Endogenous shaping as an evolutionary process: An empirical demonstration with the photovoltaic cell industry, 1976–2010

Abstract Research Summary For endogenous shaping to be recognized as an evolutionary process that helps explain the co‐evolution of firms and their environment, theories on shaping need to provide a direct link between the endogenously introduced modifications and the evolutionary trajectory of actors in the industry. Integrating insights from the sensemaking literature into the evolutionary perspective on shaping, we establish this link and identify evolutionary feedback—the response of market actors to endogenous modifications—as a distinct feature in the shaping process. To advance toward more generalized theorizing on the mechanisms of the shaping process, we ground our theoretical insights in a real‐life case by conducting a history‐friendly study of endogenous shaping and evolutionary feedback in the photovoltaic cell industry. Managerial Summary Understanding how firms actively shape their environment is essential for explaining industry evolution. This study highlights the need for theories on shaping to establish a link between shapers' modifications to the industry environment and the evolutionary trajectory of firms. By integrating sensemaking insights into the evolutionary economics perspective on shaping, we provide this link and demonstrate that evolutionary feedback—market actors' responses to endogenous changes—is a distinctive feature of the shaping process. We demonstrate the shaping process and evolutionary feedback in the photovoltaic cell industry. Our findings illustrate how endogenous modifications to the industry environment triggered evolutionary feedback. This research gives managers a deeper understanding of how their strategic decisions can influence evolutionary trajectories, highlighting the importance of evolutionary feedback in this process.