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By Henrich R. Greve

Revisiting Cyert and March's vintage 1963 "Behavioral conception of the Firm", Henrich Greve bargains an exciting research of ways corporations evolve in keeping with suggestions approximately their very own functionality. in accordance with rules from organizational idea and social psychology and examine from many industries, it demonstrates that high-performing companies speedy decrease their premiums of industry access, techniques and asset development, yet low-performing enterprises purely slowly elevate these charges. The research outlines the results of this habit for organizational survival and function, and indicates how one can increase companies with functionality suggestions.

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Extra info for Organizational Learning from Performance Feedback: A Behavioral Perspective on Innovation and Change

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Their solution to this problem was to view the organizational goal as formed by a coalition of its members and other actors with an interest in the organization’s operations and ability to influence it. This dominant coalition does not consist of all interested parties, but only of participants with sufficient authority to enforce the agreement in the short run. In the longer run, the dominant coalition may change through the introduction of new problems or changes in the power distribution. This solution was known from political theories of coalition formation and game theoretic models of negotiation, but the behavioral theory of the firm took bounded rationality into account by making several additional suggestions on how dominant coalitions were formed and maintained (Cyert and March 1963; March 1962).

A variation of this would be if the aspiration level tracked a piece of information that varied over time but was available to all decision makers (the prime lending rate, for example). A natural aspiration level is cognitively simpler to process and requires less information than the socially constructed aspiration levels that are treated later. We would expect a decision maker who rations cognitive effort to choose a natural aspiration level whenever possible, as would a decision maker who lacks the information to build an adaptive aspiration level.

This process could prevent social comparisons from becoming influential by reducing the perceived relevance of all potential referents. At the very least, it suggests that closeness to the referent not only affects the informational basis for Foundations 31 making social comparisons, but also the perceived relevance of the comparison. Sociologists have also been interested in social comparison processes, and have noted that social networks make persons who have informal contacts with a given individual easily available for social comparison (Erickson 1988; Marsden and Friedkin 1993).

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