The paper "Concept of Path Dependency" is a great example of an assignment on macro and microeconomics. The concept of ‘ path dependency’ refers to underlying forces that are self-regulating and self-reinforcing which leads to organizational locks-in. These forces have a direct impact on individual and corporate decisions (Sydow, Schreyogg & Koch, 2009). The concept explains how a certain model guides every activity within a certain economy. This mechanism leads to behavioral development resulting in institutional rigidity. However, it is important to understand the aim of this concept. In most cases, there is a lot of deviation from the set goals especially in organizations that allow too much flexibility.
To ensure that every individual within the institution sticks to corporate objective, path dependency is created. It is further argued that the path dependency model emphasise on continuity rather than change (Martin, 2010). This implies that proponents of this particular economic model insist on strict adherence to established traditions. In this case, people tend to rely on experiences and occurrences when making choices, especially in commercial transactions. This theory preserves people’ s way of doing things and economic prosperity where the model adopted is effective enough to facilitate productivity. In reference to Australia’ s history, path dependency is linked to organizational routines that shape individual behavior (Botterill, 2011).
Most institutions in Australia, especially in public sector, have maintained this model for long period. However, this idea has received sharp criticism from change-oriented economists and social scientists. This is due to its tendency to resist emerging changes. A good number of scholars argue that adopting the path dependency model hinders innovation and creativity (Tont, Argent & Plummer, 2012).
It, therefore, leaves no room for corrective measures especially when the model in use proves ineffective in addressing current social and economic challenges. Nevertheless, the path dependency concept plays a critical role in harmonizing transition, change as well as continuity in institutional management. The emergence of technological advances in both service and production sectors calls for change in operation without affecting desirable aspects of organizations.
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