Strategy-Making and Evolutionary Theory: Toward a Capabilities-Based Perspective

The strategic process in large, diversified firms is shown to be isomorphous to the enactment—selection—retention model of evolutionary theory. Such strategic processes are internalized selection mechanisms, nested within external environmental selection mechanisms, and operate on classes of strategic behavior. Recent contributions of Japanese scholars underscore the usefulness of the evolutionary paradigm for strategic management, but they suggest somewhat different mechanisms for variety amplification in organizations. The evolutionary paradigm requires strategic management scholars to come to grips with the stochastic nature of strategic change, and suggests that managing the capabilities of the organization may form the foundation for strategic management.