Christian Cordes

How corporate cultures coevolve with the business environment: The case of firm growth crises and industry evolution

This paper shows how cognitive human dispositions that take effect at the level of an individual firms corporate culture have repercussions on an industrys evolution. In our theory, the latter is attributable to evolving corporate cultures coupled with changes in a firms business environment. With the help of a formal model of evolving corporate cultures, we demonstrate how firms can establish a cooperative cultural regime that yields competitive advantages in an innovative, fast changing environment. Depending on within-firm social learning processes and cognitive constraints of human agents, organizations then reach a critical cognitive firm size in their development beyond which the level of cooperation deteriorates rapidly--they systematically face a growth crisis. Organizations successful in such an environment and reaching a critical technological size may, however, reap economies of scale in a later, mature and stable business environment with altered corporate culture. Furthermore, we relate these findings to empirical evidence on firm survival and performance in different industries, the evolution of organizational structures, and technological advancements in production technologies, and we identify some determinants of market structures.

How does opportunistic behavior influence firm size? An evolutionary approach to organizational behavior

This paper relates firm size and opportunism by showing that, given certain behavioural dispositions of humans, the size of a profit-maximizing firm can be determined by cognitive aspects underlying firm-internal cultural transmission processes. We argue that what firms do better than markets – besides economizing on transaction costs – is to establish a cooperative regime among its employees that keeps in check opportunism. A model depicts the outstanding role of the entrepreneur or business leader in firm-internal socialization processes and the evolution of corporate cultures. We show that high opportunism-related costs are a reason for keeping firms’ size small.

Reply to “Modeling the evolution of preferences: an answer to Schubert and Cordes”

In their comment “Modeling the evolution of preferences: an answer to Schubert and Cordes†(2013, this journal), Kapeller and Steinerberger claim to have identified some flaws in the formal argument developed in our paper “Role models that make you unhappy: light paternalism, social learning, and welfare†(2013, this journal). Specifically, they maintain that there is no runaway dynamic in consumption and preference values and that our model therefore always leads to a stable society. In their proof, Kapeller and Steinerberger show that their system is bounded by the highest and lowest preference and consumption levels in the population and can never escape them. Their argument does, however, not apply to the system of coupled dynamic equations we employed to model runaway consumption.

Emergent Cultural Phenomena and their Cognitive Foundations

To explain emergent cultural phenomena, this paper argues, it is inevitable to understand the evolution of complex human cognitive adaptations and their links to the population-level dynamics of cultural variation. On the one hand, the process of cultural transmission is influenced and constrained by humans’ evolved psychology; people tend to acquire some cultural variants rather than others. On the other hand, the cultural environment provides cultural variants that are transmitted to or adopted by individuals via processes of social learning. To gain insights into this recursive relationship between individual cognitive dispositions at the micro level and cultural phenomena at the macro level, the theory of gene-culture coevolution is applied. Moreover, a model of cultural evolution demonstrates the dissemination of novelty within a population via biased social learning processes. As a result, some unique facets of human behavior and cumulative cultural evolution are identified.