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A behavioral theory of the firm
... According to the behavioral theory in the tradition of Simon (1947) and Cyert and March (1963), organizational decision-making and behaviors are significantly influenced by the gap between their performance and aspiration levels-the performance benchmarks organizations use to evaluate success. Aspiration levels are typically determined by comparing an organization's past performance (historical aspiration) or the performance of similar organizations (social aspiration). ...
... Organizational decision-making may also depend on the performance gap (Cyert & March 1963;Greve 2003). When organizations receive performance feedback, they assess whether their performance has met their goals. ...
... The relationship between an organization's performance and its aspiration level critically influences its behavior (Cyert & March 1963). Specifically, when performance falls below aspiration levels, organizations actively seek ways to enhance their performance. ...
... According to the behavioral theory of the firm (Cyert and March, 1963), managers assess their firm's financial performance relative to some aspiration level (Ref and Shapira, 2017;Shimizu, 2007). These will often stem from comparing performance to that of similar businesses in their industry, a phenomenon referred to as social comparison performance feedback (Cyert and March, 1963;Greve, 2003). ...
... According to the behavioral theory of the firm (Cyert and March, 1963), managers assess their firm's financial performance relative to some aspiration level (Ref and Shapira, 2017;Shimizu, 2007). These will often stem from comparing performance to that of similar businesses in their industry, a phenomenon referred to as social comparison performance feedback (Cyert and March, 1963;Greve, 2003). When financial performance falls below the aspiration level, firms tend to initiate what is known as a problemistic search for viable solutions to return profitability to levels at or above the aspiration level (Gaba and Joseph, 2013;Iyer and Miller, 2008). ...
... Although high financial performance may theoretically provide resources and stability for a firm to explore new opportunities and adapt its business model to meet increasing demand, behavioral theory (Cyert and March, 1963) and prospect theory (Kahneman and Tversky, 1979) suggest that firms exceeding their performance aspirations are generally more inclined to maintain the status quo. In such cases, TMTs may narrow their focus to minor, incremental changes or modular BMIs that refine existing components of the business model rather than pursuing broader architectural changes. ...
... The conflict is resolved by ranking goals by importance, giving priority to goals that sustain the organization or are backed by powerful actors (e.g., Fligstein, 1990). Organizations attend to the highest priority goal whenever performance is below its aspiration level and move to lower priority goals only when performance on goals higher in priority is above the aspiration level (Cyert and March, 1963). This priority goal conception has become prevalent in recent empirical research (e.g., Gaba and Joseph, 2013;Greve, 2008;Mazzelli et al., 2019) and the hierarchical goals' model has become less prominent. ...
... Specifically, we propose that clarity in the contribution of a sub-goal to fulfilling the primary goal is a key component of the hierarchical goals' model, and temporal proximity to the subgoal's deadline provides that clarity, focusing decision-making on the sub-goal (March and Simon, 1958). In contrast, distance to the sub-goal deadline generates ambiguity about the means-end linkages and thus favours the priority goals' model (Cyert and March, 1963). ...
... Beyond the literature on multiple goals, our theory and findings have implications for the broader behavioural theory of the firm (Cyert and March, 1963) and behavioural strategy (Gavetti, 2012) because they expand the boundaries of rationality, as suggested by Simon (1997Simon ( [1947), by showing how decision makers engage in trade-offs. Work on organizational design (Joseph and Gaba, 2020) and organizational economics (Puranam, 2018) also benefit from this study because we emphasize the role of goal structures and explain how sub-goals contribute to the primary goal. ...
There is increased research on how organizations respond to performance feedback on multiple goals. Most of it considers goals that have ambiguous ranking and thus differs from goal hierarchies with sub‐goals that are instrumental for accomplishing a primary goal. We develop theory on how goal hierarchies lead to primary goal and sub‐goal interactions influencing organizational decision‐making. We show that sub‐goals are important because they are temporally prior and instrumental for primary goals, making organizational responses to sub‐goals and primary goal interdependent in interesting ways. Empirically, we demonstrate a more sophisticated approach to multiple goals than earlier work suggests. This advances the behavioural theory of the firm, and supports and refines key assumptions for organizational design and organizational economics, encouraging further research on the role of goal structures and incentive schemes. Our theory and findings call for increased consideration of the March and Simon's (1958) hierarchical goals’ model in management research.
... In this paper, we explain how external and internal factors combine to bring about further improvement in CEP. Drawing from an attention-based view (ABV) of the firm (Ocasio, 1997) and the broader behavioral theory of the firm (Cyert & March, 1963) literature in which an ABV is grounded, we theorize that the combination of regulatory fines and CEO turnover can disrupt established patterns of organizational attention to facilitate actions that improve environmental performance. We first hypothesize that after receiving a large environmental fine, firms 2 pay more attention to environmental issues. ...
... Firms' boundedly rational decision-makers can attend to only a portion of the virtually unlimited stimuli with which they are confronted (Simon, 1947;March & Simon, 1958). To help cope with information overload, firms establish explicit and implicit structures and routines (Cyert & March, 1963;Nelson & Winter, 1982). These structures and routines shape sensemaking processes and direct managerial attention toward some aspects of the operating environment while creating blind spots toward others (March & Simon, 1958). ...
... To go beyond current practices and find new opportunities for greening, firms must engage in active search. Yet, drawing from a behavioral theory of the firm (Cyert & March, 1963), in which an ABV is grounded (Ocasio, 2011), active search can be characterized as "problemistic." That is, engaging in search consumes a firm's limited resources, so firms tend to avoid it unless a problem arises that triggers the need to do so. ...
Despite decades of widespread corporate sustainability programs, corporate greening remains insufficient. What can drive firms to go greener? Drawing from an attention-based view of the firm, we hypothesize that a significant external shock can draw greater organizational attention to greening. However, the increased attention will fail to produce improvement in environmental performance unless it is combined with an internal shock sufficient to disrupt established routines. Through an empirical test of a large longitudinal data set, we indeed find that the external shock of a large environmental fine shifts organizational attention toward environmental issues. However, this shift in attention does not lead to improved corporate environmental performance unless accompanied by an internal shock, CEO turnover. If the CEO remains after a large environmental fine, corporate environmental performance does not improve. These findings help to explain the disconnect between green talk and action after decades of corporate sustainability and points out the need for further investigation of the combination of external and internal factors that can drive further improvements in corporate environmental performance.
