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The evolution of productive organizations

Abstract

Organizations devoted to the production of goods and services, such as guilds, partnerships and modern corporations, have dominated the economic landscape in our species’ history. We develop an explanation for their evolution drawing from cultural evolution theory. A basic tenet of this theory is that social learning, under certain conditions, allows for the diffusion of innovations in society and, therefore, the accumulation of culture. Our model shows that these organizations provide such conditions by possessing two characteristics, both prevalent in real world organizations: exclusivity of membership and more effective social learning within their boundaries. The model and its extensions parsimoniously explain the cooperative nature of the social learning advantage, organizational specialization, organizational rigidity and the locus of innovation. We find supportive evidence for our predictions using a sample of premodern societies drawn from the Ethnographic Atlas. Understanding the nature of these organizations informs the debate about their role in society.

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Fig. 1: Equilibrium of the model for different values of λ.
Fig. 2: Comparative statics.
Fig. 3: The impact of the presence of activities and POs on the size of local population.

Data availability

The source data used in this paper is publicly available at https://d-place.org/. The dataset used in this paper is available at https://sites.google.com/site/fcobrahm/.

Code availability

The code used to analyse the data is available at https://sites.google.com/site/fcobrahm/.

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Acknowledgements

J.P. gratefully acknowledges research support from ANID grant no. PIA/APOYO AFB180003 and Instituto Milenio grant no. MIPP IS130002. We acknowledge comments provided by M. Feldman, P. Richerson, C. Loch, S. Kavadias, B. Silverman, J. Peck, A. Feylessoufi, R. Bojilov, E. Depetris-Chauvin, R. Alonso, J. Tessada, A. Goldberg, S. Ethiraj, E. Papaioannu, B. Vanneste, V. Mak and T. Waring; by seminar participants at the Judge Business School, Stanford Business School, the London Business School and by participants at the Second Annual Meeting of the Cultural Evolution Society, Seventh Toulouse Economics and Biology Workshop, Annual Society for Institutional and Organizational Economics Conference (SIOE), Cambridge Clare Hall Graduate Students Conference, Third Culture Conference at the University of Birmingham, the Institute for Operations Research and Management Science Annual Meeting (INFORMS), the Winter Cambridge Judge Business School PhD Conference, the Sixth Development Workshop at the Catholic University of Chile, the inaugural Strategy Science Conference, Barcelona Graduate School of Economics Summer Forum (Organizational Economics) and the Trento Summer School on ‘New Thinking on the Firm: Perspectives from Law, Economics, Organization, and History’.

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F.B. and J.P. conceived the study. J.P. did most of the mathematical models, reviewed the empirical analysis and reviewed and edited the text. F.B. reviewed and contributed with some of the mathematical models, executed the model simulations and associated figures, wrote most of the text and executed the empirical analysis and its associated figures and tables.

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Correspondence to Francisco Brahm.

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Brahm, F., Poblete, J. The evolution of productive organizations. Nat Hum Behav 5, 39–48 (2021). https://doi.org/10.1038/s41562-020-00957-x

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