Is organizational evolution Darwinian and/or Lamarckian?

Roberto Grandinetti (Department of Economics and Management, University of Padova, Legnaro, Italy)

International Journal of Organizational Analysis

ISSN: 1934-8835

Publication date: 5 November 2018

Abstract

Purpose

Recently, some biologists have argued that the time has come to replace separation between Lamarckism and Darwinism with their connection. The aim of this paper is to understand whether this paradigm shift in the interpretation of biological evolution offers useful insights for dealing with the unresolved issue of how industries and their organizational populations evolve.

Design/methodology/approach

Lamarckism and Darwinism are two approaches that have contrasted or interwoven with each other in the study of biological evolution, just as they have in the study of organizational evolution. This paper provides a critical analysis of the long history of the debate through to the recent, revolutionary discoveries in evolutionary microbiology obtained in the wake of the genomic revolution.

Findings

From this new research frontier emerge three important findings: adaptive variations are no longer an anomaly that is peculiar to human organizations, but rather correspond to a widely observed phenomenon in the biological world; the same can be said for the process of horizontal replication; Lamarckism and Darwinism are not two mutually exclusive interpretations of evolution but two dimensions of evolution that coexist in various ways. Lamarckian dimension of evolution and the Darwinian one, handled in the light of these results, may help to understand the evolutionary logic that underpins specific stages of the history of industries.

Originality/value

The paper presents a new way of looking at industries and their firms from an evolutionary perspective.

Keywords

Citation

Grandinetti, R. (2018), "Is organizational evolution Darwinian and/or Lamarckian?", International Journal of Organizational Analysis, Vol. 26 No. 5, pp. 858-874. https://doi.org/10.1108/IJOA-03-2018-1367

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Publisher

:

Emerald Publishing Limited

Copyright © 2018, Emerald Publishing Limited


Introduction

In the year of the two hundredth anniversary of the publication of Lamarck’s Philosophie Zoologique and the one hundred and fiftieth anniversary of Darwin’s On the Origin of Species, Koonin and Wolf (2009) wondered whether biological evolution is Darwinian and/or Lamarckian. After a century and a half of opposition between these two interpretations of evolution, the authors argue that the time has come to turn over a new leaf, replacing the separation between Lamarckism and Darwinism with their connection. This paper was inspired by that question and by the ensuing answer, with the aim of understanding whether the paradigm shift in the interpretation of biological evolution heralded by Koonin and Wolf (and by other biologists) offers useful insights for dealing with the unresolved issue of how industries and their organizational populations evolve.

The core of Lamarck’s thinking, the inheritance of acquired characters, received ample attention in the writings of both Darwin and a certain number of evolutionary biologists who were active in the decades spanning the nineteenth and twentieth centuries. Subsequently, interest in Lamarck’s work would dwindle to zero with the advent of the Modern Synthesis discussed and accepted by biologists worldwide at a celebrated symposium held in January 1947. On that occasion, Darwin’s notion of accidental variations selected by the environment eclipsed Lamarck’s, which consisted of variations as adaptive reactions to the environment. Nevertheless, over the last few decades, the genomic revolution, that is, the opportunity to compare the complete genome sequences of organisms, has enabled studies in evolutionary biology to make a giant leap forward (Koonin, 2012). Specifically, a large body of studies concerning a variety of phenomena that seem to obey the Lamarckian mechanism of evolution, has been produced. These new discoveries converge in bringing about a paradigm shift in modern biology, a sort of new synthesis based on the coexistence of these two evolutionary logics, Darwinian and Lamarckian.

The Lamarck-Darwin dichotomy has also constituted an inescapable point of reference for scholars dealing with the evolution of industries and of organizational populations (Breslin, 2008). Many of their studies exhibit a purely metaphorical use of concepts taken from evolutionary biology, such as the Darwinian notion of struggle (competition) for life. A qualitative leap in tracing out and developing genuine analogies between evolving biological populations and evolving organizational populations was taken by two theories developed over the same period. The first is the population ecology of organizations, by Hannan and Freeman (1977, 1989), in whose view organizational populations change, not because individual organizations have the capacity to adapt to changes in the competitive environment, but because the environment exerts a selection pressure on the population which leads to old organizational forms, represented by organizations which die out, being replaced by new organizational forms, represented by newly born organizations. The authors explicitly place their theory in the Darwinian camp (Abatecola, 2012). But the premise of structural inertia places population ecology completely outside the gradualism that characterizes Darwin and Darwinism (as it does Lamarck and Lamarckism too, for that matter). The evolutionary theory developed by Nelson and Winter (1982), where the organizational routines of business firms play the role of genes, starts from an opposite premise. The authors describe their theory as unabashedly Lamarckian, in that organizations modify their routines in accordance with environmental variations, and routines can be replicated (“inherited”). Nevertheless, this part of their theoretical framework is complemented by the no less central idea that these routines are subject to the selective action of the market environment. In doing so, the authors acknowledge their indebtedness to Darwin, making their theory seem less Lamarckian than an unabashed attempt to combine the two paradigms into a third solution to the problem of evolution. But the way in which Nelson and Winter measure the effect of natural selection, that is to say, as the increase in the firm’s size, is wholly extraneous to Darwinian (and also Lamarckian) evolutionary logic.

