Firm transformation: advancing a Darwinian perspective

Purpose – The paper advocates a Darwinian explanation of the process of firm transformation. Existing but generally opposing views related to the selection‐adaptation debates are united to consider the dialogic nature of both approaches. It is argued that a Darwinian approach, as opposed to a neo‐Darwinian or Lamarckian approach, provides the means to scale the sides of a debate that has for too long divided scholars interested in firm and industry transformation. Design/methodology/approach – The paper addresses three specific issues to develop its Darwinian argument. First, the various works of Geoff Hodgson that have for many years advanced Darwin's evolutionary ideas are used to argue the nature and application of Darwinism in the socio‐economic domain. Second, the nature of what constitutes the elements of firm‐environment interaction is considered to establish basic areas of focus through which the process of firm transformation is more understandable. Finally, the construct absorptive capacity is likened to a mechanism of transmission through which the learning processes associated with the acquisition of favoured variations can be reconciled with the generic evolutionary processes of variation, selection, and retention. Findings – To understand the process of firm learning, the role of habits and routines must be outlined in specific detail. They cannot be assumed to perform interacting and replicating roles simultaneously. To do so undermines the fundamental qualities of an evolutionary theory. Originality/value – The preliminary framework advanced takes us beyond the Darwinian‐Lamarckian debate and provides elements of focus from which a greater understanding of the process of firm/industry transformation is possible.