60th birthday of ‘A Behavioral Theory of the Firm’: a review of the relational concepts and recommendations for future research

Abstract

This year, we celebrate the sixtieth anniversary of ‘A Behavioral Theory of the Firm’ (BTF) (Cyert and March in A behavioral theory of the firm, Prentice Hall, Englewood Cliffs, 1963), which central ideas and concepts are fundamental to almost all theoretical and empirical work focusing on organizational decision-making. In particular, the four underlying relational concepts of BTF: (1) quasi resolution of conflict, (2) uncertainty avoidance, (3) problemistic search, and (4) organizational learning provide theoretical explanation for firms’ decision-making behavior. However, as literature has grown, focus of the studies and application of the concepts are becoming increasingly fragmented, leading to parallel and decoupled insights rather than cohesive and complementary explanations. We conduct a systematic literature review of 114 publications in top-ranked journals to provide a deeper understanding of the applications of BTF’s four relational concepts and their interrelation. Reviewing and synthesizing extant literature, we identify seven different organizational decision areas in which mainly two relational concepts, problemistic search and organizational learning, are applied to explain specific firm behaviors. The relational concept of quasi resolution of conflict and uncertainty avoidance seem underrepresented or almost neglected in the BTF-related research. Furthermore, we provide an integrative process framework connecting the four relational concepts and related research insights, and thereby, highlight opportunities for future research.

Antecedents and Context of Chinese Firms’ Foreign Exit

“…Simon's study [33] emphasized that decision making forms the heart of the organization, and the vocabulary of organizational theory must be derived from the logic and psychology of human choice [34]. However, due to biases in decision-making perspectives as well as limited information, rational actors do not exist in real situations [35]. Thus, firms will set a return expectation based on sunk cost due to bounded rationality [33].…”