamics
G DosiandR R Nelson
p€rform".lT:l:1::::j"ty
g-rowth
rnuse'Thustheaggregate
dominates
alreadv
and
technologres
across
variation
of
prevaitingióuñes
to rr,.
ir';;i;;';;i;,.J
theaggregate',
beneath
theirleieisof diffusion,
of evolutionary
thebasicnotions
eiuf.tlSSSi?.u-.lops
Themodelof SilverUJrg
one is
technologies.
rwo
only
^rr
t¡"r.
0,r.",ü,i.inltli--á¿.1
rheorvin anorher
effort
unlcss
wiilnorb€achieved
ü,, ii,",p.rentiar
iil,lll,l,ii,rr,li;;;;il;;,;i,,
a separate
. * i . " t ' p r a c t i c e . R a t h e rt h a n i n c o r p o r a t i n g
is put into rmprovrng
:ie:;;h:;';;t;;¡iv' i. s"ir"ttütg Jt ^r' a firm improvesits prevai[ng procedures
What a [rrm learnsts
iúiougn learnin! associateowith ooeration
tüJ"tr"g;*l
but someof the
technologv'
that
reflectedin its ,ncreasti;;il;t;il;ln
"ting
to impro'e therr
technotogy
that
using
otÁers
learning"leaks out" ^;:;"bl;t
n r o d u c t i v i t fYo r f i e e .a s i t w e r c '
whereflrmsdo not "look forward"to
In contrast*ittt N"f'ln-Winter models
herefirms,or at leastsome
considered
model
the
in
J.u.toiá.nrs,
is
trtrr initially behindin productivitvis
"","iñ"1","r.
of them, recognizerhrt"i;;"i;;i ;oiágy
they can gain advantage.:l::th'it
t"á'ált",that
potentiallythe better.tecin'of"gy,
l
e
a
r
n
i n g ' w i t hi t A l s o i n c o n t r a s tw' i t h
a
n
d
.
c o m o e t i t o r si i t t " v ' n * " ' i ' l ; i " t " g
and hence
some-oIboth technologies'
Nelson-Winte,*o¿.1',1'ni'n *áy'tnlploy
besttechnologyto investin
prevailing
usingihe
fro*
p,ái"i
may usesomeo[,,,
the best'If no ñrms
is
with presentifi;i;;;t techiologythat ñotentially
experience
neverwiil
technology
beuer
,h."por.nriuily
doesthis,tn.n or corrr"iil;;;;;;i;i;f
be rcalized
w l n n e 'r if it learnsrapidly'and littieof
A n e a r l y" i n n o v a t o r "m a y c o m eo u t a
are sluggishin gtlllng ill:^ l:-t t:.
its learning"sprllsout," or íts competitors.
mav comeout a loser'il tts learntng
it
hand'
othei
On the
technologythemselves'
technologyremainshigh' or most
new
the
is slow and hencethe "nii'oiop"'"ting
as o o p ti t I n á t i m e t ym a n n e rt'a k i n g
c
o
m
p
e
t
l
t
o
r
i
t
s
"
s
p
i
l
l
s
a
n
d
o
u
t
"
oI itslearning
a d v a n t a gfeo r f r e eo f t h e s p l l l o v e r ' ' '
'
3 3 h o l u t i o n o Ji n J u s t r i e s
those
on lbe-evolutionof technologyand
A joint accountof the analysesfocussed
tha{ some
appearto su.ggest
also
organrzallons
business
oi
on the hrstory
focussed
ievel(thisdoesnot ruleout
"typical"evolutionarypáirt'n' ofttn upptl: 1t-t:.Outtty
e
n
o
u
g ho n w h e na n dw h y o t h e r
d o e sn o t k n o w
s i g n i l i c a netx c e p t r o násn, d o n t s t i l l
dynamice
s n r e r g e- ')'
(sw h a ti s
, . i ^ - ^ r c . ' . " and
. n r l industrial
i n r t r r < l r i astruc-tures
s lt r u c t u r e(v
The bastcmodel of the evolution of firms
of an
stages
early
the
ln
way
this
calledthe'linJu'*y life cycle")goes
sometimes
relativelyeasy'
entry
and
small'
be
tó
tend
indus(ry- rr, ,u,otoülül'¡""'
being.emploved'a.ndtheir 119 :!il!:
reflectrngthe drversrtiáiiechnologies
"paradigm")emerges'balfl:.r:
..don-,in'un1
a
technological
design"
ioi
However,u, a
