Evolutionary Dynamics

1
Evolutionary Dynamics

• Strategy and the Business Landscape, Chapter 4
  (Ghemawat, 2001)

2
The Four Threats to Sustainability
Imitation
Substitution
Added Value
Appropriated Value
Slack
Holdup
3
Imitation

• the diffusion of successful business
  models--defined in terms of resources deployed
  and/or activities performedacross the population
  of firms.

4
Responses to Imitation

• Economies of Scale and Scope
• Learning/private information
• Contracts and relationships
• Threats of retaliation
• Strategic Complexity

5
Substitution

• The threat of being displaced by a different
  business model.

6
Responses to Substitution

• Not Responding
• Fighting
• Switching
• Recombining
• Straddling
• Harvesting

7
Hold Up

• Cospecialization, coevolution Holdup threatens
  to divert value to buyers, suppliers,
  complementors, or other players in the firms
  network.

8
Responses to Holdup

• Contracting
• Integrating
• Building bargaining power
• Bargaining hard
• Reducing asset-specificity
• Building relationships
• Developing trust

9
Slack

• the extent to which the value appropriated by an
  organization falls short of the amount
  potentially available to them.

10
Responses to Slack

• Gathering information
• Monitoring behavior
• Offering performance incentives
• Shaping norms
• Bonding resources
• Changing governance
• Mobilizing for change