In the light of the results described, and without taking away from the contribution that population ecology and the routine-based view have made to understanding how industries work and change, one might come to the drastic conclusion that the study of organizational evolution must renounce any conceptual connection with the domain of biological evolution, accepting the radical critique made by Edith Penrose (1952) of this and other uses of biological analogies. This paper chronicles the history of the debate in the fields of biology and economics between the Lamarckian mode of evolution and the Darwinian mode, and reaches the conclusion that biology can offer a useful guide in the construction of a tenable theory of organizational evolution, today more than before thanks to the pluralistic perspective stemming from the recent studies referred to above.

The Lamarckian mode of evolution versus the Darwinian mode

The Lamarckian mode of evolution

Lamarck’s thought concerning evolution can be summarized in a sequence of three points (Lamarck, 1809). First, individuals in each species have the capacity to react to changes in the environment by modifying their organs. These new traits are not randomly acquired, but develop as a result of the benefits that they bring to the organism that possesses them. Second, these adaptive changes in animal organization are conserved and transmitted through generations. Third, through the inheritance of acquired characters (IAC), animals obtain a gradual functional improvement of their organs and an ever more complex, perfect organization: that is, biological evolution. This tendency toward increasing organizational complexity is innate in animals and is the reverse side of the coin with respect to their capacity to interact with their environment.

While the second and third points seemed self-evident to Lamarck and therefore did not require detailed explanations, the first – the adaptive variation – absorbed a great deal of his efforts (Burkhardt, 2013). Lamarck finds its shaping mechanism in the use and disuse of organs. To attempt to explain this principle, Lamarck drew up a complicated physiological theory, based on the ideas circulating among physiologists of the day, according to which adaptive shaping occurred thanks to the motion of subtle fluids in the animal body. But the most interesting or most “modern” aspect to emerge from the Lamarck's research is his view of evolution as a result of the interaction between organisms and their environment (Burkhardt, 2013).

A further aspect of Lamarck's thinking worthy of mention, however little known, has to do with the mechanisms, which operate alongside the hereditary mechanism to make a given adaptive variation the attribute of an entire species as opposed to one single individual. Here, Lamarck (1802) appears to hypothesize that the replication of an adaptive variation can occur in two ways: vertical replication or inheritance and horizontal replication. By means of the former, individuals that have created the variation transmit it to individuals descending from them. Horizontal replication, in contrast, entails a sort of imitative learning on the part of an organism which has not yet adapted from one that has already adapted. Furthermore, Lamarck believed in the innate predisposition of the individuals of each species to change in accordance with their environment, making it necessary to think of a variation which simultaneously or almost simultaneously involves many of the population’s individuals and which at the same time spreads through imitation to other individuals in the same population, facilitated in their imitation by the innate predisposition that they share with the former. In short, the force of adaptive variations as conceived of by Lamarck depends on their dual aspect, synchronic and diachronic: with the former, several individuals of the same species develop the same adaptive variation over a short interval of time, autonomously or by imitation, whereas the reproductive processes guarantee the diachronic conservation of the variation.

The Darwinian mode of evolution

The primary concern that informed the whole of Darwin's work is the variety within each species (horizontal variety). Against the dominant platonic essentialism of his time, which postulated the substantial similarity between individuals in the same species, he asserts the principle of the uniqueness of each individual (Mayr, 1991), a principle far removed from the inter-individual simultaneity of the adaptive variation in which Lamarck believed. For Darwin, intra-species variety, and, in the ultimate analysis, speciation itself, are for the most part driven by accidental variations. Subsequently, the Modern Synthesis and then the discovery in 1953 of the structure of DNA made the connection between the idea of accidental variations and genetics, attributing to the genotype-phenotype relation a univocal character, where the latter is an expression of the former and cannot influence it in any way.

The transition from Darwin to neo-Darwinism represented by the Modern Synthesis brought about a not-inconsiderable change in the way the construct of variation was understood. Although Darwin took great pains to explain how variety is created, he was unable to establish a decisive view of the issue, as he was able to do with regard to selection. Nevertheless, Darwin never stripped the connection between environment and variation of its significance. In contrast, the Modern Synthesis proclaimed the existence of a single, narrow pathway to inheritance, according to which any variations that arise not only are always accidental but also occur irrespective of the influence of environmental factors. Thus, any possible space for Lamarckian IAC is eliminated.

Natural selection is the heart of the Darwinian mode of evolution and represents its main difference from Lamarckian evolutionary theory. This concept, like that of variation, reflects the populational mode of thought adopted by Darwin: whenever accidental variations affect the capacity of individuals in the population to survive and reproduce, positive variations will be represented to a progressively larger extent in future generations, in contrast to negative variations. This differential reproduction is natural selection. As a way of conceiving of evolution, it is the opposite of Lamarck’s thought: in the former, the individuals of a species that share the same environment are different and it is on this diversity that selection operates, whereas in the latter, the individuals of a species that share the same environment are essentially similar in terms of their capacity for adaptation (Medawar, 1957).

