The evolution of productive organizations

Organizations devoted to the production of goods and services, such as guilds, partnerships and modern corporations, have dominated the economic landscape in our species’ history. We develop an explanation for their evolution drawing from cultural evolution theory. A basic tenet of this theory is that social learning, under certain conditions, allows for the diffusion of innovations in society and, therefore, the accumulation of culture. Our model shows that these organizations provide such conditions by possessing two characteristics, both prevalent in real world organizations: exclusivity of membership and more effective social learning within their boundaries. The model and its extensions parsimoniously explain the cooperative nature of the social learning advantage, organizational specialization, organizational rigidity and the locus of innovation. We find supportive evidence for our predictions using a sample of premodern societies drawn from the Ethnographic Atlas. Understanding the nature of these organizations informs the debate about their role in society.