Behavioral Theory of the Firm


Also found in: Acronyms.

Behavioral Theory of the Firm

A theory of how a firm or company makes decisions. The behavioral theory states that a company's decision makers may not make the best decisions all the time because of lack of information, how a question is framed or their own prejudices and fears. Because more than one person is usually involved in a company's decision-making process, firms often implement policies to reduce the incentive for the personal perceptions of multiple persons to result in inefficient decisions. See also: Theory of the Firm.
References in periodicals archive ?
"What are the specifics of Czech entrepreneurial behavior in terms of A Behavioral Theory of the Firm by Cyert and March?"
It discovers inner mechanisms as well as their genesis and incorporates them into the classical behavioral theory of the firm.
Drawing upon the behavioral theory of the firm (Cyert and March 1963; Greve 2003a, b), this conceptual analysis offers that stable deviation from firm-specific levels of multinationality can be explained by decision maker use of aspirations.
Furthermore, the value in starting this discussion at a theoretical level can be seen in both transaction cost economics (Coase 1937) and the behavioral theory of the firm (Cyert and March 1963).
(2013) Behavioral theory of the firm: hopes for the past; lessons from the future.
(2012) The behavioral theory of the firm: assessment and prospects.
Reciprocity and R&D search: Applying the behavioral theory of the firm to a communitarian context.
Once again, we believe the behavioral theory of the firm (Cyert & March, 1963) can provide guidance on this challenge.
We theoretically link it to the four major concepts in Cyert and March's (1963) classic book, A Behavioral Theory of the Firm: quasi resolution of conflict, uncertainty avoidance, problemistic/slack search, and organizational learning.
This is also among the first work to employ a longitudinal organizational dataset to test Cyert and March's (1963) behavioral theory of the firm across countries.
To summarize, although the behavioral theory of the firm, as reflected in the seminal work of Cyert and March (1963), explicitly acknowledges that all firms develop and pursue non-economic as well as economic goals through a process of stakeholder negotiation, family firms alone should have non-economic goals reflecting the unique interests of the controlling family (Lee & Rogoff, 1996; Zellweger & Nason, 2008).
We then compare the actions of poor performers with those of other hospitals to test the predictions of the behavioral theory of the firm and threat-rigidity.