neededfor competltrve
capital
and
scal"
to entry begrnto r,rrl,
"n-."r,uülished
rrr:l:l:.:t'h''in
andSilverberg-Dosi-orsenigo
Nelson-win{er
,, ¡n.--rn.,
between
¿in.rence
bya
captured
process
á
selectlon
by
"loses"
determined
is
*no
unJ
the latterwho "wins"
t o t h er e l a t i v cv a l u e so f a v e c t o r
s h a r e cs h a n g e
r e o l i c a l o r - t y pdey n a m t c*si " " r n u ' L t t
""t o i d i n g
r , r l ' . i i l , i . . . s ¡n th e t r c a l lcya l l e d ' c o m p e t i t i v e n e s s a l s ot a c ^ k lsei m i l a rl i f * c y c l cp h e n o ecologY"
"rir" .C
t o n t r i b u t t o n ns t * ' n i i j j t i : L ' g ' n ' L t ' o n ^ t
) n d H a n n a na n d C a r r o l l
F ' J t * u n ( 1 9 8 9a
m e n a .a i b e i tr , o t u ¿ i r t " n i i ; i " ' ; ; : - H ; t " "
"nd
il991).
in cconomics
theo¡ics
Evolutionary
165
production
grows.Also,with the basictechnological
knowledge,
learningbecomes
cumulative,
and incumben(firms are advantagedrelativeto potentialentrantsfor
(hatreasonas well.After a shakeou(,indus(rystructuresettlesdown to a collection
of established
largishlirms.
Partof this analysissremsfrom the work by Abernathyand Utterback(1975),
donenearlytwo decadesago, who arguedthat with basicproductconliguration
s t a b i i i z eRd &
, D t e n d st o s h i f tt o w a r d si m p r o v i n gp r o d u c t i o np r o c e s s eW
s .h e nt h e
m a r k e its d i v i d e du p a m o n g a l a r g ev a r i e t yo f v a r i a n t sa, n d n e w p r o d u c t sa r e
a p p c a r i nagl l t h e t i m e ,p r o d u c ts p e c i f i pc r o c e sR
s & D i s n o t p a r t i c u l a r ipyr o f i t a b l e .
B u tw i t h t h e e m e r g e n coef a d o m i n a n td e s i g nt,h e p r o l i t sf r o m d e v e l o p i n b
ge t t e r
waysof producingit can be considerable.
O p p o r t u n i t i ef o
s r o p e r a t i n go n a l a r g es c a l er a i s et h ep r o l i t a b i l i t o
yf exploiting
l a t e net c o n o m r eosI s c a l eG. e n e r a l l yl ,a r g es c a l ep r o d u c t i o ni s c a p i t a il n t e n s i v e
a ,n d
' t h u sc a p i t ailn t e n s i r yr i s e sf o r t h i s r e a s o n , . t
* . l l , r b e c a u sw
e i t h t h es r a b i l i z a t r o n
of productdesignit is profitableto try to deviseways ro mechanizeproduction.
S i n c eh i g h l ym e c h a n i z epdr o d u c t i o ni s p r o l i t a b l eo n l y a t l a r g es c a l eo f o u t p u t ,
'
g r o w t ho f m e c h a n i z a t r o
a n d l a r g e rs c a l ep r o d u c t i o ng o t o g e t h e[ro r t h i sr e a s o na s
well
A b e r n a t hayn d U t t e r b a c ka r g u et h a tt h e s ed y n a m i c cs a u s e
m a j o rc h a n g eisn { h e
. o r g a n i z a t i o fnf i r m sa n d o [ t h ei n d u s t r ya f t e ra d o r n i n a ndt e s i g ni se s t a b l i s h eadn, d
. a st h e t e c h n o l o gm
y a t u r e sM
. u e l l e ra n d T i l t o n ( 1 9 6 9 )m a d et h e s a m ea r g u m e n t
a b o u tt h c e v o l u t i o no f i n d u s t r ys t r u c t u r es o m e y e a r s b e f o r eA b e r n a t h ya n d
U t t e r b a cbka, s e do n a s o m e w h al le s sd e t a i l e d
t h e o r yo f t h eev o l u t i o no f t e c h n o l o g y .