Turning to the construct of (vertical) replication, the Modern Synthesis adds to the original Darwinian framework with two important discoveries of modern genetics. The first consisted in the identification of the genotypic component of variation in gene mutations. The second is no less important from the evolutionary perspective: the primary source of the great variety which characterizes (eukaryotic) biological populations is not represented by mutations but by genetic recombination instead. Ultimately, the reproductive process in the Darwinian mode of evolution takes on an ambivalent nature. On the one hand, it is the process that guarantees the preservation (replication) of variations from one generation to the next. On the other, it is a formidable (and accidental) generator of genetic variation.

Lamarckian variation and Darwinian selection as complementary processes

The two modes of evolution described in this section both correspond to a “strong” variant of Lamarckism and Darwinism, bearing in mind that in the former case the variant relates to Lamarck’s own work, while in the second it is represented by the neo-Darwinists of the Modern Synthesis. In their strong version, then, Lamarckism and Darwinism represent two different, complete theoretical constructions, each capable of providing a plausible, exclusive explanation for evolution, even though the first was deemed completely wrong by almost all biologists for nearly two centuries after its appearance (Mayr, 1982; Koonin and Wolf, 2009).

Nevertheless, Lamarckism and Darwinism have not merely constituted two opposing frameworks. Before the Modern Synthesis, there was no lack of scholars – starting with Darwin himself – who sought to combine the two approaches to deal with the complex phenomenon of evolution. In these attempts, they assumed their “weak” form, in the sense that one did not exclude the other.

The transition from Darwin to the strong version of Darwinism has been codified in an unambiguous way by the Modern Synthesis (Mayr, 1982). In contrast, the transition from Lamarck to the weak version of his approach exists de facto but has never been explicitly set out in a clear manner. In this weak version, according to the authors that have implicitly adopted it, variations are generated through interaction with the environment, and are heritable. They have an adaptive nature, although they do not coincide with the “perfect” adaptive variations that Lamarck had in mind. In addition, their result is not necessarily homogeneous among individuals of the same species that have faced the same environmental change. In short, a theory of variation that centers around environmental interaction but in weakened form compared with Lamarck’s original view leads to the possibility of horizontal variety being admitted; it thus becomes compatible with natural selection and with a (weak) Darwinism which no longer excludes the possibility of any environmental interaction generating variation.

Thus, a mode of evolution that includes a Lamarckian component and a Darwinian component comes to take shape. Some scholars have sought to combine these two components in various ways, both in the study of biological evolution and in the study of organizational evolution. Regarding the first domain, after the Modern Synthesis a perspective integrating weak Lamarckism and natural selection was kept alive by a small number of heterodox biologists yet surprisingly it has forcefully resurfaced in today’s evolutionary biology.

Organizational evolution as an intrinsically Lamarckian-Darwinian process?

Turning our attention from the field of biological evolution to that of organizational evolution, the first work to mark a shift toward a compromise between Lamarckism and Darwinism is An Evolutionary Theory of Economic Change by Nelson and Winter (1982), a book which had a vast influence on economists as it did among scholars of organization and management who dealt with evolutionary changes.

The authors based their theory on three analogies: industries as populations, firms (organizations) as organisms and routines as genes. Although the first two had already been adopted by Hannan and Freeman (1977) in the first version of their population ecology, the routines-genes analogy is completely original and represents the key concept underpinning the whole of Nelson and Winter’s theoretical construct. To understand evolution, in fact, it is necessary to have a solid theory of stability: this is the major contribution which genetics has made to the understanding of biological evolution and which Nelson and Winter’s concept of routines has made to the understanding of organizational evolution (Abatecola et al., 2016). In the introduction to their book, they state that the term “routines” includes a wide range of firm characteristics (from well-specified technical routines to specific business strategies) and

They are a persistent feature of the organism and determine its possible behavior (though actual behavior is determined also by the environment); they are heritable in the sense that tomorrow’s organisms generated from today’s (for example, by building a new plant) have many of the same characteristics, and they are selectable in the sense that organisms with certain routines may do better than others, and, if so, their relative importance in the population (industry) is augmented over time (Nelson and Winter, 1982, p. 14).

The quotation contains three highly significant aspects in terms of evolution: the difference between routine (genotype) and behavior, the possibility that routines are inherited and therefore replicated and the action of natural selection and its (apparently) Darwinian interpretation. However, in the excerpt cited above, there is no reference to variation or change in routines, though on this point Nelson and Winter had already declared themselves “unabashedly Lamarckian” in the same introduction. Changes in routines are, for them, analogous to genetic mutations. However – in contrast to those included in the Modern Synthesis – they are adaptive in the sense that they always imply some form of interaction with the environment[1]. In practice, the evolutionary theory proposed by Nelson and Winter represents an attempt to combine Lamarckian variation and Darwinian selection (Abatecola, 2014).

With regard to the distinction between routines and behavior, the analogous link between routines and genes formulated by Nelson and Winter – according to which routines are seen as instruction sets for behaviors – has been taken up by other scholars. In particular, in their celebrated essay on organizational learning, Levitt and March (1988) elaborate upon the idea developed by Cyert and March (1963) and subsequently appropriated by Nelson and Winter that behavior in an organization is based on routines, before adding that organizations learn by encoding inferences from history into routines that guide behavior.

