former Evolutionary Economics Group

'Scientific management' is the label Frederick Taylor attached to the system of management devised by him. In this article we present our discovery of very different 'scientific' management principles that were developed roughly concurrently with Taylorism by German physicist Ernst Abbe, then owner and managing director of the Carl Zeiss optical instruments company. Abbe's management principles as well as the social philosophy underlying them are accessible to present-day theorists because he laid them down both in the statutes of a foundation he founded and in an extensive commentary on the statutes. These original accounts offer a remarkable opportunity to enrich our current understanding of how managers can create and recreate firm capabilities that allow firms to enjoy a long-term leadership position. Abbe develops an early account for managing a science-based firm and securing its long-term competitiveness, giving detailed prescriptions with regard to the kind and scope of firm activities, its organizational setup, and its labor relations. Abbe's management principles exhibit striking parallels to important contemporary theories of organization such as the Resource-Based Theory of the Firm and the related Dynamic Capabilities Theory of the Firm, and are even today able to indicate issues that warrant further theoretical elaboration. In this article, we give an outline of Abbe's thought, highlight some of its most characteristic features, and set them into relation to present-day management theory.

Evolutionary Economics still lacks a well-developed normative branch, i.e., a concept of socio-economic or cultural 'progress' that allows to derive social welfare judgments on alternative economic processes and states and thereby on (political or legal) institutional design. This paper develops an elementary individualistic contractarian framework, based in particular on the work of the political philosopher John Rawls, that may serve as a first step towards such a concept. The hypothesis will be developed that the Rawlsian approach, if properly interpreted, is compatible with an evolutionary 'world-view'. This means in particular that it can be made weather-proof against a general 'Humean' and a more specific 'Hayekian' objection to the social contract methodology. In that case it can serve as a basis which may eventually allow to develop well-founded hypothetical statements about the relative 'goodness' of alternative economic processes and states, defined from the viewpoint of the individuals concerned. In the end, a normative theory could represent one pillar of an overarching evolutionary theory of economic policy making, in addition to its positive and its instrumental analysis.

The importance of knowledge - more in particular of its creation and diffusion - for (regional) economic development is widely acknowledged. Knowledge is one of the most important sources of economic development. With an evolutionary perspective, the process of knowledge diffusion can be investigated as an emergent process of the formation of networks in a complex context. The concept of the Regional Innovation System (RIS) offers a possible framework to connect the generation and diffusion of knowledge with regional economic growth. For regional economic development to benefit from the advantages of proximity requires the continuous renewal of networks and interactive learning. Human action is a learning process, susceptible to the influences of time, place and human contacts.
In the process of diffusion it is necessary to give more attention to the specific function of the 'nodes' in networks. These nodes can be distinguished in various kinds of 'sources' of knowledge (like universities, laboratories of large corporations, or small innovative firms) and 'destinations' (firms or other organisations). Quite often there are intermediate persons or structures acting in the transmission process between sources and destinations. These can influence the content and the configuration of the 'message', the transferred knowledge. Personal and profit motives, but also structural properties like distance and culture (language, religion) influence both the process and the outcome.
The emergence of these networks and the intermediate structures can be viewed as an evolutionary process. The complexity of the multiplicity of relations is related to those contextual conditions of geographical, cultural and organisational proximity that influence both the efficiency and the effectiveness of knowledge transfers. Governments have only a limited power to influence this evolutionary process.

During phylogeny, man adapted for culture in ways other primates did not. This key adaptation is the one that enabled humans to understand other individuals as intentional agents like the self. This genetic event opened the way for new and powerful cultural processes but did not specify the detailed outcomes of behavior we see today. It just provided the basis for cultural evolution that, with no further genetic events, enabled the distinctive characteristics of human cognition. These capabilities can explain the motivational underpinnings of a variety of human inclinations and behaviors, such as a tendency toward cooperation, altruism, or fairness.

published in: K. Dopfer (ed.), The Evolutionary Foundations of Economics, Cambridge: Cambridge University Press, 2005, pp 339-364.

We demonstrate that one should not expect convergence of the proposals to the subgame perfect Nash equilibrium offer in standard ultimatum games. First, imposing strict experimental control of the behavior of the receiving players and focusing on the behavior of the proposers, we show experimentally that proposers do not learn to make the expected-payoff- maximizing offer. Second, considering a range of learning theories (from optimal to boundedly rational), we explain that this is an inherent feature of the learning task faced by the proposers, and we provide some insights into the actual learning behavior of the experimental subjects. This explanation for the lack of convergence to the subgame perfect Nash equilibrium in ultimatum games complements most alternative explanations.

published in: Industry and Innovation, 13 (2006): 21-39.

This paper presents a method that allows local industrial clusters to be identified and applies this method to Germany. The method is applied to all 3-digit manufacturing industries in Germany. The results are used in two ways. First, they provide some information about which industries are clustering and which are not. Second, a complete list of all local clusters that existed in Germany in 2001 and are identified by this method is given. The spatial distribution of these local clusters in Germany is discussed in the light of other studies on Germany.

How relevant is the notion of evolution for economics? In view of the paradigmatic influence of Darwinian thought, several recently advocated interpretations are discussed first which rely on Darwinian concepts. As an alternative, a notion of evolution is suggested that is based on a few, abstract, common principles which all domain-specific evolutionary processes share, including those in the economy. A different, ontological question is whether and, if so, how the various domain-specific evolutionary processes are connected. As an answer, an evolutionary continuity hypothesis is postulated and its concrete economic implications are discussed exemplarily for the theory of production.

Given the significance of technology in the course of socio-economic evolution, the driving forces behind the continuous accretion of technological knowledge deserve particular attention. This paper suggests a hypothesis about the motivational underpinnings of human technological creativity that is able to explain some long-term developments in human labor and technology. These motivational underpinnings are considered to being similar across human beings. They can therefore be assumed to imply some commonly shared elements of human preferences or wants.

The paper develops a simulation method that can be used to develop knowledge inductively and test hypotheses about causal processes in social systems. Combining existing simulation methods in novel ways, it describes in detail the uses and requirements for carrying out history-friendly simulation experiments. The second part of the paper illustrates the value of the methodology by developing inductively information about the precise causal impact of (1) the initial number of organic chemists at the start of the industry (1857) and (2) the responsiveness of the German university system on the German global market share in the synthetic dye industry in 1913.

If production means generating output by application of specific inputs, then production is a ubiquitous phenomenon in nature. This observation invites a double comparison. First, physical production processes in nature can be compared to those in the economy. The differences highlight cumulative changes in technology which explain how specific modern forms of human production have become feasible through cultural evolution. Second, such a 'naturalistic' perspective on production can be compared to, and sheds new light on, the remarkably different perspective in economics which interprets production not as physical processes, but as a problem of human social interaction and coordination.