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Evolutionary theory framework to understand change in organizational routines Marco de la teoría evolutiva para entender el cambio en las rutinas organizacionales

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This conceptual theoretical article aims to present a framework to analyze aspects related to the change of organizational routines from the perspective of evolutionary theory. Evolutionary Theory was chosen because it presented an alternative to
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   ISSN 0798 1015 HOMERevista ESPACIOS  ! ÍNDICES  ! A LOS AUTORES  ! Vol. 38 (Nº 24) Año 2017. Pág. 26 Evolutionary theory framework tounderstand change in organizationalroutines Marco de la teoría evolutiva para entender el cambio en lasrutinas organizacionales Luciano Ferreira da SILVA 1; Arnoldo José de Hoyos GUEVARA 2; Belmiro do Nascimento JOÃO 3; Paulo Sergio Gonçalves de OLIVEIRA 4; Karina Ribeiro FERNANDES 5 Recibido: 04/12/16 • Aprobado: 17/12/2016 Content 1. Introduction2. Analyses of organizational routines by evolutionary theory3. ConclusionsReferences ABSTRACT: This conceptual theoretical article aims to present aframework to analyze aspects related to the change of organizational routines from the perspective of evolutionary theory. Evolutionary Theory was chosenbecause it presented an alternative to ContingencyTheory and Ecology of Organizational Populationsbecause their assumptions do not defend the contingentdeterminism, or the inertia of the populationrespectively. As a result, we assume that the routines inthe Evolutionary Theory of organizations can beclassified into: isomorphic, or emerging. Furthermore,We advocate organizations as living beings try to moveaway from the initial forms seeking greater ability tosurvive. Keywords: Evolutionary Theory, Routines,Organizational Theory, Ecology of Organization. RESUMEN: Este artículo teórico conceptual pretende presentar unmarco para analizar aspectos relacionados con elcambio de rutinas organizativas desde la perspectiva dela teoría evolutiva. La Teoría Evolutiva fue elegidaporque presentó una alternativa a la Teoría deContingencia y Ecología de las PoblacionesOrganizacionales porque sus supuestos no defienden eldeterminismo contingente, ni la inercia de la poblaciónrespectivamente. Como resultado, asumimos que lasrutinas de la Teoría Evolutiva de las organizacionespueden ser clasificadas en: isomorfas o emergentes.Además, abogamos por que las organizaciones comoseres vivos traten de alejarse de las formas inicialesque buscan una mayor capacidad de sobrevivir. Palabras clave : Teoría Evolutiva, Rutinas, TeoríaOrganizacional, Ecología de la Organización 1. Introduction The world is going through changes described by some as the Fourth Industrial Revolution(Schwab, 2016). Innovations in various areas impact the way we produce and consume, which  also changes the perspective on how to make decisions about resource allocation. The questionis no longer whether changes will cause a rupture, but when breaks in the current system willappear. Local and global changes are demanding, require new perspectives, and such changescan have almost instantaneous effects throughout some sectors.Ideally, a discussion of the relationship between organizational forms should be based in anenvironment of certainty, while still taking into account a changing environment (Ring, 1997;Nelson & Consoli, 2010; Hodgson, 2010; Knight, 2012). Moreover, the prospect of inertia andisomorphism is only suitable for stable and predictable environments, which is rare for manycompanies competing in a globalized environment during intense technological change.Brown, Squire, and Blackmon (2007) describe that the isomorphism of manufacturing methodsis labeled many times as best practices, which are based on the use of a specific set of techniques like quality management and continuous improvement, or chain managementprovision and use of a packaged set of practices across operations function. As Nelson and Dosi(1994) described, a level of efficiency presented by an organization can serve as a benchmark,which other firms may mimic. Nelson and Winter (2005) state that the perfect copy is possiblein evolutionary models, and for such a situation, one must simply perform identical routines.The routines work as institutional memories and can be of two types: technical routines andprocedures. The first is related to decisions on how to produce things. The second is related todecisions about daily activities, such as firing or hiring procedures (Nelson & Winter, 2005; Witt,2008). Routines that govern the behavior at any time are a reflection of that time, but thecharacteristics of existing routines can be understood as a reference to the evolutionary processby which they have been shaped (Becker, 2004; Nelson & Winter, 2005). Therefore, the unit of analysis for understanding the allocation of resources is not the firm, butthe institutionalized routines and become the main physical evidence of the institutions(Williamson, 2000; Becker, 2004). Additionally, here we do not analyze organizational reality asstatic, being conducted by a substantive and deterministic rationality. The reality of organizations consists of decisions based on limited rationality to solve the resource allocationproblems. Since this occurs in both stable, predictable environments, and unstable, uncertainenvironments, the results from this process become stochastic.Thus, we are motivated by the same question that motivated Hannan and Freeman (1977),Carroll (1993), Nelson and Winter (1982), and Hodgson (2010), among other researchers whoadopted the sociology of organizations as a research subject and biology as a metaphor. Weask: How do pressures from the external environment interfere with the choice of organizationroutines? In this same type of research that examines organizational forms and internal andexternal factors as determinants of survival, we include: Schumpeter (1934), with his work onthe economy and society; Simon (1956), on rationality and the structures of the organizations;Hannan and Freeman (1977; 1984), on the