The pigeon breeders' cup: a selection on selection theory of economic evolution

Both the evolutionary literature in economics and the competitive advantage literature in business strategy point to the importance of a firm's replication/selection mechanisms in developing and sustaining inimitable organization capabilities, competencies, competitive advantage and economic rents. This mechanism can be conceived of as a hierarchy of organization processes where primary, added-value processes are nested within control processes, which are nested within deployment processes, that are nested within learning processes. The evolution of this organization of processes and their complementary assets along the added-value chain within the firm and among firms is the result of the legacy of the past process-thinking skills of the firms in the added-value chain and their present thinking skills. Served and factor markets select on the dynamic effects and products of these processes and, hence, ultimately on the phenomenon that create the processes (process thinking). This selection on selection (SoS) theory is used to explain Schumpeterian ?creative destruction? at a new level of analysis, extend the satisficing principle, and identify a new stream of potentially promising empirical research. Copyright Springer Verlag Berlin/Heidelberg 2003