Institutions change through endogenous processes, exogenous shocks, or both together

Evidence

We hold that institutions can change due to endogenous processes, exogenous shocks, and combinations of both. In the case of the region of Stuttgart/Mittlerer Neckar it was both the external shock in the form of an economic crisis in the first half of the nineties, but also preparatory work already initiated beforehand in order to steer the region along a new path into different areas. — Georg Schreyögg and Jörg Sydow, The Hidden Dynamics of Path Dependence, 937

Categorization

• DEFINE: Names the three change mechanisms — endogenous drift, exogenous shock, and their combination — that structure the whole path-dependence framework.