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July 24: Tepper School of Business Celebrates 44 Years of "A Behavioral Theory of the Firm"


Geof Becker                           

Carnegie Mellon's Tepper School of Business Celebrates
44 Years of "A Behavioral Theory of the Firm"

Special Edition of Leading Management Journal Explores Legacy
Of Groundbreaking Organizational Theory Established at Carnegie Mellon

PITTSBURGH—More than four decades ago, two academic pioneers at what is now the Tepper School of Business at Carnegie Mellon University published "A Behavioral Theory of the Firm," a book that profoundly changed how researchers and managers worldwide understood the decision-making process within organizations. In a forthcoming special issue, the leading management journal Organization Science recounts the enormous impact of this groundbreaking work by the late Richard Cyert, former Carnegie Mellon President, dean of the business school and faculty member; and former Carnegie Mellon faculty member James March, who is now at Stanford University.  

"The field of organizational studies began with Cyert and March's revolutionary framework, the influence of which can be seen across the social sciences, including sociology, political science and economics," said Linda Argote, editor-in-chief of the journal and the Carnegie Bosch Professor of Organizational Behavior and Theory at the Tepper School. "The value of this book cannot be overstated, and these ideas continue to impact our understanding of how organizations learn, adapt and make decisions in the competitive and interconnected global marketplace."

When first published in 1963, "A Behavioral Theory of the Firm" represented a significant departure from accepted economic theory. Among other innovations, Cyert and March incorporated the concept of bounded rationality, which takes into consideration that most people are only partly rational when it comes to making decisions. In addition, their ideas were rooted in the belief that theory should be generated through systematic observation of processes within actual organizations. Taken together with the work of Nobel Laureate and fellow Carnegie Mellon scholar Herbert Simon, these then-novel concepts fundamentally influenced the understanding and analysis of organizations, and established what is now referred to as the "Carnegie School" of thought.

Established in 1990, Organization Science is published by the Institute for Operations Research and the Management Sciences (INFORMS) and focuses on fundamental research about organizations, including their processes, structures, technologies, identities, capabilities, forms and performance. It is ranked among the most influential management journals by the Social Science Citation Index.