... Despite the compelling evidence that performance feedback can affect a firm's collaboration activities (Baum, Rowley, Shipilov, & Chuang, 2005;Kavusan & Frankort, 2019), we have little insights into how such factors may affect a firm's strategic decision to enter new relationships that connect partners from other communities. Therefore, we investigate why some organizations bridge across network communities more or less through the lens of the behavioral theory of the firm (Cyert & March, 1963). The behavioral theory of the firm is rooted in the notion that decision-makers are boundedly rational and that performance feedback may account for a firm's strategic choices regarding the formation of new bridging ties (Baum et al., 2005). ...
... According to the behavioral theory of the firm (Cyert & March, 1963), when firms are performing better than expected, they are more willing to engage in slack search and initiative experimentation with challenging projects with high potential pay-offs (Baum et al., 2005). Persistent positive innovation performance discrepancies allow access to additional knowledge resources (Kavusan & Frankort, 2019;Kotiloglu, Chen, & Lechler, 2021), which increase a firm's motivation for competitive value creation by establishing collaborative relationships with heterogeneous partners in other communities (Wang & Yang, 2019). ...
... The behavioral theory of the firm posits that firms' strategic decisions are guided by aspirations and are triggered to conduct a problematic search to find solutions when performance falls short of aspirations (Cyert & March, 1963). Typically, the discrepancy related to negative attainment indicates a low match between a firm's accessible resources and the technological track in which it operates (Kavusan & Frankort, 2019). ...
Although extant research has highlighted the tangible benefits of bridging ties that interlink network communities, our understanding of the determinants of a firm's propensity to form new bridging ties is scarce. Drawing on the behavioral theory of the firm, we conceptualize the formation of new bridging ties as a consequence of decision-makers' bounded rationality and verify the effect of performance feedback on the share of new bridging ties. Additionally, we contend that decisions regarding forming new bridging ties in response to performance feedback are bounded by CEOs' experience. We use a longitudinal dataset of Chinese publicly listed firms in the pharmaceutical industry from 2010 to 2020. The results indicate that the magnitude of a firm's outperformance relative to its aspirations positively affects the share of new bridging ties, while the magnitude of a firm's underperformance relative to its aspirations has an inverted U-shaped relationship with the share of new bridging ties. CEOs' academic and political experience strengthens the positive relationship between the magnitude of a firm's outperformance relative to its aspirations and the share of new bridging ties. CEOs' political experience flattens the inverted U-shaped effect of the magnitude of a firm's underperformance relative to its aspirations on the share of new bridging ties.
... We think these two views can both be true under a dynamic framework. The distinction between beneficial and wasteful administrative activities depends on their suitability to current conditions (Blau, 1963;Cyert & March, 1963). As Sutton and Rao (2024) observes, processes can be beneficial by making it harder to do the wrong thing, but they can also be detrimental when they make it more difficult to do the right thing. ...
... Prior empirical studies on administrative costs have identified mechanisms driving the creation, revision, and eventual obsolescence of organizational processes. Organizations create processes in order to adapt to their environment (Cyert & March, 1963). Specifically, managers create processes when existing ones fail to solve the organization's problems (Zhou, 1993). ...
... Here, we propose a novel quantitative model that integrates the elements driving process creation and removal, with the decay of processes from useful to obsolete. The model formalizes these interactions utilizing the behavioral theory of the firm (Cyert & March, 1963), considering organizations allocating resources to meet multiple goals-process administration, direct production, process creation, and process pruning. We first examine the consequence of well-meaning resource allocation heuristics of management acting with limited information, and derive conditions for administrative bloat, which we define as both increasing administrative cost and administrative waste (proportion of processes that are obsolete). ...
We formulate a quantitative, dynamic model that captures how environmental change, alignment with the environment, managerial decisions, and resource constraints interact to give rise to administrative bloat in organizations, resulting in organizational failure. Inspired by empirical findings, we model codified processes that, while initially useful, become obsolete as conditions change, consuming resources until actively removed. Our model predicts a critical threshold in management decision parameters -- the propensity to create processes in response to problems, and the propensity to prune obsolete processes in response to administrative burden. This threshold determines two possible outcomes: a sustainable equilibrium, where administrative costs stabilize below resource limits, and runaway administrative bloat, where costs -- dominated by obsolete processes -- grow to resource capacity. The threshold worsens with faster environmental changes. A short-term environmental shock exceeding a critical threshold can push organizations from sustainability into bloat cycles, highlighting the risks posed by events like technological upheaval. Importantly, process creation and pruning propensities have asymmetrical impacts on outcomes. Avoiding administrative bloat requires carefully balancing codified and ad-hoc solutions, weighing error costs, and anticipating future process obsolescence. Finally, We also discuss how our model may be applied to generate insight from existing and future data.
... In an early study, Cyert and March (1963) discovered through survey research that budgetary slack arises from negotiations over budgetary goals among different management levels within a firm. Williamson (1963) highlights that subordinate managers attempt to sway the budget-setting process to secure slack in budgets. ...
... The definition of budgetary slack has been a topic of ongoing debate among scholars. Cyert and March (1963) were the first to introduce the concept of "slack." The budget is understood as a negotiation process among organizational members aimed at achieving goal alignment, while slack is defined as the gap between the resources available to the organization and the resources required to sustain it. ...
Budgetary slack is a common phenomenon in corporate budget management, characterized by management intentionally underestimating revenues or overestimating costs during the budgeting process to create a financial cushion. Organizations need to be mindful of the potential negative consequences of excessive budgetary slack, which can undermine financial stability and transparency. This article aims to identify and analyze the key factors influencing budgetary slack and examine its impact on organizational performance. Using a review analysis approach, we investigated the determinants of budgetary slack and its effects on organizational outcomes. The analysis reveals that budgetary slack is influenced by factors at three distinct levels: the organizational level, the environmental level, and the individual level. While moderate budgetary slack can provide flexibility in uncertain environments, excessive slack ultimately impairs organizational performance through resource wastage and reduced managerial effort. Budgetary slack is a relatively complex phenomenon that requires careful management. Organizations must balance the need for operational flexibility with maintaining accountability and transparency. Further research could explore the underlying mechanisms contributing to the detrimental effects of budgetary slack, providing valuable insights for organizations to effectively manage it.
