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[Satisfactory Profits as a Guide to Firm Behavior]: Reply
... Ever since Coase (1937) and Williamson (1975), a more widely accepted theory of the firm has existed. It is at these points that the debates in economic theory shifted from defences of to more dynamic problems (Cyert and March, 1959). ...
The general mind‐sets in economics do not fulfil the needs of a sustainable development of society. This article questions the dominant economic paradigms and transforms the stock resource allocation model based on the exploitation into the TIMES‐model, a flow resource allocation model based on exploration. In the traditional resource allocation of the firm, natural resources are treated as commodities or even ignored, while labour and capital resources are overemphasised. The sustainable firm however will be confronted with changes that encompass: a change from profit thinking to value thinking; a change from exploitation to exploration; cooperation next to competition; and a shift to a new resource allocation model (the so‐called TIMES‐model). These transformations are fundamental in character and need other assumptions based on a sustainable worldview.
This Element is an attempt to contribute to the extant literature on boards and corporate governance by exploring in detail the active involvement of the board in the purpose and strategy of the corporation in order to cope with a complex and uncertain environment.
The papers in this special issue focus on ideas associated with a book published 45 years ago, A Behavioral Theory of the Firm (Cyert, R.M., March, J.G., 1963. A Behavioral Theory of the Firm. Endlewood Cliffs. Prentice Hall, NJ). The book proposed the introduction of a few more realistic behavioral assumptions into the economic theory of the firm. The papers presented here examine some aspects of the history of the ideas found in the book, extend and elaborate the ideas in the context of current research, and indicate possible directions for future research in the behavioral tradition. We will not attempt to summarize the papers, but will try to locate them gently in their historical and intellectual context.
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