Ecology of Organizational Populations; Institutionaltheory described by Meyer and Rowan (1977), DiMaggio and Powell (1983), and Williamsson(2000); in addition to the theory of contingency by Lawrence and Lorsch (1967). Theseresearchers have addressed the need for the company to escape the isomorphism, wherepossible, and determine a new reality for each organization to adapt its processes and structureto the demands of the external environment. Thus, the use of biological concepts as ametaphor for organizational studies assists in understanding events and discussion as thecharacteristics of transferability or mutation and extinction of firms (Venkatachalam, 2008;Lejano & Stokols, 2013).Thus, the proposal of an evolutionary theory of organizations becomes a useful alternative toContingency Theory and Ecology of Organizational Populations because their assumptions donot defend the contingent determinism, or the inertia of the population respectively.Evolutionary theory proposes a longitudinal analysis based on the Path Dependence can identifyevolving capacities in organizational structures and routines (Dobusch & Kapeller, 2009; Heine& Rindfleisch, 2013; Cecere, 2014).  The paradigm considered in this research study is not functional regarding its rational-instrumental aspect. Although it accepts a certain level of functionalism in its features, theessence of the paradigm is interpretationist because it uses phenomenology to explainevolutionary issues (Burrell & Morgan, 1979). The analysis procedure undertaken in this studyprovided a critical interpretation of the evolutionary framework understood as a hermeneuticalexercise. This approach allowed the use of inter-subjectivity and reflection in buildingarguments based on the critique of the theoretical approaches used (Weber, 2015).Therefore, we follow an analysis based on a biological metaphor for the sociology of organizations, which is tautologically an abstraction of the evolutionary assumptions andintentionality of individuals (Powell & Wakeley, 2003; Hodgson & Knudsen, 2012). Note that ourgoal is to defend an Evolutionary Theory to be applied to an analysis of organizations.Thus, inertia may lead to entropy and innovation may lead to new routines. These novelcombinations may also cause changes in environmental factors, such as the Internet for thecompany related to the field of telecommunication. Note that this process becomesunpredictable for various reasons such as the subjectivity of the actors involved in the processand rationality limited by the complexity of the environment. This unpredictability causesevolution to be categorized as a stochastic process. On the other hand, intentional inertialpressures as those from regulatory laws imposed by the government, can lead to seriousstructural problems as seen in Brazil when the market reserve was imposed until 1990. 2. Analyses of organizational routines by evolutionarytheory The survival of the organization does not always depend on the ability to maintain anisomorphic organizational structure (Kim & Mauborgne, 2005; Kim & Mauborgne, 2014; Senge,2014) since this has the tendency to only be mimicry of effective models. Therefore, change asa longitudinal phenomenon causes research to adopt the evolutionary paradigm, and thisfacilitates research for the analysis of social reality of contemporary organizations (Carroll,1993; Dolfsma & Leydesdorff, 2010). It is worth remembering that a theoretical perspective isan abstraction that can lead to insights, if the conditions laid down in the respective model areappropriate. Thus, the use of biological concepts as a metaphor for organizational studiesassists in understanding events and discussion as the characteristics of transferability ormutation and extinction of firms. 2.1 Evolutionary theory of organizations The society is formed by organizations of all kinds, as they are required agents to generategoods and services that meet demands. In addition, internal and external factors create a hiveof activity for a variety of companies that aim for the same production processes. In thiscontext, the form of allocation of resources becomes an important issue when dealing with thefunctioning of public or private organizations. Therefore, administrators of these organizationsmake decisions, deliberate or not, that impact results as well as the condition of micro- andmacro-environmental factors.An important point in this decision process for allocating resources is the inability to control allthe factors of production and consumption. For example, one must take into account that thedecision guided by a predictable environment is not accurate. So this limited rationality createsthe costly need to adapt to successive eventualities arising from the unpredictability of aprocess.Nelson and Winter (2005) call all behaviors that are regular and predictable, routines. So it canbe said that the actions of individuals and firms are often guided by relatively simple decisionsand procedures. However, these institutionalized routines ensure a situation of predictability asthe factors and stakeholders remain in the same conditions.  Several researchers describe the routine as equivalent to the gene, which is the unit of analysisin evolutionary theory (Nelson & Winter, 2005; Hodgson, 2013). When observing the evolutionof species, we can use the gene (genetic code) as the unit of analysis (Ridley, 2009). The geneensures a predisposition for certain characteristics and its development determines thephenotype. Thus, the genotype can be described as the individual alleles assembly (DNA), orthe genetic code that establishes a predisposition for some characteristics. Thus, the geneticmakeup of an individual or a population is determined by an inherited capacity. This alsoenables the transmission of characteristics for future generations.In turn, the resulting phenotype influences and is influenced by environmental conditions, i.e.,the environment will influence the development of pre-arranged characteristics (Studart-Guimaraes, Lacorte & Brasileiro, 2005). So the phenotype is expressing the transferred geneticcharacteristics, i.e., physical characteristics