. r Q v e tr h el a s td e c a d e
a r t i c l e bs y G o r r a n d K l e p p e (r 1 9 8 2 )K, l e p p e ar n dG r a d y1 t 9 f 0 ) ,
U t t e r b a cakn d S u a r e z ( 1 9 9 2a)n, d a r e c e nat n a l y r i cs u r v e yp r e c eb y K l e p p e r ( 1 9 9 2 ) ,
h a v eg r e a t l ey n r i c h e dt h ea n a l y s i sH, o w e v e ri,t s t i l lr e m a i n sr o b e s e e nh o w g e n e r a l
a r et h e s"el i f ec y c l e sp" at t e r n so f i n du s t r i a el v o l ut i o n .T h e r ea r et w o m a j o ru n s e t t l e d
i s s u ehse r eb, o t h l i n k e dw i t h t h ec h a r a c t e r i s t iocfst h el e a r n i n g
p r o c e s s eusn d e r l y i n g
t h e" c o m p c t r t i vaed v a n t a g e s( o" r d i s a d v a n t a g eosf )f i r m s .
.
A f i r s ti s s u ec o n c e r n tsh ei n f l u e n c e
t h a t p a r t i c u l a "r p a r a d i g m sa"n d " r e g i m c s , "
asdellnedearlier,exertonindd
u ys n
t rai aml i c s . T h e f i n d i n g s i n P a v r r t (o1n9t8h4e)
s i z ea n dp r i n c i p aal c t i v i t i eos f i n n o v a t i n gf i r m s ,s u g g e stth a ts i g n i f i c a ngtr o u p so f
j n d u s t r isael c t o rm
s i g h tn o t c o n f o r mt o t h e" l i f ec y c l e "d e s c r i p t i o d
nu
, ef o r e x a m p l e
t o t h es p e c i l i c i tayn d t a c i t n e sosf r h ek n o w l e d g e
r h a t i n d i v i d u afii r n r se m b o d ya n d
l o t h ea b s e n coef s t r o n gt e n d e n c i el osw a r de c o n o m i eosf s c a l e( t h e s g
e r o u p si n c l u o e ,
nt reasons,machrne-tools,
. for differe
scientillcinstruments,text¡le and several
others).
Thepotentialvarietyin theevolutionarypatternsof industries,
interprerable
onthegroundsofdifferentlearningand selectionregimesis alsocorroboratedby
' " t h es i m u i a t i oenx e r c i s ei sn W i n r e r( 1 9 8 4 a
) n d D o s i e t a l . ( 1 9 9 j ) .A s e c o n dm a j o r
issueconcernsthe degreesof disruption induced upon industrialstructuresby
I - d i s c o n t i n u i ti inetsh ek n o w l e d g b
e a s ea n d i n f h e" e s t a b l i s h ewda y so f d o i n gt h i n g s i '
discontinuities
in the technological
l (i.e.,
trajectories
of thar industry).
W h i l em u c h o f t h e l i t e r a t u r eo n t e c h n o l o g ya n d p r o d u c tc y c l e ss t o p st h e
, n a ¡ r a t ¡ vaef t e ra d o m i n a n td e s i g nh a s e m e r g e da n d i n d u s t r ys t r u c t u r es t a b i l i z e s ,
. . t h e r ies a n u m b e ro f r e c e n t h e o r e t i c aaln d e m p i r i c asi t u d l e si h a t a s k t h eq u e s t i o n ,
t a p p e ntso a s e t t l e di n d u s t r ys t r u c t u r e
; "Whah
w h e na n e wt e c h n o l o gcyo m e sa l o n g
. t h a ht a st h ep r o m i s eo f b e i n g s i g n i f i c a n st luyp e r i otro t h eo l d ? "T. h u st r a n s i s t o rasn d
y l t i m a t e l yc a m et o r e p l a c ev a c u u mt u b e sa n d
: l a t e irn t e g r a t ecdi r c u i tt e c h n o l o g u
c ier rc u i ( sA. t t h ep r e s e ntti m e ,b i o t e c h n o l o gpyr o m i s easr a d i c a l l yn e w
; wired-togeth
w a yt o c r e a t ea n d p r o d u c ca w i d e v a r i e t yo f p h a r m a c e u t i c aal sn,d i n d u s t r i aal n d
340
Innovation,
1ó6
OrganEotion
Innovat¡on,
Organtzation
andEconomicDynamics 3j l
and Economic Dynamics
C. Dosi and R R Nclson
The term'compctcncedestroyingtechnicaladvance"has
agriculturalchemicals.
