A Behavioral Theory of the Firm Paper

Topics: Decision making, Decision theory, Risk Pages: 3 (754 words) Published: September 17, 2013
A Behavioral Theory of the Firm by Richard M. Cyert and James G. March

This book explains the model that the authors created for administrative decision making. The basis for the model the authors created has two main ideas: (1) it includes a comprehensive set of changeable categories; (2) it has a set of relational concepts. The classic model had two basic assumptions. The first assumption is that making money is always the bottom-line and the second is perfect knowledge. The classic theory was not adequate to deal with oligopolistic markets. The theory in this book is an alternative to manage modern, multi-product firms. Categories

The authors feel that organizations operate using goals, expectations, and decisions. Organizational goals are controlled by 2 things: (1) what things are viewed as important; (2) the aspiration level of the organization toward accomplishing each goal. Expectations are what the organization sees as being reasonable prospect using available information from past endeavors and from other organizations in the market. Organizational choices are the actions taken by an institution when problems arise. Choices are made according to previously established rules and regulations. These variable categories make up the first part of the Behavioral Theory Model. Concepts

The second part of the model is made up of relational concepts. There are 4 major concepts in Cyert and March’s theory: (1) quasi resolution of conflict, (2) uncertainty avoidance, (3) problemistic search, and (4) organizational learning. These ideas are the fundamentals to understanding decision-making processes in contemporary, large-scale business organizations. Quasi Resolution of Conflict.

The quasi resolution of conflict is related to goals, local rationale, decision rules, and attention to goals. Organizational goals are constraints that institution members must strive toward, regardless of personal ambitions. Rationality is facilitated by decision rules and...
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • Paper on CBT Theory
  • Importance of Theory Paper
  • Personal Theory Paper
  • Advanced Theories Paper
  • Criminological Theories Term Paper
  • Behavioral Theories Essay
  • Behavioral Theories of Leadership Essay
  • Watsons Theory of Human Caring Paper

Become a StudyMode Member

Sign Up - It's Free
Cartoon Text Effects | Artificial Intelligence | Robert Lopez