Two experiments on organizational communication

In order to explore the effect of conflict (as reflected in presumed payoffs) on communicated information, we undertook two experiments on organizational communication. The first looks at individual bias, the second at organizational bias. 1. An experiment on communication bias We wish to test the proposition that individuals can and do modify their subjective

Implications for a theory of organizational expectations

We can now examine in more general terms the kind of expectations model that is suggested by the studies reported above and by our present under-standing of human organization problem solving. As before, we consider the organization to be a coalition having a series of more or less independent goals imperfectly rationalized in terms

A partial model of organizational choice

The objective in this section is to show how the general attributes of decision making indicated in Chapters 3 and 4 can be introduced into a choice model. Because the elaboration is an obvious simplification of some important features of choice procedures in a complex organization, we call it a partial model. It summarizes

The firm as an adaptive institution

In Chapter 2 (and subsequently) we suggested that the classic theory of an omniscient firm is inappropriate for a theory of the firm directed toward answering questions about microbehavior. Without denying the substantial abilities of organizations as problem-solving and decision-making institutions, we have suggested that a business firm is constrained by the uncertainty of

Standard operating procedures of the firm

Any organization as complex as a firm adapts to its environment at many different (but interrelated) levels. It changes its behavior in response to short-run feedback from the environment according to some fairly well-defined rules. It changes rules in response to longer-run feedback according to some more general rules, and so on. At some

Basic Concepts in the Behavioral Theory of the Firm: Goals, expectations, and choice

The basic framework for analysis we have proposed, like the classic one, has two major organizing devices: (1) It has a set of exhaustive variable categories; (2) it has a set of relational concepts. The exhaustive categories are implicit in the organization of this volume. We have argued that we can analyze the process

Basic Concepts in the Behavioral Theory of the Firm: Four major relational concepts

In the course of developing the three subtheories, we have developed a relatively small number of relational concepts. In many respects, they represent the heart of our theory of business decision making. The four major concepts used in the theory are (1) quasi resolution of conflict, (2) uncertainty avoidance, (3) problemistic search, and (4)

The organizational decision-making process of Behavioral Theory of the Firm

We have described four basic concepts that seem to us fundamental to an understanding of the decision-making process in a modern, large-scale business organization. The quasi resolution of conflict, uncertainty avoidance, problemistic search, and organizational learning are central phenomena with which our models must deal. In our judgment, the natural theoretical language for describing

General view of price and output determination in a retail department store

As we suggested in earlier chapters, the organization makes relatively independent price and output decisions. There are loose connections between the two decision areas, but for the most part decisions are made with reference to different goals and different stimuli. Although we will want to elaborate the goals of the organization somewhat when we

Details of output determination in a retail department store

The concept of output is not obviously relevant to a department store. In fact, if our major interest were in retail organizations, we would not describe any decisions as being output decisions. However, we are interested more generally in business firms, and we wish to identify a decision variable in the retail setting that

Details of price determination in a retail department store

The firm recognizes three different pricing situations: normal, sales, and mark-down pricing. The first two situations occur at regularly planned times. The third is a contingent situation, produced by failure or anticipated failure with respect to organizational goals. In each pricing situation the basic procedure is the same, the application of a mark-up to

Tests of the detailed models in a retail department store

We have tried to develop a model that would yield testable predictions, but there are two major limits on such a goal. First, we have not been completely successful in defining a model that will make precise predictions in every decision area. Second, where we have been successful in developing a model, we are

A general model of Price and Output Determination

In this section we describe the decision processes assumed in the model at three different levels of detail. Each description is consistent with the others; they become progressively better defined. 1.  A gross description of the model We assume an n -firm oligopolistic market. Each of the firms is similar in the sense that

An exploration of some properties of the Price and Output Determination model

The general model presented in this chapter is a summary of our understanding of the key microprocesses in price and output determination by a modern firm. It is a framework for other models and a basis for exploring the reaction of such firms to characteristics of the market, variations in external (e.g., governmental) constraints,

Managerial rationality and profit maximization

As indicated in Chapter 2, the profit maximization hypothesis has been subject to repeated criticism. Some of this criticism has been directed at the notion of marginal analysis itself. We shall not be concerned with this class of criticism. More fundamental, perhaps, have been the criticisms that challenge the propriety of treating profit maximization

Motivating the model of Rational Managerial Behavior

Considerations of space permit only a cursory treatment of the question of managerial motivation. The emphasis, therefore, will be on those aspects of motivation that are neglected by the profit maximization hypothesis, but which are essential to the present model. However, this shift of emphasis should not be construed to mean that such goals

The model of Rational Managerial Behavior

The task now becomes one of selecting a set of variables that permits us to translate management’s objective function into mathematical terms. This requires that two new variables be defined: (1) the fraction of actual profits that is reported and (2) staff. The first of these is necessary in order to identify the management

A particular application of the model of Rational Managerial Behavior

Although a number of possible applications of the model suggest themselves (e.g., in the area of tax policy), most of these are best deferred until the model has been subjected to empirical test. However, departures from profit-maximizing behavior that are said to exist in the operations of public utilities are captured so nicely by

General considerations of Trust Investment Behavior

This study concerns the investment of trust funds held by banks in the United States — funds that currently amount to nearly $60 billion. Our model focuses on the investment of trust funds in common stocks. When making a decision, a trust officer in a bank is confronted with a mass of information. Information

Postulates and data for the model of Trust Investment Behavior

Since our model is a theory of individual decision-making behavior, the method of analysis is based on the theory of human problem solving. 4 In keeping with the postulates of this theory, the main postulates for the analysis of the investment decision process are that there exist: A memory that contains lists of industries