... Our research investigated how leaders of 128 different companies perceived how their organizations have responded to the Covid-19 crisis, about sensemaking and to four proposed alternatives for reacting to changes in routines: a company could consciously choose to persist with routines (Cyert and March 1963;Patriotta and Gruber 2015;Suarez and Montes 2019); become paralysed (Lenz and Lyles 1985); rely on heuristics (Patriotta and Gruber 2015;Suarez and Montes 2019); or create a bricolage as a response (Baker and Nelson 2005;Bechky and Okhuysen 2011), thus improvising its routines (Pina e Cunha, Vieira da Cunha, and Kamoche 1999; Patriotta and Gruber 2015;Suarez and Montes 2019). We also asked about the organizational context that enables crisis dealing. ...
... In response to change, organizations sometimes persist with familiar practices when no sensemaking addresses the crisis itself. Cyert and March (1963) suggest that organizations facing contextual uncertainty may opt for shortterm predictability and avoid risky decisions by standardizing and reinforcing established policies. This approach bypasses sensemaking in favour of adherence to existing standards. ...
The objective of the paper is to analyse the actors' perception regarding how organizational actors lead the reaction of their companies to crises, changing or not their routines accordingly. The paper contributes to enlarging the understanding of crisis management by an original perspective of phenomenon evaluation based on the junction of two literature fields: sensemaking and routines, considering the organizational context that impacts crisis management. A survey of 128 company executives from different industries in Brazil was developed to identify how their companies dealt with the COVID‐19 crisis, considering sensemaking, routines and the organizational context. The results unveiled a significant and positive influence of sensemaking and organizational context on the crisis reaction, but not on the deliberated mobilization of the routines, emphasizing improvisation and trial‐and‐error. The results reinforce fast sensemaking attitudes yielding direct implementation to test the new routines, correcting course of action promptly.
... As such, the aspiration level is a very important reference point for evaluating a company's performance. Performance below the aspiration level can be considered negative, while performance above the aspiration level can be considered a success (Cyert & March, 1963;March & Simon, 1958). ...
Performance feedback provides information about the company's achieved performance compared to the aspiration level. Undoubtedly such feedback influences the decisions that business leaders make for the future, primarily with regard to business risk. However, business risk is a very general term. Since research and development is one of the riskiest investments within a company, many studies have focused on the influence of performance feedback on this variable. Admittedly, this led to mixed results. Subsequent studies have therefore proposed moderator factors that can influence the relationship between performance above or below the aspiration level and research and development. As such, the importance of the size and age of the company and the organizational reserve in this relationship was confirmed. However, environmental factors and characteristics of the CEO have not yet been examined. This research focuses on the importance of CEO gender. More specifically, since literature shows that men are generally riskier than women, male CEOs are expected to positively influence the impact of performance below or above aspiration levels on the measure of corporate risk. As a dependent variable, however, this study does not focus on research and development, as this variable is not available in the Belgian annual accounts, but on the internal cash flow of a company, which has a positive relationship with investments in research and development. The data were obtained from public financial databases on the one hand and from a cross-sectional survey completed by 448 Flemish entrepreneurs on the other. The analyses show that there is a positive effect on the dependent variable when performance is above the aspiration level, and a negative effect when performance is below the aspiration level. However, CEO gender did not appear to have a significant influence on these relationships.
... The literature distinguishes various analytical perspectives. The behavioral approach focuses on analyzing market competition mechanisms, emphasizing participants' strategies and behaviors (Cyert & March 1963, Solek 2016. The functional approach highlights the role of competition as a driving force for economic development (Kaczmarek-Kalisz & Guliński 2010). ...
... Alih-alih berbagi informasi, dan tren penting dalam studi organisasi mengasumsikan bahwa informasi itu sendiri adalah kekuatan, dan kekuatan itu berasal dari penyimpanan informasi. Misalnya, tren ini diwakili oleh teori seperti teori perilaku perusahaan (Cyert & March, 1963), teori kepenyampai pesanan, teori pilihan organisasi yang dikenal sebagai ''model tong sampah", interaksionis sosiologi, dan teori konfigurasi. Presentasi diri, juga dikenal sebagai interaksionisme simbolik, dan teori permainan adalah bagian dari tren ini juga. ...
Alhamdulillah, puji syukur ke hadirat Allah yang senantiasa
melimpahkan Rahmat, Taufiq Hidayah dan I'anah-Nya. Dengan
tersusunnya buku "Psikologi Media Sosial" ini.
Berdasarkan sudut pandang psikososial, media sosial dapat
didefinisikan sebagai "ruang digital" atau “ruang dunia maya”, yang
memungkinkan pengguna untuk mengelola hubungan jaringan sosial
mereka (organisasi, perluasan, eksplorasi dan perbandingan) dan
identitas sosialnya (deskripsi dan definisi). Selain itu, media sosial
memungkinkan penciptaan hibrida jaringan sosial, pada saat yang
sama dibentuk oleh koneksi virtual dan koneksi nyata yang
menimbulkan 'interrealitas', ruang sosial baru, lebih lunak dan dinamis
dari media sosial sebelumnya. Perkembangan penggunanan media
sosial-pun semakin hari semakin banyak, bahkan “hampir” setiap
individu mempunyai media sosial.
Buku yang membahas tentang media sosial dan psikologi
sosial memang sudah banyak. Namun buku sederhana yang
membahas spesifik media sosial ditinjau dari psikologi masih jarang.
Oleh karenanya, tujuan kami menulis buku ini adalah agar semakin
banyak dan beragam pengguna media sosial di Indonesia mengenal
dan mendalami teori mengenai media sosial terutama secara
psikologis.
Buku Psikologi Media Sosial yang ada dihadapan saudara ini
pada awalnya bagian hasil penelitian yang telah kami laksanakan pada
tahun 2021 yang telah di danai melalui Bantuan Operasional
Perguruan Tinggi Negeri (BOPTN) IAIN Kudus. Oleh karena itu,
perkenankanlah penulis menyampaikan ucapan terima kasih kepada
seluruh bapak dan ibu yang menangani “proyek” tersebut.
