Towards a co-evolutionary theory of industrial change

26th Apr 2010

14:00 - 15:30

Seminar Room 1.06, Old Surgeons' Hall, High School Yards, University of Edinburgh

Abstract:

This theoretical article proposes a co-evolutionary theory to understand how industry, markets and technology interact with civil society and broader polity. This theory builds on but moves beyond evolutionary economics (EE) to address several under-developed topics that relate to a) agency (in particular strategy and interpretation), b) environment (in particular civil society and polity), and c) societal problems and normative issues. To address these problems, this article enriches EE with insights from other disciplines (such as neo-institutional sociology, organization theory, economic sociology and strategic management) and synthesizes these into a new co-evolutionary theory. The article develops a triple embeddedness framework, which conceptualizes industry actors as embedded in two external (task and institutional) environments and in an industry regime whose core elements (technology, beliefs, mission, strategic orientation) guide actions towards the external environments. The co-evolutionary theory links the external environments to core elements and types of action through five ‘enactment-adaptation cycles’: an evolutionary cycle (behavioural learning), a sensemaking cycle (cognitive learning), a political cycle, a cultural cycle, and a normative cycle. These cycles contain recursive mechanisms that link external pressures and endogenous (strategic) responses. The article indicates empirical implications for destabilization processes in transitions, industry responses to social problems, and longitudinal industry trajectorie