The Behavioral Theory of the Firm: Assessment and Prospects

The Behavioral Theory of the Firm has had an enormous influence on organizational theory, strategic management, and neighboring fields of socio-scientific inquiry. Its central concepts have become foundational to any theoretical and empirical work focussed on organizational phenomena. Unlike past reviews of this work, we start by focusing less on reviewing these concepts than we do on discussing the new agenda they created for students of organizations and related subjects. We then explain the theoretical commitments implied by its agenda before we trace and evaluate progress on a set of research issues inspired by its agenda: cognition, performance feedback, politics, attention, learning, and adaptation. Finally, we offer a broader assessment of the theory by looking both at original ideas that have seen less developments and at modern developments in the field that deserve to be incorporated into the Behavioral Theory of the Firm. In the open-system spirit of the Behavioral Theory of the Firm, we conclude that its agenda will continue to benefit from work both by its closest adherents and by work in related research traditions.