Path Dependence, Behavioral Rules, and the Role of Entrepreneurship in Economic Change: The Case of the Automobile Industry

This paper develops a complementary theory of path dependence based on rigidity resulting from the choice of management system within the firm. Rules-following behavior introduces rigidity which can lead to inefficient path dependence within a firm. Entrepreneurial alertness, in a crisis, can prevent lock-in from occurring since it leads people to alter perceptions and change behavior. An empirical look at the automobile industry explores the idea of rules-following behavior inducing path dependence development and the potential for change despite inefficient path dependent behavior.

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