Schumpeter, Marshall, and Neo-Schumpeterian Evolutionary Economics

The focus of evolutionary economics is a process of continuous and irreversible economic and organizational change over time. Currently there is no agreement on the explanation of economic evolution. From the perspective of the history of economic thought, at first the theoretical approaches of Schumpeter and Marshall with regard to economic development or evolution are dealt with in detail. For both authors technical and economic innovations are the engine of economic change. According to Schumpeter, they are created through newly established firms as the agents of change. For Marshall, innovations and economic development are a side effect of the manufacturing process and the division of labour. Technical and economic changes go off both gradually (Marshall) or discontinuously (Schumpeter). After that, a concept of neo-Schumpeterian evolutionary economics is elaborated. Evolution is understood as a process of change that leads to the adaptation of complex systems, the result of the causal interaction between variation, selection and retention of variety leading to continuity over time. It has gained wide application to the theory of innovation and later to resource-based theories of the firm. Modern evolutionary economics includes the determinants of new knowledge and innovations into its analysis. Business enterprises not only follow their routine behaviour, in a dynamic view they also show capabilities to restructure their given resources and to build new ones. To sum up, technical and economic evolution are both the result of the unintentionalmarket selection through competitive forces of the environment, and of the intentional, voluntary entrepreneurial choices, based on the firm’s resources and dynamic capabilities.