An Empirical Test of Choice and Decision Postulates in the Cyert-March Behavioral Theory of the Firm

Abstract

This paper describes an empirical test of certain choice and decision postulates first proposed by Richard Cyert and James March in their development of a behavioral theory of the firm. Its findings verify and suggest further refinement of their premise that existing standard decision rules in an organization impose constraints on organization decision makers, even when relevant environmental conditions have changed to the extent that the expectations of use of the standard decision rule no longer exists. The study also provides further substantiation that a behavioral theory of the firm may be a special case of a behavioral theory of organizations. The ubiquitous characteristics of at least some postulates is suggested by the fact that the group decisions to which the theory of the firm postulates are applied in this study are those of a segment of the American formal legal system. More extensive use of legal decisions to aid in the study of organizational behavior is also suggested. Harry T. Allan is associate professor of business administration at the University of Massachusetts.