Firms and industries in evolutionary economics: Lessons from Marshall, Young, Steindl and Penrose

Abstract

Evolutionary economists have tended to assess firms and industries separately, neglecting the role of their interaction in the process of economic growth and development. We trace the separation of firms and industries to Marshall, whose industrial analysis by means of the representative firm formalizes population thinking as ?thin? means of relating firms and industries. Penrose avoids the industry concept by focussing on heterogeneous firms, while Young and Steindl develop mundane explanations of firms? relations within groups, locating the impetus for growth in a poorly understood environment. We conclude that evolutionary economics should revisit firms? boundaries, not in the sense of explaining the existence of firms, but in a relating and communicating sense in which boundaries signify selective means of relations with others.