In what sense do firms evolve?

Does evolutionary theory help, for a theory of the firm, or, more widely, a theory oforganization? In this paper I argue that it does, to some but also limited extent.Evolutionary theories of economies, and of culture, have acquired considerablefollowing, but have also been subject to considerable criticism. Most criticism has beenaimed at inappropriate biological analogies, but recently it has been claimed that a‘universal Darwinism’, purged of all such mistaken analogy, is both useful and viable.Why should we try to preserve evolutionary theory, and will such theory stand up tosustained critical analysis? How useful is it for theory of the firm? Evolutionary theoryappears to be the most adequate theory around for solving the problem of agency andstructure, avoiding both an overly rational, managerial ‘strategic choice’ view oforganizations and a ‘contingency’ view of organizations as fully determined by theirenvironment.[...]