Diagnosis and prescription for Evolutionary Theory

Many of our criticisms of orthodox analysis are familiar enough, at least within the individual theoretical contexts to which they refer. Less familiar, and more controversial, is our suggestion that the dif­ ficulties of such analysis are largely a reflection of fundamental limi­ tations arising from orthodoxy’s canonical assumptions of profit maximization and equilibrium.

Allies and antecedents of evolutionary theory

In intellectual evolution, as in other sorts, the accidents and inci­ dents along the way play an important role in the transformation of relatively simple and amorphous beginnings into the complex struc­ tures of later times. Thus, while traits of economic theory today be-tray both its classical origins and its present scientific utility, it would

The nature of fruitful theorizing in economics

The answer to the first question can be located in Marshall’s own am­ bivalence. It has already been suggested that there was a strong ten­ sion in Marshall between having a theory that captured what he saw as the key structural aspects of the economic system and of economic processes, and having an abstract

The objectives of business firms

In the simplest orthodox model of business firms the objective is simply profit, or market value, and the more the better. But many scholars have qualified or questioned this simple specification. There have been efforts to shore up the standard formulation by detailing the linkage between owner interests and management actions. Ob­ j ectives

Production sets and organizational capabilities

Although, as indicated above, there has been extensive discussion in the economic literature about the motivational aspect of the theory of the firm, there has been startlingly little examination of the implicit theory of the capabilities of business firms that is employed as a key building block in orthodox theory. The orthodox mode of

Behavior as maximizing choice

Given capabilities and objectives, the orthodox explanation of behavior- what firms do, given constraints-runs in terms of maxi­ mizing choice. The postulate that firm behavior results from maxi­ mizing choice leads the theorist to analyze an optimizing decision lule for the firm, a rule that maps from market conditions and other variables external to

Skills as programs

A variety of terms have been used in the literature of social science to denote a smooth sequence of behavior that functions, in some senseI as an effective unit. “Skill’l is obviously one such; there is, in partic­ ular, a substantial psychological literature relating to skills and skill learning. The terms “plan/’ Uscript,” “habit,1I

Skills and tacit knowing

The late scientist-philosopher Michael Polanyi wrote extensively of the central place in the general scheme of human knowledge occu­ pied by knowledge that cannot be articulated- tacit knowledge. On the simple observation “We know more than we can tell,” Polanyi built an entire philosophical system (Polanyi, 1967, p. 4) . Though the full import

Skills and choices

While the exercise of a skill involves the selection of behavior op­ tions, the selection process is highly automatic. This raises the ques­ tion of whether it is at all appropriate to discuss this process in terms of “choice.” In the terminology of the previous chapter, the sort of choice that takes place in

The uses of skill names

Skills, like computer programs, govern performances that are com­ plex relative to the actions that are required to initiate them. The manifold coordinated details of the performance seem to take care of themselves once the decision to exercise the skill is made and a few initial steps are taken. This differential in complexity between

Skills: Ambiguity of scope

Performance of a complex skill involves, we have remarked, the inte· gration of a number of more elementary units of action. Often, these more elementary units constitute subskills that are optional compo­ nents of the main skill, selected in response to cues in the perform­ er’s environment. Thus, the integration required is not just

The skills of the businessman

Our primary purpose in this examination of individual skills has been to establish a useful starting point for the appraisal of the corre­ sponding issues in the case of the large, complex organization. Much of the discussion of “theory and realism” in the economic theory of the firm has, however, been implicitly or explicitly

Routine as organizational memory

It is easy enough to suggest that a plausible answer to the question uWhere does the knowledge reside?” is “In the organization’s mem­ ory.” But where and what is the memory of an organization? We pro­ pose that the routinization of activity in an organization constitutes the most i mportant form of storage of

Routine as truce

Our discussion to this point has been concerned with the cognitive aspects of the performances of organization members-with the question of whether they know what to do and how to do it. We have ignored the motivational aspect- the question of whether they would actually choose to do what is “required” of them in

Routine as target: control, replication, and imitation

So far, we have emphasized that a state of routine operation in an organization is in many ways self-sustaining. Judging by the preced­ ing sections, an organization might be expected to encounter diffi­ culty in departing from its prevailing routines, but it should have no trouble in conforming to them. Although this generalization is

Routines and skills: parallels

As we observed at the start of the previous chapter, understanding of individual skills informs understanding of organizational behavior in two ways. First, because individuals exercise skills in their roles as organization members, the characteristics of organizational capabili-ties are directly affected by the characteristics of individual skilled behavior. We have noted some of these

Optimal routines and optimization routines

Orthodox economists ordinarily profess a complete lack of interest in the processes by which firms actually make decisions. From their perspective, the fact that our discussion to this point has been con­ cerned with how organizations function means that it offers no clue as to “whether firms really maximize profits,” since that question re­

Routines, heuristics, and innovation

Both in customary usage and in our technical use of the term, “inno­ vation” involves change in routine. We have stressed the uncertainty that inevitably surrounds technical innovation-the implementation of a design for a new product, or of a new way to produce a product. A similar uncertainty surrounds other kinds of innovation-the es­

Summary: routines as genes

Theorists should aim to tell the truth in their theorizing, but they cannot aim to tell the whole truth. For to theorize is precisely to focus on those entities and relationships in reality that are believed to be central to the phenomena observed- and largely to ignore the rest. To advance a new theory

Characterizing economic selection processes

There is nothing about economic selection arguments that makes them peculiarly transparent, or otherwi se obviates the need for careful logical analysis. Indeed, if anything is transparently obvious about the sort of casual argument typified by the Friedman passage quoted above, it is the existence of gaping holes in the logic. For ex­ ample,