Specifically, for Nelson and Winter (1982, 2002), through routinization, organizations store the knowledge that they need to operate, and to behave in the future according to the routines they have used advantageously in the past. Ultimately, routines constitute the memory of the organization. Regarding the kind of knowledge the two authors refer, Nelson and Winter assign great importance to the tacit dimension of routines, which is consistent with the fact that they consider them the organizational equivalent of individual skills. Based on this assumption, knowledge stored in organizational routines is maintained by exercise in the same way as individual skills (Winter, 1984), the only difference being that in the former case exercise is collective and in the second it is individual. It should however be added that several passages in An Evolutionary Theory of Economic Change suggest that the cognitive structure of organizational routines are characterized by both a tacit and a codified part, while the incidence of the two parts varies from case to case. This view is shared by other scholars who have followed in the footsteps of the two evolutionary economists (e.g. Warglien, 1995; Narduzzo et al., 2000; Becker, 2004).

When Nelson and Winter speak of replication of routines, they are thinking of the simple case of establishing a new plant identical to the original and using the same routines. This may happen because the existing routine serves as a template for the new one, exactly as if it were a gene. However, in the organizational field, processes of replication are significantly more difficult than they are in the biological field, as the authors clearly explain with reference to the replication of a production plant. Copying becomes even more difficult if we move from replication to imitation, in which case the routine which one wishes to copy is not available as a template. Difficult does not mean impossible, and imitation in fact plays an important role in the formal models developed by the two authors.

Clearly, the replication referred to by Nelson and Winter corresponds to biological reproduction (i.e. vertical replication), whereas imitation is a horizontal type of replication. Between pure replication (in which a template is completely available) and pure imitation (in which a template is not available in any meaningful sense), Nelson and Winter place various intermediate cases. In particular, near the former they place the case of technology transfer already studied by Teece (1977), in which replication occurs with the active support of the source firm. In contrast, they place further from pure imitation the case in which the imitator hires away from the imitatee those employees whom the imitatee would transfer to a new plant in trying to replicate the existing one. Levitt and March (1988), too, count the mobility of human resources as a mechanism of transmission-replication of routines.

The fact that Nelson and Winter, in discussing replication, do not mention spin-offs, may come as a surprise. Spin-offs are new ventures founded by employees of firms in the same industry (Klepper and Sleeper, 2005) and thus represent a case of vertical replication that occupies one of the intermediate positions between pure replication and pure imitation. Their having overlooked what most resembles biological reproduction in an industry’s population can be explained by the fact that the authors were limiting their attention to large organizations and to their growth in terms of size. Selection is thus not differential reproduction, that is, as Darwin conceived of it, but is differential intra-organizational growth on the part of firms capable of developing advantageous routines (Gayon, 2011), side by side with inter-organizational imitation which in turn fosters the growth of imitators. This shift in focus from organisms (and organizations) able to survive and reproduce to organizations able to survive and grow is clarified in a later work by Nelson (1995, p. 69), who, in commenting on their evolutionary theory and the mathematical models deriving from it, writes:

Firms do not have a natural life span, and not all ultimately die. Neither can they be regarded as having a natural size. Some may be big, some small. Thus in assessing the relative importance of a particular routine in the industry mix, or analyzing whether it is expanding or contracting in relative use, it is not sufficient to “count” the firms employing it. One must consider their size, or whether they are growing or contracting.

Hodgson and Knudsen (2004) have developed a theory of evolution with strong, explicit connections with that of Nelson and Winter, while at the same time seeking to overcome some critical issues that were apparent in the routine-based view of evolution. They call their theory “generalized Darwinism” as it is an attempt, shared by other scholars of evolution (Aldrich et al., 2008), to construct a framework capable of interpreting evolution both in nature and in human society. This attempt can be summed up in two essential points. First, evolution regards complex population systems which exhibit many differences from each other, yet also show an ontological communality at a highly abstract level. Second, the evolution of these systems involve the three basic Darwinian principles of variation, replication and selection. This shift from analogical comparison to ontologically based generalization has not been immune from criticisms (Breslin, 2011; Levit et al., 2011; Scholz and Reydon, 2013). Nevertheless, at this point in our analysis, the theory of Hodgson and Knudsen is not of interest as a general theory but because – specifically with reference to organizational populations – it represents an advance on the evolutionary theory developed by Nelson and Winter. In this regard, it should be noted that organizational evolution occupies a significant space within the overall sphere of studies on generalized Darwinism, as Hodgson (2013) points out in a recent paper published in Organization Studies.

Adopting the genotype generalization proposed by Dawkins (1976) and taken up again by Hull (1980); Hodgson and Knudsen (2004) define individual habits and organizational routines (the organizational analogue of habits) as specific types of replicator. Replicators are the entities containing the information that is passed on differentially in selection. Replicators are contained in other entities (interactors) that constitute the generalization of organisms, the characteristics of which are the expression of the information contained in the replicators. The routines present in an organization (interactor) are not behavior but stored knowledge which makes it possible to instruct organizational behaviors and everything that relates to the “phenotype” of the organization (Knudsen, 2002; Hodgson, 2003). To emphasize the difference between routines and biological replicators (genes), Hodgson and Knudsen (2004) describe them as “dispositions” (on a par with individual habits), which may or may not be actually expressed in current behavior.

