Theoretical Artefact or Common Phenomenon? Revisiting Prominent Cases of Path Dependence

Theoretical Artefact or Common Phenomenon?

Revisiting Prominent Cases of Path Dependence

3rd International Conference on Path Dependence February 17-18, 2014, Berlin, Germany

Leonhard Dobusch and Elke Schüßler

Freie Universität Berlin

Our Thesis

Leonhard Dobusch & Elke Schüßler

…we suggest researchers should use the concept [of path dependence] where it is appropriate, rather than allowing it to become a corset that is methodologically and conceptually too constricting.

“ ” Dobusch and Schüßler (2013: 637)

<1> Starting Points

Small Events


[Small events] are not averaged away and ‘forgotten’ by the dynamics – they may decide the outcome.

[Small events] are outside the ex-ante knowledge of the observer – beyond the resolving power of his ‘model’ or abstraction of the situation.

“

” W. Brian Arthur (1989: 117-118 )

Self-reinforcement


the crucial feature of a historical process that generates path dependence “ ” Pierson (2004: 21)

Stability (“Lock-in”)


And things have been that way ever since. “ ” David (1985: 336)

Definition


[P]ath dependence can be defined as a rigidified, potentially inefficient action pat- tern built up by the unintended consequences of former decisions and positive feedback processes.

“ ” Sydow et al. (2009: 696)

<2> Path Dependence: A Special Case of Stability?

Exercises in Demarcation #1

What Sydow et al. (2009) argue path dependence is not: §  Imprinting

§  Escalating Commitment

§  Commitment/Sunk Costs

§  Structural Inertia

§  Reactive Sequences

§  Institutionalizing


Consequence: Path dependence as a process with three stages marked by decreasing choice


What Vergne and Durand (2010) argue path dependence is not: §  Absorptive capacity

§  Institutional persistence

§  Resource accumulation

§  Structural inertia

§  Imprinting

§  Fist-mover advantage

§  Chaos theory Leonhard Dobusch & Elke Schüßler

Consequence: path dependence as a property of a stochastic process to be demonstrated using controlled methodologies


§  Absorptive capacity

§  Institutional persistence

§  Resource accumulation

§  Fist-mover advantage

§  Chaos theory


§  Imprinting

§  Escalating Commitment

§  Commitment/Sunk Costs

§  Structural Inertia

§  Reactive Sequences

§  Institutionalizing

Definitely no combination of small events, self-reinforcement, stability (and inefficiency)?

The Question


Where is the path?

<3> Revisiting Prominent Cases of Path Dependence

Revisiting Prominent Cases

§  Microsoft’s dominance in desktop software markets as a technological path.

§  Silicon Valley as an institutional path.

§  Intel as a case of strategic lock-in.

(NB: Intel is not called „path dependent“ by Burgelman!)


Microsoft Windows


The Path

Dominance of Microsoft Windows and Office in the PC software market

Contingency

Despite CP/M being the leading operating system in 1981, business community followed IBM due to business relations

Mechanisms

Local-level: investment and learning effects Population-level: expectation, coordination and complementarity effects

Silicon Valley


The Path

Silicon Valley as the leading semiconductor technology cluster worldwide

Contingency

Opening of Shockley Transistor in 1955, lack of capital at East Coast, spin-off dynamic due to Shockley‘s poor management skills

Mechanisms

Local-level: investment and learning effects Population-level: expectation, coordination and complementarity effects

Bild: https://en.wikipedia.org/wiki/File:AlumRockViewSiliconValley_w.jpg

Intel


The Path

First lock-in: focus on memory chips; second lock-in: focus on operating systems

Contingency

Strategic focus on memory chip unintentionally underminded by resource allocation rule

Mechanisms

Local-level: expectation effects, investment and learning effects Local and population-level: complementarity effects

Comparing Cases (1): Levels and Factors


Levels §  Positive feedback mechanisms work on and across levels

§  Useful to break population-level mechanisms down into local-level foundations

Factors §  Role of actors changes over time as macro-level

mechanisms manifest §  Background conditions influence the functioning of

mechanisms

Comparing Cases (2): Increasing Returns?


f(x)

f‘(x)

increasing returns

decreasing returns

constant returns

t

t

<4> Looking Back:

Path Dependence as a Conceptual Bridge

What is the Value of Path Dependence?


Cases could be labeled differently: §  Microsoft Windows: Institutional Persistence, Resource accumulation, First-mover Advantage,…

§  Silicon Valley: Institutionalizing, Imprinting, Institutional Persistence,…

§  Intel: Escalating Commitment, Commitment/Sunk Costs, Structural Inertia, Absorptive Capacity,…

>> But: Positive feedback mechanisms explain the observed patterns of stability!

Our Conclusion


We hope our review of positive feedback mechanisms at different levels and in different social settings increases the applicability of path dependence as an explanatory concept for researchers’ use rather than restricting it to the very rare situations where agency does not matter or where other historical process explanations do not hold.

“

” Dobusch and Schüßler (2013: 638)

<5> Looking Forward: Open Questions

Open Questions

Stability vs. lock-in §  Is a lock-in a specific form of stability and how

can it be measured? § What is the role of positive feedback after lock-

in? Conceptualizing change

§ What is the role of negative feedback mechanisms in producing stability and change?

§ How do different mechanisms on different levels enable/prohibit change?


Thank you.

Theoretical Artefact or Common Phenomenon? Revisiting Prominent Cases of Path Dependence

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