bien coined by Tushmanand Anderson(1986)to characterizcsuchnew technologies
whenthe skillsneededto dealwith them are differentthan the skillsand experienct
that were relevantto the old technologiesthey threatento replace
body of empiricalwork now has grown up which persoasively
A considerable
destroyingin theabove
werecompetence
documentsthat certainnew technologies
In
(see,e.g.,Tushmanand Anderson1986,and Hendersonand clark 1990).
sense.
firms have had greatdiflicultyin acquiringthe
suchinstanc€;,the old established
theyneededin orderto surviveln thenewregimeNew companies
newcomp€tencies
tend lo come in and grab a significant
built around the new neededcompetencies
In
the neededcomp€tencies
shareof the new market,or l'irmswho haveestablished
wherethey had beenappropriatenow shiftover to the neu
other lineso[ business
. h e e x t e n lt o w h i c ht e c h n o l o g i c da il s c o n t i n u ) l l e s
a r e at o e m p l o yt h e i rs k i l l st h e r e T
in
is yet anothertopicof research
discontinuities
areassociaiedwithorganizational
economics
of industrialchangeand business
evolutionaryanalyses
commonbetween
returns
anddynanticincreasing
path-dependencies
3.4 Chanceand structures:
r I a n a l y t i ca n d e m p i r r c a l
T h e d i s c u s s i oanb o v el e a d sn a t u r a l l yt o a n o t h e rc l u s t e o
i s s u ecso m i n gu p i n e v o l u t i o n a rtyh e o r i z i n ag b o u tl o n gr u n e c o n o m icch a n g e p a t h
d e p e n d e n c y , - d y n a imn iccr e a s i nrge t u r n sa, n d t h e i ri n t e r a c t i o nP. a t hd e p e n d e n c i e s
u r éb r i l t i n t o a l l o f t h e m o d e l sc o n s i d e r eadb o v e ,a n d d y n a m i ci n c r e a s i nrge t u r n s
r n t os o m e .
T h u s ,i n a l l o f t h em o d e l st,h e p a r t i c u l aer n t i t i e st h a t s u r v i v ei n t h eI o n gr u na r e
influencedby events,to a considerableexten( random' that happenearly in a
model'srun. To the extent that firms specializein particularkinds of technoiogy.
w h a t t e c h n o l o g i essu r v i v ei s i n f l u e n c e sdi m i l a r l yb y e a r l yr a n d o me v e n t sl . ns o m e
r e t u r n s "m a k e sp a t h d e p e n d e n cpya r t i c u l a r i y
o i t h e m o d e l s , : ' d y n a miinc c l e a s i n g
strong.Thus,in Silverberget al. (1988),the more a ñrm usesa technologythebetter
(o
i t g e t í u t t h a i t e c h n o l o g yM. o t . , s o m eo f t h e l e a r n i n g" s p r l l so v e r " b e n e ñot t h e r
t
e
c
h
n
o
l o g iys u s e dt,h e
a
m
o
r
e
T
h
u
s
,
t
h
e
t
e
c
h
n
o
l
o
g
y
.
f i i m s u s i n gt h a t p a r t i c J l a r
b e t t e ri t b e c o m evsi s - á - v i ist s c o m p e t i t o r s .
