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

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

Leonhard Dobusch and Elke Schüßler
Freie Universität Berlin
Our Thesis

“

…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)

Leonhard Dobusch & Elke Schüßler
<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 )

Leonhard Dobusch & Elke Schüßler
Self-reinforcement

“

the crucial feature of a historical process
that generates path dependence

”

Pierson (2004: 21)

Leonhard Dobusch & Elke Schüßler
Stability (“Lock-in”)

“

And things have been that way ever since.

”

David (1985: 336)

Leonhard Dobusch & Elke Schüßler
Definition

“

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

”

Sydow et al. (2009: 696)

Leonhard Dobusch & Elke Schüßler
<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
Leonhard Dobusch & Elke Schüßler

Consequence:
Path dependence
as a process with
three stages
marked by
decreasing choice
Exercises in Demarcation #2
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
Exercises in Demarcation #3
Definitely no combination of small events, selfreinforcement, stability (and inefficiency)?
§  Imprinting

§  Absorptive capacity

§  Escalating Commitment

§  Institutional persistence

§  Commitment/Sunk Costs §  Resource accumulation
§  Structural Inertia

§  Fist-mover advantage

§  Reactive Sequences

§  Chaos theory

§  Institutionalizing
Leonhard Dobusch & Elke Schüßler
The Question

Where is the path?

Leonhard Dobusch & Elke Schüßler
<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!)

Leonhard Dobusch & Elke Schüßler
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
Local-level: investment and learning effects

Mechanisms

Population-level: expectation, coordination and
complementarity effects
Leonhard Dobusch & Elke Schüßler
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
Local-level: investment and learning effects

Mechanisms

Population-level: expectation, coordination and
complementarity effects

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

Leonhard Dobusch & Elke Schüßler
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

Leonhard Dobusch & Elke Schüßler
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

Leonhard Dobusch & Elke Schüßler
Comparing Cases (2): Increasing Returns?
f(x)
increasing
returns

constant
returns
decreasing
returns

t

f‘(x)
t

Leonhard Dobusch & Elke Schüßler
<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!
Leonhard Dobusch & Elke Schüßler
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)
Leonhard Dobusch & Elke Schüßler
<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 lockin?

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?
Leonhard Dobusch & Elke Schüßler
Thank you.

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

  • 1. 3rd International Conference on Path Dependence February 17-18, 2014, Berlin, Germany Theoretical Artefact or Common Phenomenon? Revisiting Prominent Cases of Path Dependence Leonhard Dobusch and Elke Schüßler Freie Universität Berlin
  • 2. Our Thesis “ …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) Leonhard Dobusch & Elke Schüßler
  • 4. 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 ) Leonhard Dobusch & Elke Schüßler
  • 5. Self-reinforcement “ the crucial feature of a historical process that generates path dependence ” Pierson (2004: 21) Leonhard Dobusch & Elke Schüßler
  • 6. Stability (“Lock-in”) “ And things have been that way ever since. ” David (1985: 336) Leonhard Dobusch & Elke Schüßler
  • 7. Definition “ [P]ath dependence can be defined as a rigidified, potentially inefficient action pattern built up by the unintended consequences of former decisions and positive feedback processes. ” Sydow et al. (2009: 696) Leonhard Dobusch & Elke Schüßler
  • 8. <2> Path Dependence: A Special Case of Stability?
  • 9. 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 Leonhard Dobusch & Elke Schüßler Consequence: Path dependence as a process with three stages marked by decreasing choice
  • 10. Exercises in Demarcation #2 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
  • 11. Exercises in Demarcation #3 Definitely no combination of small events, selfreinforcement, stability (and inefficiency)? §  Imprinting §  Absorptive capacity §  Escalating Commitment §  Institutional persistence §  Commitment/Sunk Costs §  Resource accumulation §  Structural Inertia §  Fist-mover advantage §  Reactive Sequences §  Chaos theory §  Institutionalizing Leonhard Dobusch & Elke Schüßler
  • 12. The Question Where is the path? Leonhard Dobusch & Elke Schüßler
  • 13. <3> Revisiting Prominent Cases of Path Dependence
  • 14. 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!) Leonhard Dobusch & Elke Schüßler
  • 15. 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 Local-level: investment and learning effects Mechanisms Population-level: expectation, coordination and complementarity effects Leonhard Dobusch & Elke Schüßler
  • 16. 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 Local-level: investment and learning effects Mechanisms Population-level: expectation, coordination and complementarity effects Bild: https://en.wikipedia.org/wiki/File:AlumRockViewSiliconValley_w.jpg Leonhard Dobusch & Elke Schüßler
  • 17. 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 Leonhard Dobusch & Elke Schüßler
  • 18. 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 Leonhard Dobusch & Elke Schüßler
  • 19. Comparing Cases (2): Increasing Returns? f(x) increasing returns constant returns decreasing returns t f‘(x) t Leonhard Dobusch & Elke Schüßler
  • 20. <4> Looking Back: Path Dependence as a Conceptual Bridge
  • 21. 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! Leonhard Dobusch & Elke Schüßler
  • 22. 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) Leonhard Dobusch & Elke Schüßler
  • 24. 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 lockin? 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? Leonhard Dobusch & Elke Schüßler