Evolutionary Processes and Patterns of Core Business Change

Abstract

Abstract During much of this century, corporate growth and diversification have been central objectives for managers of American corporations. Yet, there is a paucity of systematically developed theory and empirical research addressing the evolutionary dynamics of firms’ core businesses. This is largely the result of conceptual obstacles and the difficulty of conducting longitudinal research (Ginsberg, 1988). Addressing this deficit requires the advancement of a process theory of core business change that explains whether, for example, the occurrence of particular kinds of changes early in a process makes a difference in the overall pattern of change or whether certain sequences of events provide more rapid results. In this study, we develop an evolutionary process model of core business change that attempts to specify the forces producing core business elaboration and extension events. We refer to the model as evolutionary because it specifies processes of variation, selection, and retention over time (Campbell, 1965b). In the model, theories of organizational routines (Nelson and Winter, 1982) and organizational learning (Cyert and March, 1963; Levitt and March, 1988) are used to explain patterns of momentum (Amburgey and Miner, 1992; Miller and Friesen, 1980), imprinting (Stinchcombe, 1965), inertia (Hannan and Freeman, 1977, 1989), and change or, in the extreme, reorientation (Tushman and Romanelli, 1985) in core business change.