Ucapan terima kasih juga disampaikan kepada semua pihak
yang tidak mungkin disebut satu per satu, yang telah banyak jasanya
dalam memberikan bantuan terhadap penyelesaian buku ini.
Penulis menyadari buku ini tidak terlepas dari kelemahan.
Oleh karena itu, kritik dan saran konstruktif dari berbagai pihak sangat
diperlukan. Semoga buku ini bermanfaat bagi pembaca budiman.
Selain itu, kami menyadari bahwa di dalam penyusunan buku yang
sedang saudara baca ini masih banyak memiliki sisi kelemahan, baik
kelemahan teknis penulisan maupun substansirnya. Oleh karena itu,
kami berharap sekali kepada para pembaca untuk dapat memberikan
saran dan kritiknya, demi kesempurnaan tulisan buku ini.
... In the organizational literature, the relationship between goals and performance is described as performance feedback and is an extension of organizational learning, or the change of knowledge produced by experience (Argote & Miron-Spektor, 2011). When performance deviates from desired goals, organizations are motivated to correct the deviation, and the corrective outcomes of this effort represent what is learned through the process (Cyert & March, 1963). Moreover, research within organizational learning identifies rules as a resource for storing new knowledge (Levitt & March, 1988). ...
Sport organizations (e.g., leagues, federations, associations) often modify their rules of play to address shifts in their internal and external environments. Previous research on rule modification in the field of sport management is limited by the scope of rules considered and explanatory theoretical frameworks used. This study leverages a computational approach to analyze modifications (births, revisions, and deletions) to an archival collection of 10,277 National Football League rules between 2001 and 2022. Theories of organizational learning and performance feedback are used to generate testable relationships between plausible goals, related performance outcomes, and subsequent rule modifications. The results provide an initial account of how and why sport organizations modify their rules over time. Notably, this study finds that organizations appear to learn strategic uses for different types of rule modifications to address specific deviations in performance relative to salient goals in sport. Implications for future research on rule management are offered.
Accepted author manuscript version reprinted, by permission, from Journal of Sport Management, 2025, https://doi.org/10.1123/jsm.2024-0370. © Human Kinetics, Inc.
... In addition, as wars involve complex organizational structures that can impact the conduct of a violent conflict, such as military hierarchies (Holderness and Pontiff, 2012), we encourage researchers to explore how organizational design, command and control structures, and communication networks affect the dynamics and evolution of war. The behavioral theory of the firm (Cyert and March, 1963;Gavetti et al., 2012), which focuses on how and why decision-makers make boundedly rational choices in situations of uncertainty and complexity, seems particularly well suited for studying the complex behavioral dynamics and biases that lead to the outbreak and progression of war. In turn, insights gained from studying these processes in the context of war can also inform management research on behavioral strategy and organizational design, contributing to a more refined understanding of decisionmaking under risk and uncertainty. ...
We argue that war as a phenomenon deserves more focused attention in management. First, we highlight why war is an important and relevant area of inquiry for management scholars. We then integrate scattered conversations on war in management studies into a framework structured around three building blocks – (a) the nature of war from an organizational viewpoint, (b) the actors involved in war and (c) war's contextual factors. This framework provides a roadmap to identify pressing questions that management scholars can address, thus laying the foundations of a programmatic theory for analysing war as a specific area of inquiry. We especially emphasize the recursive relationship between war and management theory, demonstrating how they can mutually inform each other. Finally, we highlight empirical challenges and offer specific recommendations to guide future management research on war. Aiming to stimulate a new scholarly conversation, this paper contributes to establishing a forward‐looking research agenda that can help management scholars problematize key issues in the analysis of war.
... The same lack of flexibility in the levels of functional organization is to be found in the conventional theories of the firm, from the transactions cost models (e.g., Coase, 1937;Williamson, 1975) to the principal-agent models (e.g., Spence & Zeckhauser, 1971) to the satisficing models (e.g., Cyert & March, 1963) to the contract models (e.g., Grossman & Hart, 1986;Hart & Moore, 1990). In these models, managers dictate the behavior of the firm, subject to transactional, informational, cognitive, and contractual constraints. ...
This article introduces the core themes of the multilevel economic paradigm. This paradigm extends Darwin’s evolutionary framework of thought (concerned with living things) to economics, in contrast to the neoclassical paradigm, which is modeled after Newtonian mechanics (applicable primarily to inanimate objects). The central theme of the multilevel paradigm is functional organization, which refers to the way in which economic agents (individuals and groups) and systems are structured to achieve economic objectives. The multilevel paradigm recognizes that people are engaged in multiple levels of functional organization, and thus, agency is distributed between individuals and groups. These levels are flexible through time and across domains (economic, political, social, and environmental), so that the economy is understood as embedded in the polity, society, and the natural world. Flexible levels of functional organization are both a cause of and response to radical uncertainty. This flexibility of functional organization implies multilevel economic decision-making and multilevel flourishing.
... The maintaining in power of the dominant coalition (to use the expression coined by Cyert and March, 1963), as well as the necessity of neutralizing rival coalitions, may influence innovation: the proposal for a new product may have a very different treatment whether it is emitted by the former or by one of the latter. ...
To innovate efficiently people in companies and other organizations must take management constraints into account. I analyze several of them: (1) those related to managers and other innovation actors; (2) those related to the organization and innovation processes; (3) those that influence the origin of innovation ideas. We can see that some management constraints slow down or discourage innovation, while others energize innovation.
... Moreover, LU enables an organization to overcome critical disagreements arising from the co-development of the new BM with the partners. In this sense, strong LU can help to choose the right alternative by promoting unity in the internal decision-making process (Cyert and March 2015). ...
