Strategic Consequences of Co-evolutionary Lock-in: Insights from a Longitudinal Process Study

Modern economic theory recognizes that competition between alternative technologies is under certain conditions characterized by ‘increasing returns to adoption’ (e.g., Arthur, 1987, 1989, 1994). Arthur points out that the process involved is ‘…non-ergodic — or more informally we can say that it is path dependent in the sense that the outcome depends on the way in which adoptions builds up, that is, on the path the process takes’ (1987, p. 438). An important aspect of the competing-technologies adoption process is that it is ‘…inherently unstable, and it can be swayed by the cumulation of small historical events, or small heterogeneities, or small differences in timing’ (1987, p. 438). And, an important theoretical implication of this is that ‘What we have in this simple model is order (the eventual adoption-share outcome) emerging from fluctuation (the inherent randomness in the arrival sequence). In modern terminology, our competing-technologies adoption process is therefore a self-organizing process’ (1987, p. 438). As such, models of increasing returns to adoption and path dependence can be related to theory about complexity and chaos in the physical sciences (e.g., Kauffman, 1993; Prigogine, 1981, 1996; Nicolis and Prigogine, 1989).