When positive feedback ends

By Daan Schouten

This post will illustrate that the concept of path dependency is not just applicable to big processes such as institutional change. The European Patent Office (EPO) is responsible for granting European patents. As better performance pays off, positive feedback incentivizes people to pursue a career within EPO. Because EPO is the only one of its kind in Europe, and the work is highly specialized, the concept of negative feedback applies also: the longer one works for EPO, the harder it becomes to find an alternative job with similar payoffs.

The work environment changed radically with the appointment of Benoît Battistelli in 2010. The new president of EPO is said to have brought with him a ‘culture of fear’. Five employees committed suicide: one on the last day of his vacation, another from the seventh floor of the branch located in Rijswijk. A Dutch court claimed Battistelli fundamentally breached principles of human rights when preventing labor union Suepo from effectively organizing. However, EPO enjoys immunity and Dutch courts have no jurisdiction to investigate what goes on within EPO.

Employees face a distressing situation: their career path suddenly lost its allure, the negative feedback associated with resignation is very strong, and the immunity of EPO leaves them with dim future prospects. Strikingly, the appointment of Battistelli has been a relatively contingent event, one whose consequences few could have foreseen when deciding to specialize in patent law.

In terms of contingency, this case is similar to the effect of American intervention in Central America, which James Mahoney claims to have prevented liberalism from developing in Nicaragua and Honduras. Also, it is informative to see the distinction between this example of career path dependency and the economic version, which posits that outcomes should always be optimal because people also consider the long term: one can hardly blame EPO’s employees for the suboptimal outcome of their past decisions.