Strategic agility (SA) has become an essential capability for established firms to successfully navigate the challenges of business model innovation (BMI) in dynamic environments. This study develops both a conceptual process model and a theoretical framework to explore the interplay between SA and BMI. The conceptual process model provides a practical, stage‐by‐stage analysis of how the three meta‐capabilities of SA—strategic sensitivity (SS), leadership unity (LU), and resource fluidity (RF)–enable the initiation, ideation, integration, and implementation stages of BMI. The theoretical framework expands on this by exploring the relationships between these meta‐capabilities and incorporating moderating factors such as market dynamism and enabling factors such as digital capabilities. Through a theorizing approach, the study synthesizes foundational and recent literature to derive key constructs and propositions, offering new insights into the dynamic interactions between SA and BMI. The findings contribute to the literature by addressing gaps in the integration of SA and BMI research and by providing actionable guidance for practitioners to enhance organizational agility and innovation. Additionally, the study highlights the importance of fostering synergy among SA meta‐capabilities and outlines how contextual factors influence the effectiveness of BMI processes. By presenting both a conceptual process model and a theoretical framework, this paper bridges the gap between theoretical advancement and practical applicability, offering a comprehensive perspective for researchers and practitioners alike. The study concludes with implications for future research and managerial practice.
... The notion that managers play a crucial role in corporate misconduct is consistent with upper echelons theory, which posits that a firm and its actions reflect the values and characteristics of the "most powerful actors-their top executives" (Hambrick, 2007, p. 334). Yet, researchers often overlook the crucial role played by TMTs-the "dominant coalition" of individuals at the helm of the firm (Cyert & March, 1963)-in making decisions for the firm (Yoon et al., 2016). ...
... On this point, Penrose's logic is very close to that advanced by the authors of the Carnegie School such as Cyert, March and Simon (Pitelis 2007). The way in which Penrose actually deals with the phenomena of excess resources very strongly echoes the notion of "organizational slack" advanced by Cyert and March (1963), in the sense that such excesses can be seen as a form of slack. Understood as the "difference between total resources and total necessary payments" in the context of organisational functioning (Cyert and March 1963, 35), organisational slack enables the firm to remain stable by acting as a shock absorber and thereby facilitating adjustment to the firm's environment. ...
... This is known as bounded rationality model of Simon which revolutionized the concept of organizational decision making by proposing that decisions are not completely rational always, as the decision maker cannot have perfect control on environmental and mental abilities (Kalantari, 2010). According to March & Simon, (1958); Cyert & March,(1963) the concept of bounded rationality has explored the shortcomings of human rationality like limited information processing capabilities of human mind and uncontrollable aspects like uncertainty (i.e. bounded rationality attributes 'limitations of information and calculation' and implies the need to satisfy targets rather than optimizing the best imaginable solution). ...
Rational decision making approach in this study indicates features like carefully planning the decisions, thinking before deciding and double checking for right facts before deciding, consideration of various options in terms of goal, and deciding logically and systematically. The ideal rational decision making approach is being adopted in a realistic form of bounded rationality. This rational decision making approach/behavior seems to be a key to success for developing Asian Economies (for e.g. India). Organizations are important units for development of various continents, hence the study of decision making approaches of executives working in those organizations also bear significance. It has been observed rationality significantly positively predict team effectiveness. Hence Asian (Indian) executives are advised to adopt rational approaches for better team and task functions. But, Rationality should not take the form of maximization, as it may lead to avoidance and delays in decision making.
... It is crucial to recognize that worker productivity is based on how a company implements a logical approach to deal with competing objectives sequentially [21]. A wide range of outside variables influences how performance is carried out. ...
Organizations cannot avoid receiving complaints from individual employees or groups of employees who are unsatisfied with their existing working conditions or interactions with colleagues. Despite the decentralization of the health sector following the adoption of the new constitution in 2010, the difficulty of settling employee grievances has grown. This study aimed to investigate how grievance processing affects staff performance at Kenyan public hospitals, specifically Longisa referral hospital in Bomet County. The study's specific objectives were to examine the effect of grievance handling procedures on staff performance at Longisa referral hospital. This study employed a case study design. The study's target population included 307 Longisa referral hospital professionals. Performance. This investigation employed the census, since the sample size was small and readily available. A questionnaire was used to gather primary data. The data was evaluated using descriptive statistics for frequency and percentages, Pearson correlation analysis, and Chi-square analysis to summarise and classify data, uncover relationships between variables, and assess the strength of those relationships. The data was presented as frequency tables. The study discovered a positive and statistically significant correlation (r = 0.547, P-value = 0.000) between grievance handling procedures and staff performance at Longisa Referral Hospital. The three null hypotheses that guided the inquiry were tested using Chi-square analysis, and all of them were rejected due to their Chi-square values. Respondents typically believed that grievance processing affected employee performance. As a result, the study concluded that in order to improve employee performance, businesses should establish wise and sound grievance resolution processes. According to the report, organizations should implement effective grievance-handling approaches to improve employee performance. The study is expected to enhance grievance handling
... 15 Internally, PILs can also enable more "meso" or organizational-level learning. Learning at the organizational level is mainly concerned with organizations adapting to changes in their operating environment (Cyert & March, 1963;Moyson et al., 2017). Such learning involves detecting and correcting errors or anomalies in organizational processes to achieve objectives. ...
In recent years, policy innovation labs (PILs) have emerged to develop greater capacity for addressing pressing public policy problems and achieving policy objectives. An implicit assumption is that PILs can bring new data and evidence to support policy learning. Policy learning enables individuals, organizations, and systems to advance their capacity to achieve policy objectives and produce desirable policy outcomes. We investigate the role of policy learning in “data-based” PILs, which address the growing interest in big data and advanced technologies to address public policy issues. With a focus on applying new information and data systems technologies to assess public policy and management issues, data-based PILs would be expected to support policy learning and thus serve as a critical case for assessing how the design of policy venues can support intentional policy learning. Yet, limited research has examined whether and how policy learning occurs in these PILs. Using an exploratory study design and analyzing findings from key informant interviews, insights into policy learning reveal that data-based PILs enable policy learning processes by acquiring, translating, and disseminating data, information, and experiences across organizations. The most significant policy learning challenge that data-based PILs face is inadequate systems to connect data across agencies. This barrier was perceived as limiting the ability of PILs to fulfill their role of enhancing knowledge sharing in a policy system.
The paper examines the employment of mobile lessons learned teams within the Armed Forces of Ukraine during the Russo-Ukrainian War (2014–2024). These squads served as integral components of two successive learning systems and evolved through two phases: Formation (2014–2018) and Modernization (2019–present). The article explores the establishment of these groups and the development of their operational methodologies. It analyzes the specific roles these teams have played in learning processes, emphasizing their pioneering contributions to enhancing the lessons learned capability. Notably, these squads have been instrumental in ensuring the timely and high-quality analysis of critical combat experiences. Historical research of various categories of mobile lessons learned teams in the UAF and leading global militaries has been conducted, highlighting innovative approaches of the Ukrainian squads. The study proposes a classification of these groups based on their functional purposes, identifying three types: Collect and analyse observations; Supervise and assist in lessons implementation; and Monitor and evaluate the learning process. The findings include recommendations for improving the operational efficiency of these teams.