This cognitive interpretation of routines “helps” Nelson and Winter’s theory to cast off any ambiguity concerning their nature. While it is indeed true that at various points in An Evolutionary Theory of Economic Change the authors, as already mentioned, postulate and argue in favor of the genes-routines analogy, it is equally true that other passages of the book, like later works (Nelson, 1995, 2006), set out a behavioral – and therefore phenotypic – interpretation of routines (Hodgson, 2003; Vromen, 2006). These two interpretations of routines as cognitive regularities and behavioral regularities are then found on their own or mixed in those studies on economics and management which adopted them as a conceptual category (Becker, 2004; Breslin, 2008). The interpretation of routines as recurrent patterns of behavior is obviously legitimate too. However, such an interpretation makes the concept of routines unusable in the field of evolutionary theory (Knudsen, 2002). To make the concept of routines usable in this field, they must be “reduced” to cognitive regularities as Hodgson and Knudsen do. The alternative is to assume the Feldman and Pentland's (2003) distinction between the ostensive (cognitive) and performative (behavioral) aspects of routines. The ostensive aspect of the routine, that we can liken to its genotype, represents the collection of all the understandings of the individuals involved in the routine about the abstract pattern of the routine, whereas the performative aspect is its phenotype as it embodies the specific actions taken by specific people at specific times when they are engaged in the routine. As a consequence, only a routine's ostensive part may be replicated and inherited (Furlan and Grandinetti, 2018).

Like individual habits and every other type of replicator, for Hodgson and Knudsen (2004) also an organizational routine (or its ostensive aspect) is replicable[2]. Replication is the process through which a routine is copied, thereby bringing about a transfer of knowledge from the source routine to the copied routine. The authors make it clear that it is not possible to transfer behaviors from one organization to another but only the knowledge that underlies them (Hodgson and Knudsen, 2010). The copy will never be an exact replica of the source, although the degree of similarity may be very high. In several papers by Hodgson and Knudsen (e.g. 2006), replication and inheritance are treated as synonyms. However in a more recent publication, Hodgson (2013) distinguishes between the diffusion of routines from organization to organization (imitation) and their inheritance through spin-offs, adding that the faithful copying of routines through imitation is often more difficult than through spin-offs. Once again, the distinction between vertical replication (which now includes spin-offs) and horizontal replication (which can be found in the Lamarckian but not the Darwinian approach to evolution, as we know) emerges, as it had in Nelson and Winter. The inclusion of spin-offs within the scope of observation pertaining to evolution makes it possible to observe in organizational populations a process of the reproductive type at the interactor level which otherwise would remain the exclusive prerogative of biological populations.

Let us now consider the main features of the approach to selection of the two economists of generalized Darwinism (Knudsen, 2002; Hodgson and Knudsen, 2004, 2010; Hodgson, 2013), especially when they discuss selection which leads to the reconfiguration of an organizational population in relation to the frequencies of routines (replicators) and of the organizations that host them (interactors as object of selection). First of all, selection can only operate in the presence of variety, which originates from a multiplicity of sources. The first source is linked to the fact that routines can be modified within the organization in which they developed and in which they operate, and this brings into play the interaction between the organization and its competitive environment. Variations generated by horizontal replication also lead to an increase in selectable variety and this generative replication takes on two forms. On the one hand, replication can rarely be perfect, and the most interesting errors from an evolutionary perspective are copy errors, which change the cognitive structure of a routine so that the imperfect replica is associated with a different behavior. On the other hand, variation in the routine can be planned by who is responsible for the replication. Finally, variety is also increased by vertical replication through spin-offs: although the authors do not elaborate upon this point, it is reasonable to assume that the distinction between accidental and designed variation may also regard the replication of those routines which involve a spin-off venture and the parent firm from which the spin-off originates. Selection determines the success of advantageous variants (routine differential replication) by virtue of the fact that the organizations that have developed them have a longer lifetime, are more attractive for imitation, and more “fertile” as parent firms of spin-offs. The operation of selection, too, is seen as a process of environmental interaction, although here the concept of interaction is understood (as in Hull et al., 2001) in a very broad sense which is unrelated to the Darwinian mode of evolution or to the Lamarckian concept of interaction as a producer of variation which was admitted into generalized Darwinism. The joint action of variation, replication and environmental interaction (in the two meanings described above) results in selection, and its repetition over time produces the evolution of an industry, as in every complex population system of interactors and their replicators.

