Not all sunk costs produce path dependence

Evidence

Apart from this idealized counterargument (it takes an efficient capital market for granted), the simple fact of past investments (in terms of sunk costs) cannot be equated with path dependence, since, in consequence, all investments would bring about path dependence (for a more sophisticated argument in this direction, see Arrow, 2004). This refers back to our initial statement that we should refrain from conceptualizations that end up considering all past dependence as path dependence. — Jörg Sydow, Georg Schreyögg, and Jochen Koch, Organizational Path Dependence, 62

Categorization

• DEEPTHINKING: A conceptual boundary condition that, if ignored, collapses an entire theoretical framework into uselessness—any past decision becomes ‘path dependent.’
• XREF: Ties directly to Pierson’s and David’s increasing-returns accounts of path dependence, and to organizational ecology’s structural inertia literature.