Este estudo tem como objetivo analisar a relevância da Inteligência Emocional (IE) como competência crítica para a liderança e a gestão de pessoas, com ênfase em sua aplicação em contextos organizacionais complexos e de crise. Por meio de uma revisão bibliográfica de produções publicadas entre 2000 e 2017, o trabalho explora como a IE, definida por Salovey e Mayer (2000) como a capacidade de perceber, compreender e regular emoções, impacta diretamente a eficácia gerencial, a resiliência organizacional e a tomada de decisões estratégicas. Foram utilizadas bases de dados como SciELO, PEPSIC, LILACS, Google Acadêmico e BDTD, com foco em artigos e livros em português que abordam descritores como "Inteligência Emocional", "Liderança" e "Gestão de Pessoas". O documento estrutura-se em três eixos principais: Fundamentos da IE, Liderança e IE, Processo Decisório e Gestão de Crises. Resultados demonstram que organizações que investem no desenvolvimento da IE colhem benefícios mensuráveis, como redução de turnover (Google: -15%), aumento da produtividade (Nestlé: +18%) e melhoria do clima organizacional (Salesforce: +35% em engajamento). Conclui-se que a IE não é apenas um diferencial, mas um catalisador para a construção de organizações adaptáveis e humanizadas, capazes de transformar vulnerabilidade em inovação.
This research investigates the role of Artificial Intelligence (AI) in enhancing corporate governance through real-time financial monitoring in Rwanda, focusing on its impact on transparency, accountability, and fraud detection. Using a mixed-methods approach, data was collected via surveys from 50 organizations, complemented by in-depth interviews and secondary data analysis. Results reveal a significant increase in AI adoption, rising from 25% in 2020 to 72% in 2023, with real-time monitoring (91%) and improved reporting accuracy (84%) as key benefits. Statistical analyses confirm these findings, with a t-test indicating significant adoption growth (p < 0.001) and a regression analysis showing a strong positive correlation (R² = 0.96) between AI investment and compliance rates. Challenges include skill shortages (72%) and high initial costs (65%), necessitating capacity-building and cost-sharing initiatives. The study concludes that AI is a transformative tool for corporate governance, aligning Rwanda's corporate practices with global standards. Recommendations include enhancing AI training programs, subsidizing costs, and fostering public-private partnerships.
This research examines the contribution of green sukuk to sustainable development. It investigates, the emergence of sustainable development, the role of Islamic finance, and the specific impact of green sukuk. Therefore, the difference between green bonds and green sukuk is highlighted within the research. Challenges and opportunities, including its potential for climate action and state building, are also explored. Through a qualitative research using literature review, the study reveals that green sukuk directs funds towards environmentally friendly projects, such as renewable energy and climate change mitigation, contributing to sustainable development goals. This research focuses on the significance of green sukuk as a financing tool that aligns with Islamic finance principles and promotes sustainability.
Economic policy uncertainty (EPU) plays a focal role in formulating a balanced firm strategy to ensure value creation. Performance shortfall conditions may be a further strategic challenge to firms in such uncertain times to ensure survival. Our primary objective in this study is to examine whether environmental, social, and governance (ESG) performance is a strategic option available to performance shortfall firms amidst EPU conditions so they can remain afloat. As a secondary objective, we also investigate the moderating role of different national culture dimensions in strengthening performance shortfall firms’ inclination to explore ESG performance in such turbulent times. Results show the positive impact of EPU on a firm’s performance shortfall condition and confer that exploring more ESG performance would not be the probable solution for performance shortfall firms in an EPU environment to turn around operationally except in low power distance, high individualistic, masculine and high uncertainty avoidance culture.
Objective: The objective of this study is to investigate the effects of information processing capacity in sustainable development goals (SDG) upon consensus, decision speed, and support for strategic decision. It also tests whether consensus and decision speed are a trade-off in a strategic decision process. Theoretical Framework: Based on the Information Processing Theory (Galbraith, 1973), it is hypothesized that information processing capacity (participation, interaction and informalization) would positively affect decision process outcomes, i.e. consensus, decision speed, and support for strategic decision. Method: Measures of each construct were collected through a survey involving 156 TMT members (CEOs and General Managers) from the Indonesian telecommunication, media, and information technology sectors. The result of Partial Least Square analysis confirms that information processing capacity, in terms of participation and interaction, does significantly influence the level of consensus, decision speed, support for decision. However, formalization rather than informalizaton appears to increase the information processing capacity. Results and Discussion: The result of Partial Least Square analysis confirms that information processing capacity, in terms of participation and interaction, does significantly influence the level of consensus, decision speed, support for decision. However, formalization rather than informalizaton appears to increase the information processing capacity. Further, the study shows that the level of consensus is positively associated with decision speed, suggesting a non trade-off relationship between the two commonly presumed incompatible constructs. Research Implications: The practical and theoretical implications of this research are discussed, providing insights into how the results can be applied or influence practices in the field of SDG. Originality/Value: The study contributes to the Information Processing Theory by confirming the positive effect of information processing capacity on decision process outcomes, while showing that formalization can increase information processing capacity.
The objective of this investigation is to evaluate the influence of niche market leadership (NML) on market globalization orientation (MGO) by means of an intelligent cloud-based accounting information system (ICAIS). The study also examined the moderating function of industry dynamism (IND) in the relationship between NML and ICAIS as well as the relationship between ICAIS and MGO. The data obtained from a convenience and snowball sample of respondents employed in small and medium companies (SMEs) in Vietnam was analyzed using Partial Least Squares-Structural Equation Modeling (PLS-SEM) with the assistance of SmartPLS 4.1.0.6. The results clearly showed that NML had a significant and beneficial effect on MGO. The findings eventually demonstrated that the association between NML and MGO was partially mediated by ICAIS. The statistical outcomes also highlighted the moderating role of IND in the relationship between NML and ICAIS as well as the relationship between ICAIS and MGO. Broadly speaking, this study offers valuable insights for managers, stakeholders, and policymakers to comprehend on how to foster MGO through leveraging the potential of NML and ICAIS.
