Theorizing Path Dependence: A Review of Positive Feedback Mechanisms in Technology Markets, Regional Clusters, and Organizations
Industrial and Corporate Change, 22(3): 617-647
39 Pages Posted: 20 Oct 2012 Last revised: 24 Aug 2016
Date Written: 2012
The concept of path dependence has often been criticized as vague and only narrowly applicable. Although we can find some very refined definitions of the concept, we also find a wide range of empirical phenomena being described as path-dependent. We argue that more detailed accounts of the positive feedback mechanisms that form paths can take path dependence beyond this state of being overdetermined, but under-specified. Reviewing three well-described cases of path-dependent dynamics in technology markets, regional clustering, and organizations, we define a core set of positive feedback mechanisms that constitute path dependence at different analysis levels and clarify the relationship between positive feedback and increasing returns. We show that path-dependent processes, that is, processes driven by positive feedback that veer toward rigidity or lock-in, can be (but do not have to be) found under many labels, including structural inertia, coevolution, or institutional persistence. We conclude that a precise definition of path dependence does not need to be at odds with the concept’s widespread use in understanding organizational and industrial development processes.
JEL Classification: L10, L20, M00, O10, O33, O43, R10
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