Following the analysis conducted by Hodgson and Knudsen, the evolutionary mode that characterizes organizational populations would appear to be of a “mixed” type, consisting of Lamarckian adaptation and Darwinian selection. In practice, things are not so simple. The variations developed by organizations through interaction with their changing environment are adaptive for the same reasons Nelson and Winter declared themselves “unabashedly Lamarckian”. Variations associated with horizontal replication and vertical replication are adaptive too, at least when the difference from the source-routines is not because of a purely random error. At this juncture, selection comes into play. But what selection? Darwin’s natural selection needs reproduction, and reproduction is included in the framework of generalized Darwinism only with regard to spin-offs. More specifically, the spin-offs that are “useful” for natural selection are replicative spin-offs. In this case, an organization that has developed a winning variation is more likely to survive and “gemmate” new ventures that are carriers of the advantageous variation: vertical replication and differential reproduction, that is to say, Darwinian selection. Otherwise, it is possible to speak of selection only in the sense of “survival of the fittest” as the outcome of the competitive struggle, which in fact is the meaning that many economists have given to “natural” selection; however, such a meaning has little to do with the role that natural selection plays in the Darwinian mode of evolution (Paul, 1988; Sammut-Bonnici and Wensley, 2002). As it is difficult to assign such an important role to (replicative) spin-offs that they become the main mechanism in the evolution of industries, it is the Lamarckian approach that dominates, based on adaptive variations and their horizontal diffusion, obviously in its soft or weak version compatible with variety and, in the presence of vertical replication, with natural selection. In conclusion, although Hodgson and Knudsen’s work marks a step forward on that of Nelson and Winter, including with regard to selection (freeing it from the rather unevolutionary idea of differential growth), nevertheless one is forced to acknowledge that their generalized Darwinism has a paradoxical outcome when applied to organizational populations, which is to set out an evolutionary approach that has more the appearance of Lamarckism than that of Darwinism[3].

The rediscovery of the Lamarckian mode of evolution by modern biology

A varied set of phenomena has led in recent times to the Lamarckian mode of evolution being acknowledged once again by a growing number of biologists. We shall describe one, horizontal gene transfer, which is the one that has been known about the longest, and is to date the most extensively analyzed and widely disseminated.

Horizontal gene transfer (HGT), sometimes also referred to as lateral gene transfer, means the transfer of genetic material from one organism to another which allows for the acquisition of novel traits that are unique from inherited traits (Dunning Hotopp, 2011). It is therefore a mode of DNA replication that is completely different from the vertical replication which takes place during cell division (Koonin, 2012). The genetic material subject to transfer includes various types of mobile elements, such as bacteriophages. HGT does not lead to modification of pre-existing genes of the recipient cell but to the acquisition of novel genes and functions. Long thought to be a prokaryote specialty, HGT is now recognized as a mechanism of genetic innovation in eukaryotes as well (Dunning Hotopp, 2011).

The most well-known case of HGT as a mechanism that permits the acquisition of evolutionary variations is antibiotic resistance. When a sensitive prokaryote enters an environment where an antibiotic is present, the only chance for the newcomer to survive is to acquire a resistance gene through a mobile genetic element, that is, by HGT (Koonin and Wolf, 2009). HGT thus represents a bona fide Lamarckian adaptive variation insofar as the transferred gene and the advantageous phenotypic trait associated with it (antibiotic resistance) are acquired by virtue of the organism’s interaction with the environment, from which the genetic material responsible for the HGT comes. The character acquired is then transferred vertically by means of the asexual reproduction of the prokaryotic organism. An HGT variation is not necessarily adaptive: it may actually be deleterious instead. However, the existence of adaptive variations in the HGT planet is well documented (Koonin and Wolf, 2009).

Given that HGT occurs by asexual processes, the organisms involved in the transfer may belong to the same population but also be genetically distant (Bock, 2010). When the transfer links close organisms, HGT appears as the “realistic” form, that is, documentable on a genetic basis, and mediated by the horizontal intra-species replication that Lamarck called imitation. The analogue of this close HGT in organizational populations has attracted the attention – as we have seen – of evolutionary economists (Nelson and Winter, 1982; Hodgson and Knudsen, 2004).

Although empirical research on the phenomena such as HGT has intensified greatly in recent years, much work remains to be done to construct a framework that can replace the one produced by Modern Synthesis (Koonin, 2012). It is possible, however, to make a few general considerations. First of all, given a certain population, genetic variations of an adaptive nature may be added to random mutations in driving the diversity of the population that can be screened by natural selection. Clearly, this is a “mixed” Lamarckian-Darwinian scenario. A second scenario is purely Lamarckian, in the sense that the horizontal and/or vertical replication of a winning adaptive variation changes the population without it being possible to observe any scope for action on the part of natural selection. Yet for any given population, the possibility of a purely Darwinian scenario based on random mutations and natural selection must also be acknowledged (Koonin and Wolf, 2016). In the final analysis, one is led to speak of a pluralism of evolutionary modes.

Concluding remarks: toward a new theory of organizational evolution?

The long journey that we have traced out between Lamarckism and Darwinism and how these two visions have contrasted or interwoven with each other in the study of biological and organizational evolution has concluded with discoveries from the world of microbiology – discoveries that it is no exaggeration to describe as revolutionary. It is from this exciting research frontier that three general implications for anyone interesting in examining industries and their organizations from an evolutionary perspective have emerged:

  • Adaptive variations represent a widely observed phenomenon in the biological world; they are no longer a sort of anomaly of human organizations, or something to which undue emphasis should not be given to avoid somehow detracting from the Darwinian interpretation of organizational evolution.

  • What appeared to be a (Lamarckian) peculiarity of organizational evolution, that is, horizontal replication, is no longer one.

  • Lamarckism and Darwinism are not two mutually exclusive interpretations of evolution but rather two dimensions of evolution – relating to the role that the environment plays respectively in influencing variation and in determining selection – which coexist either separately in time or in combination in any given evolving population.

