Evolution and firm formation

Harald Bathelt and Johannes Glückler

Chapter 10 in Concise Introduction to Relational Economic Geography, 2026, pp 122-135 from Edward Elgar Publishing

Abstract: Firms’ action and interaction not only depend on their embeddedness in localized institutional contexts, but are also shaped by prior decisions and these decisions’ outcomes. A decision to invest in a specific technology and location creates sunk costs and is difficult to reverse. It therefore impacts future decision-making. Consequently, a relational approach is inherently also an evolutionary approach. Whereas traditional concepts of economic action are static or view changes in contexts as external events, evolutionary approaches recognize that past decisions frame the options for likely actions in the future. The lasting effects of historic economic structures and past decisions have stimulated the development of evolutionary economics and organizational ecology, which are important conceptual reference points for relational economic geography. This chapter discusses the principles and key concepts of evolutionary thinking and integrates them in a relational understanding of how firms establish and develop in space-time.

Keywords: Entrepreneurial ecosystem; Evolutionary economic geography; Evolutionary economics; Organizational ecology; Spin-off; Start-up (search for similar items in EconPapers)
Date: 2026
ISBN: 9781802204971
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