Firm survival: adding transferred demand into the equation

Despite genuine attempts to develop more contingent theories of population change that incorporate adaptionist and selectionist accounts, little evidence of a united framework has emerged to date. While this current diversity of opinion may contribute to the eventual quality of knowledge development (Singh, 1993), it nevertheless appears to be a debate that continually fails to incorporate essential evolutionary concepts. This paper attempts to introduce the neglected (and essential) evolutionary process of niche construction (Olding-Smee, Laland and Feldman, 2003) into this ongoing debate. The niche construction process is used to highlight a change in environmental selection directly related to the market place behaviour of certain firms in the Hobart pizza industry. It is claimed in this paper that a process of transferred demand can be identified as a generative mechanism through which firm survival (in specific selective neighbourhoods and/or niches) was enhanced. Specifically, that regional pizza shops have received a survival advantage through the presence of franchised firms due to the proccess of transferred demand. In brief, transferred demand occurs when television advertising aimed at metropoletian and suburban consumers creates demand in regional areas (for a product/service) that the advertiser cannot supply. As such, regional firms benefit and survive significantly better than other regional firms who don't benefit from any fortituous industry-based advertising. The use of niche construction and many other key ecological or biological evolutionary concepts to explain the emergent findings from the Hobart pizza industry highlight a current problem in evolutionary theorising, that being a lack of consistency. Hodgson, (2001, p. 92) argues that 'explanations in one domain have to be consistent with explanations in another, despite examination of different properties and deployment of different concepts'. This simple, yet exacting principle requires that in many instances we must go backwards (in degrees of understanding) before we can advance. It is around this central premise that this paper attempts to make a contribution to the growing literature related to an evolutionary account of entrepreneurship.