The temptation to use results of such significance to construct a general theory of evolution – given that the generalization of Darwinism or Lamarckism does not seem to represent a plausible way forward – is strong. More modestly, the intention is to highlight how these two dimensions of evolution – Lamarckian and Darwinian – handled in the light of these results, can be used to understand the evolutionary logic that characterizes specific phases in the history of industries. This concluding thought finds support in a series of more or less recent theoretical and empirical studies that have analyzed these phases. In a certain way, the aim has been to pursue a “bottom-up” approach, following the indication of Buenstorf (2006) in his discussion of how useful generalized Darwinism is as a framework to study competition and industrial evolution.

The first phase corresponds to the emergence of an industry, and specifically the earliest stage of its development, a stage which, as Forbes and Kirsch (2011) point out, has been relatively neglected by researchers. Nevertheless, in the last 15 years a good number of studies have shown how this stage is characterized by the birth of many new ventures and by a high death rate (Klepper, 2009; Furlan and Grandinetti, 2016). In addition, the survival rate is higher for spin-offs, particularly spin-offs which are born from leading parent companies. On this base and with explicit reference to the theory of routines proposed by Nelson and Winter (1982), Klepper and Sleeper (2005) advance the hypothesis that spinoffs inherit knowledge from their parents, where knowledge is considered the organizational counterpart to genes. Of course, not all employees occupy an ideal position in the parent company to acquire the knowledge embedded in organizational routines which are candidates for replication, as Aldrich and Yang (2014), for example, have pointed out. Some studies have instead emphasized the differences that may exist between parent companies and their spin-offs in terms of knowledge endowments and routines, for example in relation to the fact that the new venture seeks to bring to market an innovative idea that has been developed but not implemented in the parent company (Agarwal et al., 2004; Buenstorf, 2006; Furlan and Grandinetti, 2014).

If one wishes to include all these findings in an evolutionary framework, it can be said that in an emerging industry vertical replication of routines predominates over horizontal replication. Here the reference to routines is in the cognitive-genotypic sense attributed to the term by Nelson and Winter (1982) and later by Hodgson and Knudsen (2004). Successful firms develop adaptive variations, grow internally and – if the appropriability of the variations is not high – “reproduce” via spin-offs. Through vertical replication, imperfect replicas may be produced as a result of random errors or a knowledge gap on the part of the founder or of the founding team of the new venture and/or adaptive variations when the spin-off is innovative or in any case exhibits elements of planned diversity in respect of the parent firm. The conditions therefore exist for horizontal (intra-industry) variety and vertical replication that typically see Darwinian selection at work. Curiously, this Lamarckian-Darwinian evolutionary phase of the industry is accompanied by a limited degree of competitive intensity, as there is still a small number of competitors and demand is expanding. In such a situation, the relatively high death rate of firms is not caused by intense competition but by the fact that in the uncertain environment that typically characterizes an emerging industry the resources required to remain competitive (to survive) are not uniformly distributed among the industry’s small population. Put another way, the Lamarckian dimension of evolution observable in this stage must be understood in a weak sense. To unveil the erroneous equivalence of mortality rate and competitive intensity frequently found in the accounts of economic studies, Darwin himself comes to our aid when in his main work he explains that his use of the expression “struggle for existence” must be understood in a broad, metaphorical sense (Pramling, 2009).

The second phase we wish to deal with is the one which is commonly termed “maturity”, during which growth in output gradually falls to zero with the steady saturation of the market, bearing in mind that this stage may be reached by different industries via different patterns as opposed to just one as suggested by the industry life cycle theory (Klepper, 1997). In an industry in its mature phase, competitive intensity is high in relation to the unfavorable condition of both supply and demand. Kim and Mauborgne (2005, p. 4) provide an effective description of the competitive situation of a mature industry by using the “ecological” metaphor of the red ocean (versus the blue one, that is a new market space and a new industry):

In the red oceans, industry boundaries are defined and accepted, and the competitive rules of the game are known. Here, companies try to outperform their rivals to grab a greater share of existing demand. As the market space gets crowded, prospects for profits and growth are reduced. Products become commodities, and cutthroat competition turns the red ocean bloody.

In a “red” or mature industry, the evolutionary mechanisms are the opposite of those described above for a “blue” or emerging industry. Incumbent firms develop adaptive variations, but their employees, including those with a high potential to become entrepreneurs, are not provided with incentives to use the knowledge that they have acquired to create new ventures in a market that has the color of blood. Conversely, horizontal replication abounds in relative terms (to a greater degree the lesser the appropriability of the variations introduced) and with it further variations emerge because of chance or necessity, which correspond to the generative replication which Hodgson and Knudsen (2010) discuss. Both the capacity to introduce the original variations that are necessary and the capacity to imitate them or reinterpret them in an innovative way are not evenly distributed in the “large” population of an industry in its mature phase: evidently, adaptive routines cannot be compared to public goods, to use a metaphor adopted by some biologists to describe the genetic material involved in HGT (McInerney et al., 2011). Ultimately, in this phase of high competition there is a high degree of variety within the industry population (Srholec and Verspagen, 2012; Cafferata, 2016), higher in absolute terms than the same industry could have recorded in its emergent phase, even though the differences between the variants have been reduced (Karniouchina et al., 2013). Therefore, it would appear that the premises for selection being able to operate exist, as suggested by the correspondence between high competition and high selective pressure which is usually postulated. But what type of selection would operate in an industry context like the one described? Certainly not Darwinian selection, which requires vertical replication, nor the selection that Price (1995) in his construction of a general model for selection calls subset selection to distinguish it from the former. Subset selection consists of picking out a subset from a set based on a selection criterion of some kind. However, such a meaning is incompatible with both vertical and horizontal replication, as clarified by Price (1995) himself. In actual fact, the term “selection” can assume no appropriate meaning in the mature phase of an industry, although it seems correct to state that in this phase the industry evolves according to a Lamarckian scheme, in that firms seek to adapt to the changing competitive environment in which they operate. It should be noted that we are speaking of a weak form of Lamarckism, and thus one which is compatible with horizontal variety, but which at the same time can do without Darwinian selection.

