Organizational Evolution

Conceptual Overview

To be recognized as evolutionary, attempts to understand processes of organizational change must be based on a combination of at least some of the following seven claims: (1) Evolutionary change is a process that requires little or no foresight; (2) organizations change is a consequence of problem-driven, trial-and-error search; (3) search is primarily local, conducted in proximity to current knowledge domains; (4) organizations learn by encoding past experiences into routines that guide and constrain future behavior; (5) routines evolve through variation, selection, and retention processes primed by external or internal stimuli; (6) organizational evolution is embedded in an environmental (e.g., industry) evolutionary process characterized by variation, selection, and retention processes based on the creation, growth, and decay of organizations and new organizational forms; and (7) the evolution of organizations and their environments unfolds in highly interactive and complex ways, impinging on each other's variation, selection, and retention processes.

The general view that emerges from the composition of these various claims corresponds to Lindblom's view of organizations as entities that “muddle through” in search of improvement of their set of interdependent operational and administrative routines. A variety of learning processes may be triggered, possibly based on performance feedback, as well as on deliberate investments in internal sensemaking and external screening. Levitt and March have argued that organizational learning is routine based, history dependent, and target oriented. Organizations learn by encoding inferences from history into routines that guide behavior. According to this view, processes of material transformation, encoded in operating routines, and processes of organizational learning and change, or dynamic capabilities, cannot be understood separately but only in reference to each other and as dependent from a combination of experiential (on-line), as well as deliberate (off-line), learning processes. The logic of mutual constitution that defines the relation between production, learning, and organizational change can be the starting point for developing a truly evolutionary understanding of organizations.

The idea that an organizational system can respond adaptively to the challenges posed by environmental change by reproducing internally the basic dynamics of an evolutionary process is not new. The way in which the stable (but not fixed) elements of an organization change over time is described as a continuous process of generation of ideas for improvement of the status quo (variation), of evaluation and screening of the change proposals to identify those worthy of implementation (internal selection), and finally, of translating the selected ideas into either novel or adapted routines (retention).

The implications of these three basic evolutionary subprocesses are recurrently documented in contemporary organizational research. The typical example of processes responsible for producing variation is innovation. Innovations can differ widely. They may take the form of the appearance of a new organizational form. They could concern the emergence of a new technology. Marginal adjustments of uncountable operating routines inside each organization might signal innovation, or innovation could arise from largescale legal and institutional change. Both within and among organizations, processes of selection may be triggered by rational evaluations of expected consequences, but more often than not, they will be triggered by competition for scarce resources, as well as by pressures to conform to institutionalized norms. Finally, organizational processes of retention have been associated frequently with specialization, standardization of roles and processes (routinization), and the stabilization of decision-making processes.

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