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Organizational Process, Strategic Content and Socio-Economic Resources: Small Enterprises in East Germany, 1990–94

The theory of the firm implies a framework which links up conceptually diverse aspects and approaches. This article tests a specific framework: an interactionist variant of co-evolution theory derived from an article by Hrebiniak and Joyce. Organizations are viewed as enacting different combinations of strategic choice and environmental determinism, which point toward specific market forms and internal processes, through a process of mutual adaptation. Co-evolutionary configurations are hypothesized to have an effect on resource outcomes (profitability and employment). The present article tests this theory, based on a combined qualitative study and standardized questionnaire investigation of a quota sample of 120 smaller enterprises in East Germany. This refers to an environment which, because of the new and rapid emergence of new firms subdivided into different types, can be seen to render the application of interactionist co-evolutionism particularly exigent. It was found that the typology derived according to the framework performed well in predicting and explaining economic performance and employment development. It is suggested that this type of study, linking internal and external organizational characteristics within an interactionist scheme, has potential. It would also help to systematize and control co-evolutionary research on the firm following a coherent research design, going beyond the liberal interpretation of historical information.