This theoretical article aims to expand evolutionary economics (EE) to address two empirical topics: a) societal problems such as sustainability, and b) comprehensive technological transitions. To address these topics, this paper builds on but moves beyond EE to develop a neo-evolutionary theory that conceptualizes how industry, markets and technology interact with civil society and polity. This theory develops a broader understanding of environments (which also includes civil society and polity) and agency (which also includes strategy and interpretation). To address these issues, this article enriches EE with insights from neo-institutional sociology, organization theory, economic sociology and strategic management, and synthesizes these into a neo-evolutionary theory. Industry actors are conceptualized as embedded in two external (task and institutional) environments and in an industry regime whose core elements (technology, beliefs, mission, strategic orientation) guide actions towards the external environments. The neo-evolutionary theory links the external environments to core elements and types of action through five 'enactment-adaptation cycles': an evolutionary cycle (behavioural learning), a sensemaking cycle (cognitive learning), a political cycle, a cultural cycle, and a normative cycle. These cycles contain recursive mechanisms that link external pressures and strategic responses. The article indicates empirical implications for destabilization processes in transitions, industry responses to societal problems such as sustainability, and longitudinal industry trajectories.