are exhibited. Therefore, the same genotype canexpress different phenotypes depending on their interaction with the environment. Based onthese ideas we can draw an analysis model for organizations using biological concepts of evolution as a metaphor.Thus, the firm is not a valid unit of analysis, but only the means of evidence of the routine thatis independent of an individual, and the most relevant group or species for research on thesurviving institutions (Hodgson, 2003; Becker, 2004). This view is similar to the analysisproposed by Hannan and Freeman (1977) on the theory of Ecology Organizational population.As can be seen, the routines as the unit of analysis are relevant to organizational studies.However, this research rejects the view that the gene is analogous to the routine. We arguehere that the routine is only a physical representation of the underlying genetic predisposition,i.e., the routine is the phenotype. Just as it was pointed out by Stoelhorst (2014). In turn, thegene is directly related to the core business of a population (field of activity). Hodgson & Knudsen (2012) emphasize that “Any infection or contagion immediately affects the phenotype,not the genotype”, which is an indication that our idea is tenable, even though the authors usedthis thought to justify the routine as genotype.The routines work as institutional memories and can be of two types: technical routines andprocedures. The first is related to decisions on how to produce things. The second is related todecisions about daily activities, such as firing or hiring procedures (Nelson & Winter, 2005; Witt,2008).Routines that govern the behavior at any time are a reflection of that time, but thecharacteristics of existing routines can be understood as a reference to the evolutionary processby which they have been shaped (Becker, 2004; Nelson & Winter, 2005). Nevertheless, despitethe dominance of certain repertoires of routines, which restrict the behavior of firms, they useonly a small fraction of the possible options.Arrow and Hahn (1971) said that the set of production possibilities is the state description of knowledge of a firm or the possibilities of transforming inputs into goods. Nelson and Winter(2005) defined the production of the firm together as achievable input-output combinations inall possible levels and combinations of activities known by the firm.As Nelson and Dosi (1994) described, a level of efficiency presented by an organization canserve as a benchmark, which other firms may mimic. Nelson and Winter (2005) state that theperfect copy is possible in evolutionary models, and for such a situation, one must simplyperform identical routines. However, these authors also point out that innovation is a change of routine, similar to Schumpeterian innovation vision. Thus, based on the selection and imitationof routines, Evolutionary theory explains the isomorphism or inertia in adopting productionpractices (Hodgson, 1994; Becker, 2004; Nelson & Winter, 2005; Conceição, 2007; Jiang, Gong,Wang, & Kimble, 2016).Therefore, the unit of analysis for understanding the allocation of resources is not the firm, butthe institutionalized routines and become the main physical evidence of the institutions(Williamson, 2000; Becker, 2004). This is similar to the theory of Ecology of Organizational  Populations, which says that the routines are determined by the species (core business) and theecosystem in which they are inserted (Hannam & Freeman, 1984). Remember that theorthodox view states that the institutions determine the market routines based on a substantiverationality, which is used to determine balance (Samuels, 1995).However, the orientation of Evolutionary theory is contrary to the individualistic utilitarianismview that evaluates the social welfare in terms of individual utility. This guidance should befocusing on real human needs and the design of the economy as an open system evolving intime, which is subject to cumulative causation. This causation is studied in evolutionary theorythrough the concept of Path Dependence (Hodgson, 1994; Cecere et al  ., 2014.). Thus, it isnecessary to assume that the analysis of the routines should take into account that theeconomic environment involves disputes, antagonisms, conflicts and uncertainties (Alchian,1950; Williamson, 2000; Knight, 2012).The concept of Path Dependence is represented by a model of social causality that is dependenton the historical trajectory. Therefore, Path Dependence is presented as an analysis tool forevolutionary researchers. It is used to understand the value of temporal sequences and thedevelopment of events and social processes cumulatively (Hall & Taylor, 1996; Cecere, 2014),as this it is a system based on historical causality.So we adopt the view that substantial changes occur that alter the activities of firms and,consequently, their ability to get results or interact in the market. The firms’ adoption of asuccessful model, institutionalized by environmental conditions or by bargaining power intransactions under a Porterian perspective, is an important action for organizations (Porter,2008). The practice of copying operational models can generate an isomorphism inorganizations and in the form of management (Hannan & Freeman, 1984).Brown, Squire, and Blackmon (2007) describe that the isomorphism of manufacturing methodsis labeled many times as best practices, which are based on the use of a specific set of techniques like quality management and continuous improvement, or chain managementprovision and use of a packaged set of practices across operations function. In addition, firmshave a repertoire of routines – see figure 1, but also the search for new routines, ororganizational arrangements, which determines an active role for the administrator in theeffectiveness of the organization (Feldman, 2000). This theory agrees with the theory of contingency by Laurence Lorsch (1967), in opposition to the Evolutionary Theory, in which theprocess is understood as stochastic and not controlled as the contingentialists defend. Figure 1. Ecological System versus Evolutionary System
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