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 explains 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 pre-modern societies drawn from the Ethnographic Atlas. Understanding the nature of these organizations informs the debate about their role in society.

Cultural Evolution Theory and Organizations

“…We show in the paper (Brahm & Poblete, 2021a) that these two characteristics of organizations are prevalent in our past, lending historical plausibility to our overall explanation. For example, the shreni in India in 500 BCwhich produced most of the goods and services in that society -were a guild-like organization based on apprenticeship (i.e., low social learning costs) and where "the admission of a new member was put to a vote of the Shreni assembly" (i.e., restricted access) (Khanna, 2005).…”

“…Standard, widespread econometric techniques can be utilized successfully. Two tests using econometric analysis across societies support the theory: (i) Ethnographic atlas (Brahm & Poblete, 2021a), (ii) Long-run persistence of tradition (see Brahm & Poblete, 2021b).…”

“…In Brahm and Poblete (2021a) we show that for a range of models and assumptions, if one introduces organizations that are exclusiveentry is restricted (i.e., there is a boundary)and that are better at social learning -it is more efficient or cheaper when done among members of the organization -, then the population can escape the Rogers paradox. In simple terms, in the face of a changing environment, organizations of said characteristics increase the adaptability of the population.…”

Long-term gene–culture coevolution and the human evolutionary transition

“…This pattern is supported by cross-cultural evidence through human history [17] across geographical regions [50], and by quantitative evidence from violent group conflict [52,53]. Third, culturally organized groups appear to solve adaptive problems more readily than individuals through the compounding value of social learning and cultural transmission in groups [54,55]. Societies may operate to make each of their members more innovative than they would otherwise be individually [56].…”

A cultural evolutionary theory that explains both gradual and punctuated change

“…It is not clear what implications CCE studies in small groups should have for larger populations, such as the urban environments humans have lived in for millennia. Extrapolating the hypothesized correlation between CCE and population size, it would seem that larger social learning networks would surface the best technologies [16,33,34], productive organizations [35], government institutions [36,37] and technical knowledge [38–40]. As innovation rate scales with population density [18,41], however, the number of similar options can increase by orders of magnitude, and social learners need to update more frequently to keep up.…”