B u t w h i l ep a t hd e p € n d e n c i ae ns dd y n a m i ci n c r e a s i nrge t u r n sa r eb u i l ti n t om o s t
o f t h e m o d e l sw e a l r é a d yh a v ec o n s i d e r e dt h, i s w a sn o t t h e c e n t e ro f a t t e n t i o on l
t h e a u t h o r s .o v e r t h e p a s l f e w y e a r s ,h o w e v e r ,a c o n s r d e r a b llei t e r a t u r ei n
e v o l u t i o n a rey c o n o m i chsa sg r o w n ,f o c u s s eodn t h e s et o p i c sT. h e w o r k so f A r t h u r
( 1 9 8 81, 9 8 9 )A, r t h u re r a l .( 1 9 8 7a) n d D a v i d( 1 9 8 51, 9 9 2a) r ep a r t i c u l a r lry. n t e r e s t i n g ,
a n d p r o b a b l yt h e b e s t k n o w n a n d n o t e d .T h e s i m p l e s vt e r s i o n so f t h e s ep a t h dependentmodels follow a somewhatdifferentanalyticalstrategyfrom those
in the previoussection.ro
discussed
There,firmswereconsideredexplicitly.They werethe "carriers"of technology,
in
and the technologythey usedaffectedtheir "lltness."In the modelsconsidered
per se are the unitsof
and "technologies"
this section,flrms-tendio be repressed,
analysis.In the former set of modelsthe behavioraldescriptiontendsto be qurle
on behaviora]
articulated(obviouslyinvolvingalsoa few "inductive"generalizations
¡ . H e r e w e r e f e r m a i n l y t o d i f l e r e n c e si n t h e m o d e l l i n g p h i l o s o p h y _r a t h e r . t h a n i n t h e f o r m a l
elc a
i n s t r u m e n t s u t i l l z e d - e . g . , g e n e r a l i z e dP o l y a u r n s v s o r d i n a r y d i f f e r c n t i a l e q u a t i o n s ,
rs in Silverbtrg
discussion of rhe more teihnical aspects of difTerent formal machineries
( 1 9 8 8 )R
, o s s e r( l S 9 l ) a n d D o s i a n d K a n i o v s k i ( 1 9 9 4 )
tvolutionary
thcorics
in cconomics
ló7
rules).The latter set, on the contrary, tends to focus on some generalsystem
properties
while being rather agnosticon behavioralassumptions(seeFóray's
chapterin Foray and Freeman1992).The simplestversionof the latter moáel
basically
works through the assumptionthat eachtime one technologyis uscd,or
bought(and othcrs not), the probabilitythat it will be usedor boughr next rime
(and the other probabilitiesdecrease).
increases
under conditionsof unbounded
increasing
returnsit can be shown that one of the technologies
ultimatelydrives
out all its competitorswith probabilityone. But the winningtechnologyis (a) ex
anteunpredictable,
and (b)mightnot bethe"potentialb€st"ofthosethatcompeted.
Before
discussing
the variousmechanisms
that arearguedto lie behinddynamrc
increasing
returns,let us highlight why theseanalyticargumentsare not simply
interesting,
but provocative.Let us considerthe relationship
betweenevolutionáry
s u c c e si n
s ,t r i n s i c" l r t n e s s ,a"n d c h a n c e( i . e .u, n p r e d i c t a b h
l ei s t o r i c ael v e n t si)n t h e
d e v e l o p m eannt d d i f f u s i o no f i n n o v a t i o n s .
