Theorizing Path Dependence: A Review of Positive Feedback Mechanisms in Technology Markets, Regional Clusters, and Organizations

Abstract

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.