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Keywords Behavioural economics, Organizational theory, Management history, Business studies
Abstract While the history of modern ideas in business education in general, and organization theory and organizational economics in particular, has several different intelkctual roots, two books in particular were influential in initiating the field that is now broadly recognized as behavioral theories of organizations: A Behavioral Theory of the Firm, written by Richard Cyert and James G. March; and Organizations, written by Herbert Simon and James March. These two books set the stage for several subsequent developments in organization and management theory including research in learning, strategic management, and organizational routines. The behavioral view of the firm was also important to modern developments such as evolutionary theory and transaction cost economics. This paper examines part of this history and development, focusing in particular on the contributions of March.
1. Introduction
James G. March (born 1928) received his PhD in Political Science from Yale University in 1953 and went to Carnegie Mellon University (then Carnegie Tech) where he contributed to the origins of modern organization and management theory, most significantly through his co-authorship of the two classic books, Organizations (March and Simon, 1958) and A Behavioral Theory of the Firm (Cyert and March, 1963).
March stayed at Carnegie until 1964 where he went to Irvine to become a professor of psychology and sociology and the dean of the School of Social Sciences at the University of California, Irvine. He began there (with Michael Cohen) a study of leadership and ambiguity in the context of American college presidency (Cyert and March, 1963). This book discusses the loose coupling between decision-making problems and solutions to these problems and gives reasons for leaders to encourage ambiguity, rather than prediction and control. The idea that choice is fundamentally ambiguous is a central theme to ideas about "Garbage can decision processes" (Cohen et al., 1972) which also emphasize the temporal sorting of problems and solutions. The general implications of such ideas were explored with Olsen in the book Ambiguity and Choice in Organizations (March and Olsen, 1976), a collaboration that later led to two books exploring an institutional and organizational perspective on politics and governance. This essay takes discusses some of March's ideas and contributions, and indicates its significance for...