Biological analogies for firm growth can be found in the work of Marshall and Veblen, who first became prominent in the decades following the Second World War. The work of Nelson and Winter is perhaps the most important development of this theory. They proposed an evolutionary model based on three key concepts borrowed from the natural sciences: selection, which operates on firms' internal routines; mutation, which has its organizational counterpart in the concept of 'search', encompassing changes in routine; and the 'the struggle for existence' which has clear parallels in market competition. Nelson and Winter make it clear that there is not an exact correspondence between organisaions and biology, but that evolutionary theory is an important metaphor. Evolutionary theory continues to be challenged from the older, contractarian perspective, notably by writers such as Williamson.

Geoffrey M. Hodgson