S t u d e n tos[ t e c h n i c aal d v a n c el o n g h a v en o t e d t h a t ,i n t h e e a r l ys t a g e so f a
t e c h n o l o g yh'iss t o r yt,h e r eu s u a l l ya r ea n u m b e ro i c o m p e t i n g
v a r i a n t sT. h u si n t h e
earlyhistoryof automobiles,
somemodelswerepoweredby gasoline-fucllcd
internat
c o r n b u s ( r oenn g i n e ss, o m e b y s t e a me n g i n e ss, o m e b y b a r t e r i e sA. s w e k n o w ,
gtadualg
i ya s o l i n e - f u e l leendg i n ecsa m et o d o m i n a t ea n d t h eo t h e rt w o o o s s i b i l i t i e s
w e r ea b a n d o n e d
T.h e s t a n d a r de x p l a n a t i o fno r t h i s ,a n d i t r sa q u i t ep l á u s i b l oe n e ,
r st h a tg a s o l i n e n g i n e w
s e r et h e s u p e r i o m
r o d e ,a t t h a t t i m e ,a n d w i t h e x p e r i e n c e
t h a tw a sf o u n do u t .T h e S i l v e r b e r g - D o s i - o r s e n im
g oo d e cl o n r a i nas v a r i a n o
t fthis
mechanism
I n. t h e i ra n a l y s i a
s p o t e n t i a l l ys u p e r i o rn e wa l t e r n a t i vree q u i r e s o m e
d e v e l o p m e-nlte a r n i n g- b e f o r ei t s l a t e n ts u p e r i o r i tby e c o m em
s a n i f e s I(t. c a nt a k e
t i m eb e [ o r et h a t d e v e l o p m e norc c u r sa n d ,w i t h b a d l u c k ,i t e v e ni s p o s s i b l teh a t i t
n e v eor c c u r sH. o w e v e ro, n ec o u l d a r g u e o, n t h e g r o u n d so f t h a t m o d e l ,t h a t g i v e n
s u f l l c i ehnet t e r o g e n e iat ym o n ga d o p t e r (sa n dt h u sa l s oi n e x p e c t a t i o ni n
s ,i t i a lj k i l l s ,
e t c .t)h ep o t e n t i a l lby e t t e rt e c h n o l o giys l i k e l yt o w i n o u t ,a l b e i a
t t r h ec o s to f m a n y
" m i c r o e c o n o mtirca g e d i e s("u n f u l f i l l e de x p e c t a t i o n sm, i s t a k e st h a t n o n e t h e l e s s
produce
system-level
externalities,
deathof firmsetc.).
l n t h eA r t h u r a n d D a v i d m o d e l so, n e c a n s e ea d i f f e r e net x p l a n a t i o fno r w h y
l h ei n t e ¡ n acl o m b u s t i o n
e n g i n ew o n o u t . I t n e e dn o t h a v eb e e ni n n a t e l ys u p e r i o r .
A l l t h a tw o u l d h a v eb e e nr e q u i r e dw a s t h a t ,b e c a u s oe f a r u n o f l u c k ,i t b e c a m e
h e a v i luys e do r b o u g h t a
, n d t h i ss t a r t e da r o l l i n gs n o w b a lm
l echanism.
W h a tm i g h t b e b e h i n da n i n c r e a s i nrge t u r n sr o l l i n gs n o w b a i lA
? r t h u r ,D a v i d ,
a n do t h e ra u t h o r ss u g g e sste v e r adl i f l e r e npt o s s i b i l i t i e s .
O n eo i t h e m i s t h a t t h ec o m p e t i n gt e c h n o l o g i ei nsv o l v e da r ew h a t N e l s o na n o
W i n t e (r 1 9 8 2 )D, o s i ( 1 9 8 6 a
) n d o t h e r sh a v ec a l l e dc u m u l a r i v ree c h n o l o g i eIsn. a
cumulative
technology,today'stechnicaladvancesbuild from and improveupon
thetechnology
that wasavailablea( the srartof the period,and tomorrow'sin iurn
buildson today's.The cumulativeeflectis Iike the technologyspecificlearningin
theSilverberg
et al. model.
Thus,let us return to the history of automobileenginetechnology.According
to thecumulativetechnologytheory,in the early historyof automobiles,
gasoline
cngines,
steam engines,and electricalengines,all were plausiblealternative
lechnologies
for poweringcars,and it was not clearwhich of thesemeanswould
turnout to be superior.Reflectingthis uncertainty,differentinventorstendedto
makedifferentbets,someworkingon internalcombustionengines,
otherson steam
engtnes,
stillotherson electricpower.Assume,however,that simplyas a matterof
chance,
a large share of these effortsjust happenedto focus on one of the
andEconomicDynamics
342 Innovalion,Organization
168
Innovation,
Organizat¡on
andEconomicDynamics 343
R Nclson
G Dos¡andR
variants- the internalcombustioncngine- and, as a result,over this pcriod there
wasmuch more overallimprovementin the designof internalcombustionengines
Or, alternatively,
assume
than in the designof the two alternativepower sourc€s.
that while the distributionofinventiveeffortswererelativclyevenacrossthe three
weremadeon
options,simplyas a matter of chanctsignificantlySreateradvances
internalcombustioncnginesthan on the other ones.
