Economic Opportunity and Evolution: Beyond Landscapes and Bounded Rationality

• Author: Stuart Kauffman,Teppo Felin,Roger Koppl,Giuseppe Longo
• Published date: 01 December 2014
• DOI: http://doi.org/10.1002/sej.1184
• Date: 01 December 2014

ECONOMIC OPPORTUNITY AND EVOLUTION:

BEYOND LANDSCAPES AND

BOUNDED RATIONALITY

TEPPO FELIN1*, STUART KAUFFMAN2, ROGER KOPPL3, and

GIUSEPPE LONGO4,5

1Said Business School, University of Oxford, Oxford, U.K.

2Institute for Systems Biology, Seattle, Washington, U.S.A.

3Whitman School of Management, Syracuse University, Syracuse, New York,

U.S.A.

4Centre Cavailles, Republique des Savoirs, CNRS, College De France et Ecole

Normale Superieure, Paris, France

5Department of Integrative Physiology and Pathobiology, Tufts University School

of Medicine, Boston, Massachusetts, U.S.A.

The nature of economic opportunity has recently receivedsignificant attention in entrepreneur-

ship, organization science and strategy. The notion of boundedly rational search on an (NK)

opportunity landscape has been particularly relevant to these conversations and debates. We

argue that the focus on bounded rationality and search is highly problematic for the fields of

entrepreneurship and strategy and does not allow us to explain the origins of economic novelty.

We contrast the NP problem with the frame problem to illustrate our point, and highlight the

role of adjacent possibilities and novel affordances. We discuss the entrepreneurial and eco-

nomic implications of these arguments by building on unique insights from biology,the natural

and computational sciences. Copyright © 2014 Strategic Management Society.

INTRODUCTION

The origins of novelty and the nature of economic

opportunity have recently received significant atten-

tion in entrepreneurship, organization science, and

strategy. The notion of boundedly rational search

(Simon, 1955, 1956)—on a strategy landscape or

‘phase space’—represents a particularly powerful

and influential metaphor and tool for thinking about

the nature of economic activity.1For example, NK

modeling has been used to study how firms search

locally or globally for peaks or opportunities within

landscapes (Levinthal, 1997; Winter, Cattani, and

Dorsch, 2007). Some have argued that behavior and

‘rationality’on this landscape is a process (Levinthal,

2011; also see March, 1994; Simon, 1978), thus

emphasizing mechanisms such as experiential learn-

ing and environmental feedback—while yet others

have recently focused on how novelty and opportu-

nity might emerge via distant, cognitive leaps on a

landscape (e.g., Gavetti, 2012; cf. Holyoak and

Thagard, 1996). The discussion has centered on how

economic actors navigate and map these opportunity

landscapes, given uncertainty and such factors as the

resources of the economic actors, the cognition or

biases of the decision makers, the dynamism of the

environment, or competition and past experience.

It is important to note—given the arguments in this

article—that the origins of the landscape metaphor

Keywords: entrepreneurship; economic opportunity; novelty;

strategy

*Correspondence to: Teppo Felin, Said Business School, Uni-

versity of Oxford, Park End Street, OX1 1HP, U.K. E-mail:

teppo.felin@sbs.ox.ac.uk

1As we will later discuss, phase spaces and various combina-

torial landscapes have been central in a number of disciplines,

including physics, biology, and chemistry (see Reidys and

Stadler, 2002).To learn about the history and basic mathematics

behind phase spaces, see Nolte, 2010.

bs_bs_banner

Strategic Entrepreneurship Journal

Strat. Entrepreneurship J., 8: 269–282 (2014)

Published online in Wiley Online Library (wileyonlinelibrary.com). DOI: 10.1002/sej.1184

Copyright © 2014 Strategic Management Society