Behavioral theory of the firm

John Joseph

Chapter 10 in A Guide to Key Theories for Strategic Management, 2026, pp 169-188 from Edward Elgar Publishing

Abstract: This chapter examines The Behavioral Theory of the Firm (BTOF), one of the most influential perspectives in strategic management, offering a behaviorally grounded account of how organizations make strategic decisions. We explain how BTOF departs from neoclassical models and foregrounds bounded rationality and search, conflict and coalitions, and organizational structures and attention allocation as central to understanding firm behavior and heterogeneity. We compare BTOF with a variety of other theories of strategic management, drawing both complementarities and contrasts. Finally, we identify three domains where BTOF offers particular value to strategy scholars: managing multiple and competing demands, navigating uncertainty and ambiguity, and coordinating effectively in the presence of interdependencies.

Keywords: Behavioral Theory Of The Firm; Carnegie Perspective; Decision Making; Search; Coalitions; Organizational Structure (search for similar items in EconPapers)
Date: 2026
ISBN: 9781035342846
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