Research
 

The selective pressure on the development of products and production technologies is not exerted directly by customer demand, but by its interpretation in a company. The decisions on technical development usually take place a long time before a product reaches the market on the basis of calculations about profitability in management accounting. The profitability can depend on various factors, including production facilities, supply networks, intellectual property, distribution channels and competition. The calculations that lead to decisions on an investment tend to be very complex. Nevertheless, they do not represent fully realistic market conditions, but only a simplification for the sake of reliable estimates. In a conventional simple evolutionary model of innovation, technical development does not express expert knowledge. In addition, it adapts as much to the shortcomings of the financial calculations as to the prognostic information they are based on. If the selective pressure from management accounting is high, technical development is likely to focus on the exploitation of the missing cost factors in the calculations and neglect the reality of market demand. In practice, innovations in research and development are not propelled by arbitrary change. Expanding the conventional model, the expertise in research and development can be represented by introducing intentional improvement operators. These operators show a potential to avoid unwanted directions of adaptation, which gives reason to believe that common sense in research and development play an important role in avoiding detrimental effects of incomplete cost calculations.

Evolutionary approaches in economy are strongly related to the idea of a dynamic relationship between supply and demand on a free market. Consumption and production are interdependent: Consumers react to price changes and the introduction of new products; producers offer goods up to the extent to which selling them is profitable. Technical development, in terms of new products as well as new production methods, is an adaptive process that can be compared to natural evolution, which, according to Darwin, advances through repetitive arbitrary changes under selective pressure from outside (see e.g. Hodgson 1993). Finding exact economic correspondences for the reproductive processes in nature, the genetic carriers of information and the genotype of adaptation is rather difficult. The general principle of evolution as an adaptive activity without intentional direction, however, applies very well to the dynamics business on an unrestricted market (see e.g. Broesel t al. 2007, Beck-Sickinger/ Petzold 2009).

The idea to describe the development of trade and industry similar to the biological models of natural adaptation and selection dates back to the late nineteenth century (Marshall 1890, Veblen 1898). In the twentieth century, Joseph Schumpeter has been very influential with his evolutionary approach to innovation (Schumpeter 1912). Schumpeter describes innovation as a source of continuous change, driven by the search for competitive advantage of the companies on a market. After several decades in which economic research showed little interest in evolutionary models, the approach regained increasing popularity during the 1980ies (Hodgson 2005), mainly due to the seminal paper by Richard Nelson and Sidney Winter (Nelson/ Winter 1982).

Evolutionary economics is a relatively open field of research, which has been influenced by various scientific concepts, such as bounded rationality or complexity studies (Simon 2005, Frenken 2006). It is concerned with both microscopic and macroscopic phenomena of economic adaptation and their dependency on socio-cultural or administrative structures. It is characteristic for evolutionary economics to assume that the economic development cannot be guided and controlled (comp. Dopfer 2008, Winter 2005). Nevertheless, it is possible to influence the process of their adoption on a market, which depends on their representation, distribution and the selective pressure exerted on them.