Administrative behavior, theory of

Acronym
N/A

Alternate name(s)
Bounded rationality, satisficing

Main dependent construct(s)/factor(s)
N/A

Main independent construct(s)/factor(s)
N/A

Concise description of theory
The theory of administrative behaviour is a generic term used to describe the process by which people within organizations work. The theory is credited to Herbert Simon, and in particular to Simon’s findings about how organizations function that run counter to other, classical approached. For example, Simon (1976) clarified the processes by which goal specificity and formalization contribute to rational behavior in organizations. He criticizes Fayol's platitudes and Taylor's "economic man" assumptions, proposing the "administrative man" who pursues his self-interests but often doesn't know what they are, is aware of only some of the possible decision alternatives, and is willing to settle for an adequate solution than continue looking for an optimal one (p. 45).

Participants in high positions make decisions with a higher value component, people in lower positions make decisions with a higher factual component. The top makes "what" decisions, the bottom "how" decisions. Choice of ends can only be validated by fiat or consensus, choice of means empirically.

Each goal in the means-end hierarchy is an end to things below it and a mean to those above it. Activities can only be evaluated against the goals above it. Goals can be delegated to different units which simplifies the decision making process for participants. Scott notes that "from this perspective, an organization's hierarchy can be viewed as a congealed set of means-ends chains promoting consistency of decisions and activities throughout the organization". (p. 46)

Two key concepts, both attributed to Simon, are related to the theory of administrative behavior. The first is the concept of bounded rationality. Bounded rationality notes the cognitive limitations of decision makers. Simon points out in his book, Models of My Life, that most people are only partly rational, and are in fact emotional/irrational in the remaining part of their actions. In other work, he states "boundedly rational agents experience limits in formulating and solving complex problems and in processing (receiving, storing, retrieving, transmitting) information" (Williamson, p. 553, quoting Simon). Simon describes a number of dimensions along which "classical" models of rationality can be made somewhat more realistic, while sticking within the vein of fairly rigorous formalization. These include: The second concept related to the theory of administrative behaviour is satisficing. Satisficing is a behaviour which attempts to achieve at least some minimum level of a particular variable, but which does not strive to achieve its maximum possible value. The most common application of the concept is in administrative behavior, which, unlike classical economic accounts, postulates that producers treat profit not as a goal to be maximized, but as a constraint. Under these theories, although at least a critical level of profit must be achieved by firms; thereafter, priority is attached to the attainment of other goals.
 * limiting what sorts of utility functions there might be.
 * recognizing the costs of gathering and processing information.
 * the possibility of having a "vector" or "multi-valued" utility function.

Sources:

http://faculty.babson.edu/krollag/org_site/encyclop/simon.html http://en.wikipedia.org/wiki/Satisficing

Diagram/schematic of theory
N/A

Originating author(s)
Herbert Simon

Seminal articles
Simon, Herbert (1957). "A Behavioral Model of Rational Choice", in Models of Man. Williamson, Oliver (1981). "The Economies of Organization: The Transaction Cost Approach". American Journal of Sociology. Vol 87, pp. 548--577.

Simon, H.A. (1990) A mechanism for social selection and successful altruism, Science 250 (4988): 1665-1668.

March, James G. (1994). "A primer on decision making: how decisions happen", The Free Press, New York.

Kahneman, D. (2003) Maps of Bounded Rationality: Psychology for Behavioral Economics." The American Economic Review. 93(5). pp. 1449-1475. H. Simon, "Organizations and markets," Journal of Economic Perspectives, vol. 5, no. 2 (1991), p. 28.

March, James G., and Herbert Simon 1958 Organizations. New York: Wiley.

Originating area
Micro-economics, Cognitive psychology

Level of analysis
Individual

IS articles that use the theory
Agosto, D. E. 2002. Bounded rationality and satisficing in young people's Web-based decision making. J. Am. Soc. Inf. Sci. Technol. 53, 1 (Jan. 2002), 16-27. http://dx.doi.org/10.1002/asi.10024 N.

Ahituv, "A Systematic Approach Towards Assessing the Value of an Information System", MIS Quarterly, Vol. 4, No. 4, (December 1980), pp. 61-75.

Bakos, J. Yannis; Treacy, Michael E., “Information Technology and Corporate Strategy: A Research Perspective”, MIS Quarterly, Jun 1986, Vol. 10 Issue 2, p106, 14p. Anne Beaudry and Alain Pinsonneault, “Understanding User Responses to Information Technology: A Coping Model of User Adaptation”, MIS Quarterly, Vol. 29, No. 3, pp. 493-524. Edward Bernroider and Stefan Koch, “Decision Making for ERP-Investments from the Perspective of Organizational Impact – Preliminary Results from an Empirical Study”, Proceedings of the Fifth Americas Conference on Information Systems (AMCIS 1999), pp. 773-775, Milwaukee, WI, 1999. Choudhury, V. and Sampler, J. L. 1997. Information specificity and environmental scanning: an economic perspective. MIS Q. 21, 1 (Mar. 1997), 25-54. Kling, R. "Social Analysis of Computing: Theoretical Perspectives in Recent Empirical Research," ACM Computing Surveys (12:1), 1980, pp. 61-110. Kumar, K., van Dissel, H. G., and Bielli, P. 1998. The merchant of Prato—revisited: toward a third rationality of information systems. MIS Q. 22, 2 (Jun. 1998), 199-226. Lamb, R., & Kling, R. (2003). Reconceptualizing users as social actors in information systems research. MIS Quarterly, 27(2): 197-235.

Links from this theory to other theories
Transaction cost economics, Micro-economic theory

Original Contributor(s)
Mike Wade Please feel free to make modifications to this site. In order to do so, you must register. Return to Theories Used in IS Research