A Naturalistic Approach to the Theory of the Firm: The Role of Cooperation and Cultural Evolution

Christian Cordes, P. J. Richerson, R. McElreath and P. Strimling

Papers on Economics and Evolution from Max Planck Institute of Economics, Evolutionary Economics Group

Abstract: One reason why firms exist, this paper argues, is because they are suitable organizations within which cooperative production systems based on human social predispositions can evolve. In addition, we show how an entrepreneur – given these predispositions – can shape human behavior within a firm. To illustrate these processes, we will present a model that depicts how the biased transmission of cultural contents via social learning processes within the firm influence employees’ behavior and the performance of the firm. These biases can be traced back to evolved social predispositions. Humans lived in tribal scale social systems based on significant amounts of intra- and even intergroup cooperation for tens if not a few hundred thousand years before the first complex societies arose. Firms rest upon the social psychology originally evolved for tribal life. We also relate our conclusions to empirical evidence on the performance and size of different kinds of organizations. Modern organizations have functions rather different from ancient tribes, leading to friction between our social predispositions and organization goals. Firms that manage to reduce this friction will tend to function better.

Keywords: Theory of the Firm; Cultural Evolution; Entrepreneurship; Firm Performance; Cooperation (search for similar items in EconPapers)
JEL-codes: L25 D21 M13 M14 C61 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec, nep-cbe, nep-ent, nep-evo, nep-hpe, nep-pke and nep-soc
Date: 2006-06
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Journal Article: A naturalistic approach to the theory of the firm: The role of cooperation and cultural evolution (2008)
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