DJ, 2003 Theories of the Firm Evolutionary Theory

DJ, 2003 Introduction z Unit of analysis: the firm and its “specific physical and human assets” (Chandler, 1992) z These evolve over a relatively long period of time z They involve cumulative and collective action

DJ, 2003 Concepts z Organisational capabilities z Organisational routines z Dynamic capabilities z Organisational learning z Inertia

DJ, 2003 The Theory z Routines and capabilities differentiate firms z Organisational learning enhances this difference and can increase competitiveness z The more rapidly routines develop, the more rapidly resources are released for dynamic capabilities z Illustration: Hilliard (2002)

DJ, 2003 Critique z Evolutionary theory does not adequately incorporate innovation z This is because of its emphasis on automaticity of decision making (O’Sullivan, 2000, p.37) z As it is based on routines, the theory’s ability to embrace strategy, change and innovation is limited

DJ, 2003 Advantages z Unlike neoclassical theory (R & I), evolutionary incorporates developmental and organisational (D & O) resource allocation z Dynamic capability “captures the strategic actions of deliberate reflection on firm learning and capability” (Hilliard, 2002).

DJ, 2003 Sources G M Hodgson (2000), Evolution and Institutions: On Evolutionary Economics and the Evolution of Economics, Edward Elgar Zollo, M. and G Winter (2001), “Deliberate learning and the evolution of dynamic capabilities”. Paper given at the DRUID Nelson and Winter Conference, Aalborg, June 12-15, 2001“Deliberate learning and the evolution of dynamic capabilities”. Mary O’Sullivan (2000), pp.29-38