The explanandum of evolutionary economics is how the differential growth or reproduction of entities
can be explained. Typically, but not exclusively, evolutionary economists deal with differential success of
firms, including why older firms have higher survival probabilities (Klepper 2002a,b), yet may suddenly
become extinct as a result of radical innovation (Anderson and Tushman 1990). Understandably,
evolutionary economics has had most impact in the fields of industrial organisation, organisation theory
and management studies. Other examples of evolutionary processes of differential growth include
technological change (Grübler 1990; Saviotti 1996; Frenken and Nuvolari 2004), economic geography
(Boschma and Lambooy 1999), and economic growth, structural change and long waves (Pasinetti 1981;
Freeman and Perez 1988).
Where evolutionary economics differs from the older neoclassical and institutional schools of thought
is that economic actions of agents, be them firms, consumers or governments, can not be explained by
perfectly known costs and benefits (as in neoclassical economics), neither by institutions followed
automatically and by all (as in our definition of institutional economics). Rather, routines, learned in the
past and determining current competitiveness, determine action, and being learned primarily within the
boundaries of a firm, routines are largely firm-specific. Being exposed to economic selection
environments and social institutions, surviving firms are characterised by routines that are more or less
adapted to scarcity conditions and the wider institutional framework. Crucially, routines can be changed,
either by chance or intentionally, such that new varieties are introduced and survival probabilities of the
entities in question will shift.
Table 1. Three approaches in economics
|
Neoclassical____________________ |
Institutional_____________________ |
Evolutionary_________________ |
|
Deductive______________________ |
Inductive_________________________ |
Both |
|
A-contextual____________________ |
Contextual______________________ |
Contextual______________________ |
|
Optimising agents_______________ |
Rule-following agents___________ |
Satisficing agents__________________ |
|
Equilibrium analysis______________ |
Comparative analysis____________ |
Out-of-equilibrium analysis_______ |
|
Micro-to-macro |
Macro-to-micro |
Recursive_______________________ |
|
Allocation______________________ |
Coordination____________________ |
Evolution_______________________ |
|
Quantitative change______________ |
Institutional change_______________ |
Qualitative change_______________ |
3. Debates
There are a number of recurrent debates in economics, which can be positioned within the triangle of
the three approaches in economics. The recurrence of debates may well have to do with the parallel, and
largely independent, dynamics of sub-disciplines within the economics profession. For example, debates
between neoclassical and evolutionary scholars started in the context of the functioning of markets
(Winter 1964), and only later focused on growth theory (Nelson and Winter 1974, 1975), on innovation
theory (Nelson and Winter 1977; Sahal 1981), on international trade theory (Dosi et al. 1990), on
institutions (Freeman and Perez 1988; Nelson 1995a), on the theory of the firm (Teece et al. 1997), and on
economic geography (Boschma and Lambooy 1999). We discuss these debates in the context of post-war
economic theory as to shed a new light on the recent debate in economics geography between neoclassical