Decision-makers usually have an aspiration level, a target, or a benchmark they aim to achieve. This behavior can be rationalized within the expected utility framework, which incorporates the probability of success (achieving the aspiration level) as an important aspect of decision-making. Motivated by these theories, this study defines the probability of success as the number of days a firm’s return outperformed its benchmark in the portfolio formation month. This study uses portfolio-level and firm-level analyses, revealing an economically substantial and statistically significant relationship between the probability of success and expected stock returns, even after controlling for common risk factors and various characteristics. Additional analyses support the behavioral theory of the firm, which posits that firms act to achieve short-term aspiration levels.
Much research has examined the drivers of firms’ R&D investments. However, many questions remain with respect to the role of R&D as a learning target and as a means of achieving legitimacy, particularly in the context of imitative R&D strategy. We develop a theory that integrates different explanations of why firms engage in imitation, highlighting efficiency-enhancing learning and legitimacy and focusing on firms’ R&D investment decisions. We argue that deviations in firm performance from social aspiration levels determine the salience of learning and legitimacy goals. Specifically, as performance moves from lying below to being above social aspiration levels, organizations gradually shift from a primary focus on learning vicariously from others’ R&D investments toward a focus on mimicking them to maintain legitimacy. An analysis of a sample of 2,081 Spanish manufacturing firms, as well as an online experiment with 863 participants from the manufacturing industry largely support our hypotheses.
JEL CLASSIFICATION: D22, M10, O32
This chapter brings us “back to the roots” of international business (IB) theorisation, by underscoring the influence of the Reading School in the development of mainstream IB theory. Several examples using the words of influential scholars are provided, highlighting the importance of the Reading School and its influence on the development of IB as a unique and standalone field. Subsequently, the authors adopt an IB microfoundational lens to explain why future IB research can place more attention to the role of micro-actors for explaining why multinational enterprises (MNEs) behave the way they do. They stress that shifting IB scholarly attention from the macro- to the micro-level is a key path for extending and advancing what the Reading School has offered us, and prolong the influence of IB research not only for advancing IB theory but also for informing other disciplines.
In most scientific disciplines, the p-value is, still too often, revered as “the” conclusive criterion for hypothesis testing. For years, scholars from diverse horizons have alerted to the hazards of daredevil claims of “proofs” entailed by mere benchmarking of p against an arbitrarily predetermined risk tolerance -cutoff. Deciding whether empirical results are “statistically significant” or not, through such a dichotomization, not only bypasses the uncertainty hanging over the supposed effects, but also prompts insignificance verdicts. First, a cross-examination of an article published by JMR in 2021 traces the root causes of quick-and-dirty handling of p, and recaptures the true meaning of this misconstrued statistic. Next, a recalibration of it is advertised, for it yields a measure of the probability that the effect studied is real: its plausibility. Complementarily, to highlight the substantiality of expected effects, forest charts of their compatibility/confidence intervals are promoted. An example borrowed from an article issued by JAMS in 2022 proves the relevance of the add-ons proposed. Finally, the decision aid Bayesian econometrics provide—materialized by curve plots of credible intervals, chances of positive outcomes, and risks of negative ones—is illustrated through a thorough revisit of a 2018 marketing research case.
The global economy is facing significant challenges due to major macroeconomic and geopolitical events like the Russian-Ukraine war and conflicts in Gaza. Reports (e.g., EY. (2021). Global corporate divestment study. https://www.ey.com/en_gl/divestment-study. Accessed 15 June 2023.; UNCTAD. (2023). World investment report 2023. https://unctad.org/publication/world-investment-report-2023. Accessed 15 October 2023.) indicate that multinational enterprises (MNEs) are rapidly adapting their strategies in response to these volatile conditions.
While the prevailing perspective on executive leadership has emphasized the effectiveness of a unified command structure, family firms frequently adopt shared leadership structures, such as dyads, triads, or larger co-CEO constellations. Given the widespread use of such structures in family firms, it becomes imperative to understand how family involvement in the firm shapes the dynamics of co-CEO constellations and their implications for firm outcomes. Drawing upon the socioemotional wealth (SEW) perspective, we propose that the salience of extended SEW concerns increases the costs associated with a shared leadership structure. These elevated costs, in turn, result in adverse environmental, social, and governance (ESG) outcomes. Our empirical analysis, based on panel data from 76 Italian firms listed on the Milan Stock Exchange during 2003–2020, suggests that family firms employing a co-CEO structure tend to exhibit lower ESG performance, while a positive relationship emerges in nonfamily firms. We theorize and find empirical support that the negative effect for family firms stems from family-induced cognitive diversity, manifested via the inclusion of both family and nonfamily members or family members from different generations in the co-CEO constellation. Importantly, we identify a key mitigating factor: when one of the co-CEOs also holds the position of the board chair, the negative impact of the co-CEO structure on ESG performance is mitigated and even turns positive. These findings advance our understanding of how family involvement in the shared leadership structure shapes a firm’s ethical orientation, having important implications for the governance of family firms.
Cet article explore le rôle de la communication interne en temps de crise, notamment, sa capacité à faciliter la prise de décision et à assurer la continuité des missions professionnelles. L’analyse des interactions de trois fonctionnaires du gouvernement canadien durant la crise de la Covid-19 révèle plusieurs typifications et prédicats entravant le processus décisionnel. Pour surmonter ce blocage, les acteurs internes construisent, temporisent et activent au moment opportun une marge d’action communicationnelle afin d’étirer le temps et de débloquer le processus décisionnel. Cet article souligne le rôle fondamental de la communication interne en gestion de crise et discute son manque de reconnaissance organisationnelle.