In conclusion, a strong Lamarckian vein runs through the picture that emerges. We should accept this evidence instead of remaining trapped in the illusion of a generalized selective action exerted by the environment, and at last set in motion a broad program of theoretical and empirical research into the topic of industry evolution. It is a matter of studying specific industries, identifying the phases of their (non-deterministic) life cycle first and then analyzing each one of them in terms of horizontal replication (imitation), vertical replication (spin-offs) and variation through incumbent firms or new ventures.

The entire analysis set out in this paper has focused on Lamarckism and Darwinism as approaches that have contrasted or interwoven with each other in the study of biological evolution, just as they have in the study of organizational evolution. Despite the profound differences between these two perspectives (both in their strong and weak versions), Darwinian evolution constitutes an eminently gradualistic process, just as Lamarckian evolution does (Rhodes, 1987). To remain within the gradualistic evolutionary perspective, the phases and processes that mark an evolutionary discontinuity in the history of industries as organizational populations have not been considered in this concluding section. Likewise, with regard to the birth of a new industry, we have considered the first phase of its life but not the phase that leads to its birth. Such a lack is obviously a limitation of this paper, and at the same time reminds us that the history of an industry cannot be fully understood without taking into account that it presents discontinuities. Also on this point, evolutionary biology tells us something useful, namely the theory of punctuated equilibria proposed by Gould and Eldrege (Abatecola et al., 2016). Their theory recognizes stasis as a meaningful and predominant pattern within the history of species, interrupted (punctuated) by rapid events of speciation (Eldredge and Gould, 1972; Gould and Eldredge, 1993). This theory, precisely its part concerning the periods of rapid change, has attracted the attention of some scholars of technological evolution. In particular, Mokyr (1990a, 1990b) analyzed a good number of macroinventions defined as technological breakthroughs that constitute discontinuous leaps in technological evolution just like the punctuated emergence of biological species. Conversely, it is not entirely clear whether the idea of punctuated equilibria can be applied to organizational evolution, in combination or not with the technological one (Schot and Geels, 2007; Abatecola et al., 2016), even though there are valuable attempts in this direction (Romanelli and Tushman, 1994; Breslin, 2014). In other words, there is not yet a theory capable of explaining the appearance of organizations similar to those organisms that a great geneticitst named “hopeful monsters” (Goldschmidt, 1933), that is to say, organizations that are be able to create a new industry, or to start the radical change – after a phase of gradualistic evolution – of the industry in which they are incumbents or new entrants (Buenstorf, 2016).

Disclosure statement: No potential conflict of interest was reported by the author.

Notes

1.

Another important aspect of the way in which Nelson and Winter (1982) interpret variations lies in their considering them the result of search processes guided by specific routines which are superordinate in respect to routines that are modified (routine-guided, routine-changing processes). With regard to this point, here too, the influence of the behavioral theory of the firm by Cyert and March (1963) is clearly in evidence.

2.

However, several studies on organizational routines have highlighted that the specific nature of routines confer to them a high degree of stickiness making their exact replication a very difficult task (e.g. Becker, 2005; Pentland and Feldman, 2005). The availability of a template (as in the case of intra-organizational replication) facilitates the replication process and increases the chances to obtain a good copy of the routine (Szulanski and Jensen, 2004).

3.

Conversely, the framework of generalized Darwinism, when applied to biological populations, corresponds to the strong Darwinism of the Modern Synthesis.

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Acknowledgements

The author wish to thank his friend Claudio Schneider, professor of cell biology. He introduced me to the recent discovery that both Darwinian and Lamarckian modes of evolution are important in helping to explain biological evolution, and prompted me to leverage this paradigm shift to improve our understanding of how industries evolve.

Corresponding author

Roberto Grandinetti can be contacted at: roberto.grandinetti@unipd.it

About the author

Roberto Grandinetti is a Full Professor of Management at the Department of Economics and Management, University of Padova, Italy. His main research areas are the evolutionary paths of geographical clusters, interfirm relationships and knowledge-intensive business services. He has published books and articles in journals such as Human Systems Management, Industrial Marketing Management, International Journal of Operations and Production Management, Production Planning and Control, The Learning Organization, Entrepreneurship and Regional Development, Knowledge Management Research and Practice, Journal of Knowledge Management, European Business Review, Competition and Change and International Journal of Entrepreneurial Behavior and Research.