Geography Reference
In-Depth Information
4.2.3
Economics of Technological Change and Evolutionary Views
As in the case of neoclassical economics, the economics of technical
change, and its Schumpeterian and evolutionary foundations, is not a
theory of the firm. Its central issue is rather technological progress and its
relationship with growth. This approach focuses directly on the questions
of how, where and why technological change occurs, and how it affects
economic processes such as industrial dynamics and growth. The basic
tenet here is that such processes take place in historical time, therefore
bringing into the picture many ostensibly non-economic factors, such as
science, society, culture, institutions and policy. Two concepts are par-
ticularly important here in considering the microeconomic level of the
firm.
Heterogeneity
, implying that the representative firm of the neoclassic
theory no longer makes sense, and
selection
, which suggests that firms with
'good' strategies will tend to grow, while those with 'bad' strategies will
tend to lose. As a consequence, the other axiom of the orthodox theory
that any feasible pattern of productive activity can be faultlessly replicated
becomes incongruous.
The evolutionary framework, which was first articulated as a modern the-
oretical framework in Nelson and Winter's seminal topic
An Evolutionary
Theory of Economic Change
(1982), draws significantly on the work of
other scholars including Simon (1947), Alchian (1950), Cyert and March
(1963) - seen also in Chapter 3 - and most notably Schumpeter (1934,
1950). As with Penrose, in the evolutionary approach attention is paid
to the nature and the sources of continuity in the behavioural patterns of
the individual organization. In the evolutionary approach, the resource
base of the firm is seen as being subject to improvement through learning,
adaptation, imitation and innovation. These changes may or may not be
transmitted to other firms, thereby accounting for differences in compe-
tence and capabilities between firms. Such variety actually enhances the
evolutionary fitness of the population of firms as a whole, and this is the
actual focus of Nelson and Winter's contribution.
Within the firm, change involves the disruption of
routines
which
provide the basic structure for everyday operations. According to Nelson
and Winter, routines are 'regular and predictable behavioural patterns
of firms' (1982, p. 14). They are the persistent and organization-specific
characteristics that shape the firm's potential behaviour, though, impor-
tantly for our purposes here, the actual behaviour of the firm is explicitly
determined
also
by the external context. Routines are inheritable, path-
dependent, and selectable, as variety among firms will render some rou-
tines 'better' than others. Skills and routines are not deliberately chosen
as against alternatives, but rather they are developed through trial and
