Evolving capabilities and innovative intentionality: some reflections on the role of intention within innovation processes.

SUMMARY

We may argue that individual and organisational dynamic capabilities evolve through the interaction of intentions and action goals. Capabilities are renewed and reshaped by the appearance of new action goals. A feedback process between capabilities and goals opens up new possibilities of action. This may happen when agents (organisations and individuals) act towards their goals, transforming capabilities and renewing the spaces where actions are conceived and deployed. Moreover, agents' goals vary not only in the sense that they are different but also because they are characterised by different transforming intensities. The concept of innovative intentionality synthesizes this idea. Innovative intentionality is defined as the will to conceive or imagine realities which differ from the perceived realities, with the purpose of making them effective. This concept appears to be useful for addressing the divergence of innovative dynamics among organisations and societies.

KEY WORDS

innovative intentionality; action plans; dynamic capabilities; evolving capabilities; evolutionary economics

1. Introduction

Within the evolutionary tradition, economic and social systems become evolving systems characterised by constant endogenous change brought about by the generation of novelties which result in its self-transformation over time (Rubio de Urquia 2003). Evolution is seen as a system's self-transformation (Witt 2003: 12-13). It is also perceived as 'a process, or a cluster of processes, which combine the generation of novelties and the selective retention of some of the novelties generated' (Loasby 2001: 1).

Self-transformation processes are necessarily encompassed--and to a great extent explained--by changes in agents' knowledge (whether agents are organisations or individuals); that is, by learning processes. These are key explanatory factors of economic change: the knowledge acquired by agents and the interaction of the different agents' knowledge form the basis on which the evolutionary and complex character of economic processes rely. In particular, the literature devoted to explaining the development of evolving economic systems accords an essential explanatory role to agents' capabilities, which are dynamic as they are transformed over time (Loasby 1999, 2006).

If we take a closer look at the phenomena addressed by evolutionary economists (basically self-transformation and novelty emergence in economic systems) and at the concepts they use and develop to build their theories (e.g. entrepreneurship, innovation, dynamic capabilities), we observe that they all refer to processes which are deployed over time. Moreover, we could actually state that evolutionary economists have assumed the challenge of moving away from the timeless economic system (Schakle 1972, 1979) to the intricate world of complex dynamics (Dopfer & Potts 2004; Potts 2000).

From an analytical point of view, shifting from the standard economics timeless system of rational choice to evolving systems means assuming the temporary dimension of economic action which is essentially a projective action. It therefore implies moving away from 'the technology of choice framework' (Encinar & Munoz 2006) in which agents make choices on the basis of given means, given goals (objectives) of action and perfect and complete knowledge about the states of the world, and then perform actions in a timeless environment.

The acceptance of the inherent temporary dimension of human action implies the need to address the great importance that agents' past trajectories have in determining action and choice. It also implies taking into account that a choice is made from imaginable alternative future scenarios. Action is directed towards an uncertain, unknown future that agents imagine according to their cognition of reality, their beliefs, values, etc; all of which depend on individual trajectories and psychological make-up, and on the social collective environment (Borras 2004; Rubio de Urquia 2005).

We cannot understand human behaviour--and therefore economic behaviour--and its transformation only on the basis of the existent reality or on past reality. It is also necessary to consider future unreality because it is in the future that goals are located; the objectives formulated by individuals and groups of individuals. Actions (e.g. producing, consuming, innovating, working, organising) are conditioned by agents' desired (Pareto 1909; Shackle 1972: 135) and pursued goals which vary greatly and are submitted to change over time. As a consequence, diversity and changes in pursued goals should be considered key explanatory elements of the process of self-transformation (evolution) of social and economic systems. Important features of novelty generation and innovation processes may be addressed by focusing on the dynamics of the agents' formulation of goals. (1) These are the imagined realities deemed possible and desirable towards which the agent orients his/her/its action (Loasby 1996; Canibano 2004; Canibano, Encinar & Munoz 2004, 2006). In this sense, we refer to enacted intention: imaging or desiring a future scenario (a possible reality or goal) does not imply any changes in the environment unless the agent orients her action according to those goals; unless she acts towards the goal.

The purpose of this paper is to develop some reflections which are based on the above ideas and which have led us to consider the essential role that enacted intention plays within economic dynamics.

We argue that the constant feedback between enacted intention (oriented by action goals) and capabilities transforms the economic system. Action goals may evolve over time and by doing so they bring about changes in the capabilities of agents that might also result in the establishment of renewed intentions and goals, and therefore in the development of re-shaped or renewed capabilities. In order to develop these arguments, we first focus on the evolutionary concept of dynamic capabilities (Section 2), because the role of intention and the genuine temporary dimension of action are recognised in this literature. Moving on from dynamic to evolving capabilities allows us to go further in the understanding of self-transformation processes.

Furthermore, considering agents' intentionality enables us to reflect on the explanation of transformation intensity and trajectory. Why do organisations (and their capabilities) evolve in different ways? The proposed concept of innovative intentionality, will give an important theoretical role to enacted intention in the explanation of economic change. The paper may, therefore, be located within the discussion on microfoundations of organisational and individual capabilities and their consequences in terms of economic dynamics (Felin & Foss 2005, 2006; Loasby 2006).

The following section addresses dynamic capability building processes as intended learning processes. The argument moves then to the proposition of the concept of evolving capabilities: the constant feedback between enacted intention and capabilities results in the evolution of capabilities (Section 3). In the discussion of evolving capabilities the role of innovative intentionality arises. Innovative intentionality is defined as the will to conceive or imagine realities which differ from the perceived realities, with the purpose of making them effective (Section 4). These considerations and proposed concepts provide, in our view, the possibility to keep the dynamic consistency of the evolutionary approach, particularly because important sources of novelty may be located in the goals side of action. In this sense, they might prove useful for further explorations of economic dynamics, evolution and entrepreneurship.

2. Dynamic capabilities as intentional learning

Learning and knowledge acquisition processes are central to the explanation of economic change. Recent attempts to provide an analytical foundation of evolutionary economics describe economic evolution as 'a growth of knowledge process' (Dopfer & Potts 2004: 21). As Metcalfe and Foster (2004: xi) recognise, knowledge acquired by individual agents and the interaction of agents' knowledge constitute the basis for evolution and complexity of economic process. An extended literature has been devoted to the analysis of knowledge acquisition, use and management within organisations that need to cope with uncertainty and adapt to a rapidly changing environment, overcoming varying technological challenges. General agreement on the idea that a great proportion of organisational and individual knowledge is tacit (Polanyi 1959) has lead to the development of a variety of concepts which address tacit knowledge in different ways and which have been widely used in the literature: know-how, skills, competences, routines, capacities, capabilities. In one way or another, all these concepts refer to the abilities that organisations (and individuals) have in order to reach their goals. Indeed, the fact that an organisation wants to attain a certain goal does not mean that it has the capacity to undertake the necessary actions to achieve it.