But then,at the end of the first period,if therewerea roughtie before,gasoline
poweredenginesnow are better than steamor electricengines.Cars embodying
internalcombustionengineswill sellbetter.More inventorsthinkingabout where
to allocatetheireffortsnow will be deterredfrom allocatingtheirattentionto steam
or electricenginesbecauselargeadvancesin theseneedto be achievedbeforethey
Thus,
would becomecomp€titiveevenwith existinginternalcombustionengines.
for the allocationof inventiveeffortsto beshiftedtoward
therearestrongincentives
g o s tr a p i d l yT. h e p r o c e si s
t h ev a r i a n to f t h e t e c h n o l o gtyh a t h a sb e e na d v a n c i n m
c u m u l a t l v eT. h e c o n s e q u e n c eosf i n c r e a s e di n v e s t m e n itn a d v a n c i n gi n t e r n a l
¡ n v e s t m e ni nt a d v a n c i n tgh eo t h e r( w o p o w e r
c o m b u s t i o en n g i n e sa,n d d i m i n i s h e d
. e l a t i v e lsyh o r t l y ,
formsa
, r el i k e l yt o b e t h a t t h e f o r m e rp u l l se v e nf u r t h e ra h e a dR
And all theeflortsto advancetechnolog,va cleardominanttechnologyhasemerged.
f u r t h e ri n t h i s b r o a da r e ac o m et o b e c o n c e n t r a t eodn i m p r o v i n gt h a t p a r t i c u l a r
"paradigm".
returnsstoriesthat havebeenput forth
Therearetwo otherdynamicincreasing
to consumersor usersif
network externalitiesor other advantages
One stresses
w h a td i f l e r e ni tn d i v i d u a lbsu ya r es i m i l a ro, r c o m p a t i b l ew,h i c hl e n d sa d v a n t a gteoa
early.The otherstresses
variantthatjusthappenedto attracla numberofcustomers
systemsaspectswhere a particular product has a specializedcomplementary
p r o d u c to r s e r v i c ew
, h o s ed e v e l o p m e nlte n d st h a t v a r i a n ts p e c i a al d v a n t a g e s
T e l e p h o n ea n d c o m p u t e rn e t w o r k s i,n w h i c h e a c hu s e ri s s t r o n g l yi n t e r e s t ei dn
examples
h a v i n go t h e r u s e r sh a v ec o m p a t i b l ep r o d u c t sa, r e c o m m o n l ye m p l o y e d
that needto bespecially
whichrun cassettes
recorders
of thefi rstcase.Videocassette
t a i l o r e dt o t h e i rp a r t i c u l adr e s i g no, r c o m p u t e r tsh a t r e q u i r ec o m p a t i b lper o g r a m s ,
why
areoftenusedexamplesof the second.Paul David'sstory( I 985)of the reasons
'QWERTY" typewriterkeyboardarrangement
haspersisted
theseemingly
inefficient
y p i s t sa n d t h e
s o l o n g a s a s t a n d a r di n v o l v e sb o t h i t s f a m i l i a r i t yt o e x p e r i e n c et d
e x i s t e n coef t y p e w r i t etrr a i n i n gp r o g r a m st h a t t e a c hQ W E R T Y .
A s r n t h e Q W E R T Y s t o r y ,t h e f a c t o r sl e a d i n gt o i n c r e a s i nrge t u r n so f t e na r e
i n t e r t w i n e da, n d a l s o l i n k e d w i t h t h e p r o c e s s ei sn v o l v e di n t h e d e v e i o p m e no t[
cumulative
t e c h n o l o g i eTsh. u s ,t o r e t u r nt o o u r a u t o m o b i l e x a m p l ep' e o p l ew h o
l e a r n e dt o d r i v ei n t h e i rp a r e n t s ' o fr r i e n d s ' c apr o w e r e db y a n r n t e r n acl o m b u s t i o n
cameto
enginenaturallywereattractedto gaspoweredcarswhen they themselves
purchaseone,sincethey knew how they worked.At the sametime the ascendancy
of automobilespowered by gas burning internal combustionenginesmadeit
places
profitablefor petroleumcompaniesto locategasolinestationsat convenient
o[
álong highways.It also made it profitabtefor them to searchfor more sources
ln
p"tról.u*, and to developtechnologiesthat reducedgasolineproductio.n.costs.
iurn, this increasedthe aitractivenessof gasolinepoweredcars to car driversand
buyers.
