The Red Queen Among Organizations: How Competitiveness Evolves

Reviewer: Kate Morrison (ThinkPlayDo Group, London).

All Volume 39 No2 246 17 July 2008 William P Barnett, Princeton University Press, 2008, 272 pages, £17.95.

This book is a contribution to the field of organisational learning that seeks to explore the link between competition and organisational development in terms of the Red Queen model of co-evolutionary selection. Deriving from the Red Queen’s statement in Lewis Carroll’s

Through the Looking Glass

that

“it takes all the running you can do, to keep in the same place”

, Barnett’s insight is to apply this model to organisational ecology, by treating the ‘organisation’ as if it were an ‘organism’. His central thesis is that organisations learn by engaging in competition: the more they compete, the more they learn.

The metaphor of ecology is centered on the notion that learning not only makes organisations stronger competitors but also triggers learning in rivals. Organisational adaptation, Barnett explains, should be modelled as a function of competitive activity,

“Since through such competition an organization learns about and adjusts to the logic of competition in its environment.”

Competitiveness thus varies as a function of the organisa-tion’s recent experience of competition.

The book proceeds to describe the concept of ‘logics of competition’ and offers a model of the Red Queen in terms of ‘hysteretic’ competition. This means that organisations that have recently experienced competition are ‘more viable and generate stronger competition’. The twist Barnett adds to this is the ‘competency-trap hypothesis’ – that organisations that have experienced strong competition in the past, but not in the present, are less viable. Barnett then develops a number of hypotheses relating to the nature of recent competition and firm viability. An econometric model is built and estimated on comprehensive data sets over two industries: commercial banking and computer manufacturing.

The concept is then further developed to examine the ‘competition-inertia hypothesis’, which states that the greater the experience of competition in one context, the more hazardous it will be for an organisation to move into another context. He concludes with discussion of implications for managerial practice and critique of existing research that ignores the ‘logics of competition’ in relation to organisational learning.

The main strength of the book is in highlighting the importance of competition in market-based economies for building viable, adaptive organisations. The hypotheses that give weight to this argument are backed by empirical and econometric work that seems solid. While at times a ponderous read, the book nevertheless proposes an important idea, and one that Barnett is right to advance over alternative theories of organisational learning lacking such foundations in competition-based dynamics.

However, it is only because co-evolutionary models are relatively new to the field of organisational learning that Barnett’s contribution is worthwhile. For example, not one mention of the evolutionary game theoretic foundations of the Red Queen model is made in the book.

Modern microeconomics has already covered much of this ground and evolutionary game theory has long established the underlying simple but important point: that competition matters for organisational strategy. Bringing this insight into the domain of industrial dynamics and linking it specifically to organisational learning is, nevertheless, a useful step forward.

Jason Potts

School

of Economics, University of Queensland, Australia

Kate Morrison

ThinkPlayDo Group, London

Archived source: 2008-11-20 website capture.