Biological Analogies in the Theory of the Firm * 1

Abstract

Biological analogies are used in a variety of ways in the social sciences. Biological analogies in particular have been widely used in discussions of the firm. Implicit in the notion that firms have a ‘life cycle’ analogous to that of living organisms is the idea that there are ‘laws’ governing the development of firms akin to the laws of nature in accordance with which living organisms appear to grow, and that the different stages of development are a function of age. Probably the best known and most common of these analogies is that of the life cycle, in which the appearance, growth and disappearance of firms is likened to the processes of birth, growth, and death of biological organisms. Recently, two additional biological analogies have been presented—a natural selection analogy, dubbed by one writer viability analysis, and the homeostasis analogy designed to explain some aspects of the behavior of firms.

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