The debate over the benefits of female representation in top management is ongoing, with some arguing it enhances decision-making quality by bringing diverse perspectives, while others seeing it as symbolic or even detrimental. To make progress on the debate, this study takes an institutional perspective to develop a theoretical account examining the gender norms that constraining the effect of female representation in top management teams (TMTs) on corporate financial fraud. We offer two main insights: (a) female TMT representation is associated with lower incidence of corporate fraud, and (b) the relationship becomes weaker for firms domiciled in regions with gender inegalitarian norms or gender stereotypical norms that are more gender stratified. Results based on archival data about Chinese public firms, and simultaneous estimation of fraud commitment and detection probabilities, support our predictions. Several alternative econometric specifications, including (but not limited to), instrumental variable analysis and matched sample analysis, enhance confidence in the robustness of our findings. The findings of this study make important contributions to the literatures of managerial diversity, corporate fraud, and institutional norms.
Building information modeling (BIM), as a transformative technology, plays a crucial role in implementing lean construction within the architecture, construction, and engineering (AEC) industry. Despite extensive studies that have focused on how to promote BIM adoption more effectively, the literature remains divided on the relationship between BIM adoption and its determinants. To clarify the controversy, this meta-analysis was conducted on 62 empirical studies published between 2012 and 2023, involving 11,228 study subjects across 13 countries, based on the technology-organization-environment (TOE) framework. The findings showed that, among the technical characteristics, compatibility proved to be the major driver. Additionally, in the organizational dimension, organizational culture was considered a very crucial factor, while among the external environment, mimetic pressure stood out as a primary driver in promoting BIM adoption. This research synthesizes previous theories to develop an integrated framework of BIM adoption, verifying that perceived usefulness and perceived ease of use mediated the influences of external factors on BIM adoption. It also showed that the national BIM maturity (eight complementary components), along with contextual factors (organization type, job level, and time span), moderates the effects of the particular pathways in the framework. The proposed integrated theoretical model measures the association of BIM adoption with its determinants, offering new insights into the mechanisms of BIM adoption. These findings help to resolve some lingering debates in the extant literature and promote wider adoption of BIM in the AEC industry.
Reflection empowers practicing managers to learn from their exposure to experiences in business organizations, and reflective learning is a powerful tool to apply in the classroom to train competent managers. Through reflection, managers and students can learn how to learn from their experiences. This article proposes using a pedagogical approach based on a double-loop peer presentation feedback cycle in multi-stage team projects focusing on complex and ill-defined managerial challenges to cultivate reflective learning in the management classroom. We suggest adopting a semester-long team project with several work-in-progress presentations to incorporate reflection practices in the course design. We introduce a comprehensive process using an online application suite to deploy the double-loop peer presentation feedback approach in class. In the first loop, students in the audience provide feedback to the presenting team after each presentation. For the second loop, the presenting team rates the feedback received to stimulate individual and group reflection. We illustrate the use of this double-loop feedback process in three different undergraduate management courses and offer empirical evidence that the approach may improve reflective learning outcomes.
Objective of the study: Given the benefits of external collaborations in technology-intensive industries, we explore how firms adapt their portfolios of external collaborations to internal uncertainties. Using the behavioral theory of the firm, this study examines how firms adapt based on innovation performance feedback. Methodology/approach: We built a panel dataset from three sources. Patent data came from The National Bureau of Economic Research (NBER) paper (Kogan, Papanikolaou, Seru, & Stoffman, 2017), which used extensive name-matching tools to link USPTO patents to firms. External collaborations data were collected from the SDC Platinum Joint Ventures and Alliances database, focusing on R&D agreements. Financial data were sourced from Compustat. After processing, the dataset included nearly 900 publicly listed firms from 12 high-tech industries (1990-2010). We tested our hypotheses using two probit models, each predicting a different dependent variable. Originality/Relevance: We shift the focus from the traditional dyad perspective, which centers on individual partnerships, to how firms adjust their entire portfolios of external collaborations in response to their internal dynamics, like innovation performance feedback. While real options and transaction cost theories emphasize the need to maximize efficiency in individual partnerships, we explore how firms adapt their broader set of external collaborations to changing internal conditions. Main results: We find that firms performing above innovation aspirations are more likely to form equity alliances (i.e., joint ventures). However, the magnitude of this effect greatly differs between mature and young firms. Young firms are about four times more likely than their mature counterparts to form equity alliances when they significantly surpass their innovation targets. Theoretical/methodological contributions: Our study contributes to the research on alliance portfolio adaptation by showing that, beyond external factors like technological change and market uncertainty, firms also adjust their portfolios of external collaborations in response to internal factors, specifically innovation performance feedback. Moreover, our findings also demonstrate that firms’ responses to innovation performance relative to aspirations vary based on their lifecycle stage. Social /management contributions: Our study also has several implications for managers. First, managers of well-performing firms should view exceeding innovation aspirations as a signal to pursue collaborations to scale new technologies and knowledge. Their performance gives them a stronger negotiating position for forming joint ventures, allowing them to secure more favorable terms. Additionally, they should, in this case, seek partnerships to share risks associated with cutting-edge innovation projects rather than solely investing in internal innovation prospects. For young firms, which tend to respond more aggressively when outperforming their innovation aspirations, managers should adopt bold partnership strategies. In contrast, managers in mature firms should focus their resources on internal development, mergers and acquisitions, or partnerships that help maintain the autonomy of these firms.
La forza sta nell’unità, non nella divisione (Esopo)
Nel corso del tempo, la cooperazione agricola italiana ha registrato un notevole sviluppo, con cifre significative in termini di presenza territoriale, dimensioni aziendali e quota di prodotto lavorata e/o commercializzata, soprattutto in determinate aree e settori produttivi. Nonostante ciò, nel dibattito politico il ruolo delle cooperative in agricoltura sembra sottovalutato.
Per tale ragione, la conoscenza più approfondita del fenomeno cooperativo, dal punto di vista strutturale ed economico, rappresenta un elemento fondamentale per individuare i fabbisogni e per comprendere le leve su cui potenzialmente agire.
Il presente lavoro è frutto della collaborazione tra il CREA - Politiche e bioeconomia ed Euricse (Centro di ricerca europeo sull’impresa cooperativa e sociale), entrambi impegnati da anni sul tema, in una fase in cui la cooperazione in agricoltura sta ritrovando un rinnovato interesse grazie alla Politica Agricola Comune, che attribuisce alla promozione di processi collaborativi un ruolo cruciale nell’ambito di uno degli obiettivi specifici della PAC 2023-2027 finalizzato a “Migliorare la posizione degli agricoltori nella catena del valore”.
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