In this article, we propose a theory of the cultural evolution of the firm. We apply cultural and evolutionary thinking to the questions posed by theories of the firm: What are firms and why do they exist? We argue that firms are best thought of as cultures, as social distributions of modes of thought and forms of externalization. Using the term ‘meme’ to refer collectively to cultural modes of thought (ideas, beliefs, assumptions, values, interpretative schema, and know-how), we describe culture as a social phenomenon, patterns of symbolic communication and behavior that are produced as members of the group enact the memes they have acquired as part of the culture. Memes spread from mind to mind as they are enacted and the resulting cultural patterns are observed and interpreted by others. The uncertainties of interpretation and the possibilities of reinterpretation and recontextualization create variation in the memes as they spread. Over time, firms evolve as a process of the selection, variation, and retention of memes. Our claim is that understanding firms in this way provides a new perspective (what we call the ‘meme’s-eye view’) on the question of why we have the firms we have and, by allowing us to shed the functionalist assumptions shared by both economics and knowledge-based theories of the firm, makes possible a genuinely descriptive, as opposed to normative, theory of why we have the firms that we have.
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