Evolution, Darwinism and the Theory of the Firm

10th EURAM Conference, Rome, Italy, May 2010

Darwinism and Natural Selection in the Evolution of the Firm. Revisiting Stinchcombe’s Liability of Newness

Gianpaolo Abatecola (Tor Vergata University, Italy), Roberto Cafferata (Tor Vergata University, Italy ) and Sara Poggesi (Tor Vergata University, Italy)
In providing a seminal explanation of the Darwinian struggle for survival between newborn organizations and older ones, Arthur Stinchcombe (1965) introduced the liability of newness hypothesis to account for problems that firms may face in the first years of their life cycle. Despite lively research commitment, an up-to-date systematization of the theoretical and empirical findings on this topic is missing. Thus, this paper aims at contributing to fill this gap through a systematic literature review based on rigorous criteria. Our main results suggest that, although partially integrated, Stinchcombe’s theoretical underpinnings are still widely supported within the scientific community to date. Our research findings can also contribute to improve knowledge on what is currently known and what prospectively constitutes a challenge for future research in this area.

 

Exaptation as source of creativity and innovation

Andrea Ganzaroli (University of Milan, Italy) and Lunciano Pilotti (University of Milan, Italy)
In this paper we investigate exaptation as source of creativity and innovation. This term addresses natural features that enhance fitness, but were not built up by natural selection for that purpose. In the management literature this term has been used to address the exploitation of an existing body of knowledge to enter an emerging technological trajectory and gain a competitive advantage in a relative industry. So far, however, little attention has been devoted to the evolutionary dynamics underling and generated by this process. Therefore, in this paper we deepen our understanding of those aspects. Our main contribution is to highlight the discontinuous nature of those changes. Exaptation, differently from adaptations, are not selected for their contribution to the optimization of an existing function, but for their availability to perform an emerging function. Therefore, exaptations are not selected, but select and contribute to build up the environment valorising their potential.

 

Community Ecology: A General Model of Reciprocal Legitimacy between Two Organizational Populations

Konstantinos Pitsakis (Tilburg University, Netherlands) and Souitaris Vangelis (CASS Business School, UK)
Drawing from empirical contexts of mutualism and symbiosis among populations of organizations (e.g. corporate entrepreneurship units and the organizations they create), we build theory on the legitimation process among populations. We advance previous work in the community ecology literature by bringing in the concept of reciprocity in social exchanges to argue that reciprocal cooperative transactions help organizational populations gain legitimacy early in their life cycles. Propositions on the exact antecedents (power balance, communication capabilities and technological capabilities) of reciprocal transactions are formulated. These elements lead to a reciprocal legitimation of interacting organizational populations. We finally develop propositions on the consequences (network sustainability, protection from competition, population growth) of reciprocal legitimacy.

 

The Evolutionary Ecology of organizational culture

Udo Staber (Canterbury University, New Zealand)
The characterization of organizational culture as an evolving, heterogeneous set of elements has gained momentum in recent years. Researchers have used Darwinian evolutionary concepts to explain how organizational culture changes over time, but they have often not been precise about the cultural units that are subject to the evolutionary process of variation, selection, and retention. In this paper, I discuss the building blocks of an evolutionary-ecological approach that is grounded in ideas as a unit of replication or transmission. For the evolution of organizational culture to occur, there must be variation among the ideas within a population of ideas with respect to selectively important features. For illustrative purposes, I present a case study of a project conducted by a web-design company to generate novel ideas. The data indicate the ecological and contingent character of ideas underlying the organization’s evolving culture of creativity.

 

Overcoming the liability of newness: evidence from the Italian wine industry

Massimiliano Basciano (Tor Vergata University, Italy)
The liability of newness hypothesis (Stinchcombe 1965) argues that new organizations experience a higher death risk than older organizations. Over the years, a number of researches on this topic have been based on the population ecology approach, which mainly stands on quantitative studies and tries to determine the dependence of death rates on the age of firms. On the contrary, a limited number of researches have been focused on qualitative approaches to determine what factors are the most relevant in determining the possibility for firms to overcome the liability of newness. Furthermore, almost no studies have specifically analyzed this topic within the wine industry, which in Italy is quite important. In fact, Italy resulted the first country in wine production in 2008, with 46,2 millions of hectolitres and almost 11 billions € of revenues. The value of this paper is that it aims at contributing to fill the depicted literature gap through an in-depth qualitative case study regarding a wine start-up firm in Tuscany. In particular, a framework of specific survival factors is drawn from the relevant literature and is used to codify and render the data derived from the case. The key results are then discussed and the most promising implications for further research are finally outlined.

 

A Critical Review of the Universal Darwinist Approach to Studying Organizations

Dermot Breslin (University of Sheffield, UK)
In the last half century, a number of evolutionary scholars have adopted the generalized evolutionary framework of Universal Darwinism to study organizations. However, these developments have been hampered not only by disagreement between the evolutionary scholars themselves, but more broadly by criticisms from a diverse range of established scientific traditions within economics and organization science. In light of these developments, the aim of this paper is to provide a timely critical review of the use of the evolutionary approach, and in particular the Universal Darwinist approach to the study of organizations.

 

Accounting systems and evolution: What can we learn from a Darwinian interpretation of accounting standardization?

Noel Christine (Metropolitan State University of Denver, USA)
In this article we propose applying the theory of evolution to the interpretation of accounting systems and their evolution. Accountancy is a normative system, whose historical evolution may be explained by a company’s complex relationships with its legal, economic and social environment. Within this framework of analysis, the history of accounting is described as a succession of phases based on a particular conception of the role of accountancy. In this way the emergence of IFRS would signify the superiority of accounting systems based on the defense of shareholders’ interests over those based on stakeholder governance.

 

Darwiportunism as Psychological Contract

Christian Scholz (Saarlandes University, Germany)
What can we really learn from Charles Darwin? In this paper his Darwinism is combined with individual opportunism, which leads us to the concept of Darwiportunism: Developed exactly 10 years before the current global financial and economic crises, this concept helps us to understand recent developments, not only on a global scale, but also within the company. Using the idea of psychological contracts, we get four different combinations of Darwinism and opportunism. The paper develops the framework, draws on some of the theoretical and empirical backgrounds, shows practical implications, and finally raises an ethical question: Do we really have to continue the current short time profit maximising? Or is there a sustainable strategy that is applicable even to the logic of Charles Darwin and to Darwiportunism.

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