Evolutionary Concepts and Business Economics: Towards a Normative Approach

Abstract

In the field of economics, a distinct 'new' subdiscipline called "Business Economics" is steadily evolving where the aim of its contributors is to produce useful insights into the nature of the firm and its competitive environment, which in turn inform the practice of Strategic Management. Inevitably, it has been the practice thus far to base this Business Economics upon neoclassical thinking rather than the emerging evolutionary models of economic systems. Evolutionary economics is essentially concerned with dynamic systems and with behavioural trajectories within such systems. This is in direct contrast with the neoclassical fixation upon stasis, equilibrium and global rationality (i.e. all-seeing, all-knowing decision makers). Such an approach renders difficult the examination of bounded rationality and the development of competitive advantage in a dynamic environment. We argue that the evolutionary perspective on the competitive structures in which strategic management is practised has a pivotal role to play in the practice of strategy. In particular, we identify specific approaches to strategic management (and particularly competitive strategy), which result from an acceptance of the evolutionary nature of the strategic environment.