Note that, for those who considergas engineautomobiles,large petroleurn
on
of a largeshareof the nation'stransportation
companies,and the dependence
that
petróleum,a complexihat spellstrouble,the story spun ou( aboveindicates
; i t d i d n o t h a v et o b e t h i s w a y . " I f t h e t o s s o [ t h e d i e e a r l y i n t h e h i s t o r yo [
Evolutionary
thcones
in cconomics
t69
automobiles
had comeout anotherway,we might todayhavehad steamor electnc
car-s.
A similar argument rec€ntly has been made about the victory of A.c. over
D.c. asthc'system"for carryingelectricity.
The storyalsoinvitescónsideration
oI
p.ossibly
biasedprofcssionaljudgmentsand social or political factorsas major
elements
in the shapingof Iong run economictrends.Aftlr all, in thesestoriesaú it
takesmay bejust a líttlepush.
on the other hand,other analystsmay seethe aboveaccountas overblown.
steamand batterypoweredcar engineshad major limitationsthenand stilldo now;
gasoline
clearlywas better.A.c. had major advantages
over D.c., and still does.
Accordingto this point o[ view, dynamic increasingreturns is an important
phenomenon,
but it is unlikelythat it hasgreatlyinflueñced
whichtechnologywon
out,rn most lmportantcases.
Indeed,the relativeimportanceoi uniquehistoricalci¡cumstances
in determin_
i n gl o n g - t e r m
e v o l u t i o ni s l i k e l yt o r e m a i na l i v e l yt o p i co f e m p i r i c arle s e a r cahn < j
a r g u m e notv e r t h e c o m i n gy e a r sT
. h i s i s b y n o m e a n sr e s t r i c t etdo t e c h n o l o g i c a l
c h a n g eI t. a p p l i e sa s w e l l r o f l e l d sI i k e ( h ed e v e l o p m e norI p a r t i c u l a irn s r i t u t L n s ,
t h eg r o w t ho f i n d u s t r i eosr t h ed y n a m i c so f f i n a n c i am
l arkeis.,t
4. Conclusions
In thispaperwe haveattemptedto presentsomemajor distinguishing
featuresoÍ
e v o l u t i o n am
r yo d e l si n g e n e r a al ,n d ,w i t h m o r ed e t a i l i,n e c o n o m i c T
s .i e e x a m p l e s
of applicationsthat we presentedare only a small subsetof the poteritial
resea¡ch
agenda that one is_only beginning ro explore both via .á-put.ri m p l e m e n t es d
i m u l a t i o nm o d e l sa n d v i a " r e d u c e df o r m "m o d e l st h a t h a v eb É c o m e
i n c r e a s r n galm
y e n a b l et o a n a l y t i c atlr e a t m e n tds u e t o t h e a d v a n c ei n n o n - l i n e a r
d y n a m i casn d s y s t e mt h e o r y .A n d , o f c o u r s ec, o m p l e m e n ( a rt o
y the theoretical
endeavors
there is a rich empiricalagendaconcerningthe identiñcationof the
regularrties
in economicstructuresand in the procesiof changewhich are the
naturalobjects of evolutionaryexplanations.particularlypromising areas of
applicationof evolutionarymodels include the nature of leirning piocess;the
mechanisms
of adaptation,discoveryand selectionunderlyirig..oñori. growth;
thetheoryof the firm and the dynamicsof industrralorganizaiion.
AcknowledgmentS
s u p p o r t t o o n c o f t h e a u t h o r s ( G . D . ) b y r h e I t a t r a nN a t l o n a r
R c s e a r c hc o u n c r ¡
( c N R ) a n d r o b o t h b y r h e I n t c r n a ( i o n a l I n s t r r u t eo f A p p l i . d
s y r t . * A n a l y s i s( l l A S A , L a x e n b u r g ,
A u s t r i a )i s g r e a t f u l i y a c k n o w l e d g e c .
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