Cognition and Innovation. Entrepreneurship and the Autopoietic Approach. The Cases of Aer Lingus and FIAT

By now it is an accepted fact that firms are autopoietic systems; that is, systems capable of self-reproducing and regenerating the typical network of processes – organizational, economic and financial – in the environment where they operate. The capacity to self-reproduce comes from the ability of firms to adapt and co-evolve in their environments, thereby coming up with innovative solutions through processes involving acquisition and creation of knowledge; this depends on the firm's capacity to find factors that facilitate the accumulation of dynamic capabilities. The fitness of the organization, defined by the degree of its success in adapting to the environment – measured by its capacity to produce an adequate positive performance over time – depends on the type of innovation produced, and thus typically on the entrepreneurship that characterizes the firm over time. Whenever the firm's performance is not satisfactory – and there are low levels of fitness – and, in order to avoid the break-up of the organization, there is an increase in the propensity toward risk, then the greater are the incentives to search for disruptive innovations; in fact the organization will be forced to undertake profound changes in its structure or business model, while maintaining its identity intact. Organizations showing satisfactory performance – which have high fitness levels –, instead, will hold that it is preferable to search for incremental innovations in the framework of a conservative strategy; the lesser uncertainty of results obtainable through such a strategy of continuity is preferable to the uncertainty from the introduction of wideranging innovations. After we have clarified these concepts, the paper will present the cases of Aer Lingus and FIAT to empirically show how economic organizations, with a lower fitness, are able to maintain their autopoiesis in situations that require a high degree of environmental adaptation and that motivate the drive toward innovation. The paper shows the relationship between the type of innovation introduced by firms and the fitness level elicited by the organizations according to an autopoietic approach. Empirical evidences come from Aer Lingus and FIAT case studies.