Evolution of institutions and organizations

Abstract

Some economists argue that institutions are the most important factor affecting variation in economic growth. However, there is a need to better understand how and why institutions emerge and change. Here we develop a conceptual framework, informed by evolutionary theory and complexity science, which follows models of cultural evolution in viewing institutions as part of a non-genetic system of inheritance. We use this framework to examine the ways in which broader historical factors, not just economic factors, influence present-day institutional arrangements and economic outcomes, and the ways non-institutional aspects of culture (e.g., values, beliefs) interact with institutions to shape behavior in particular contexts. Overall, this framework emphasizes the processes by which institutions evolve, and how they can coevolve with other institutions and culture. We illustrate this approach with four examples of how evolution theory and complexity science can be used to study institutional emergence and change. We emphasize the need to develop explicit models of the processes of institutional evolution, and stress the importance of testing and assessing these models with data. We argue that this framework holds the promise of bringing together and synthesizing the findings and insights from a range of different disciplines