Towards a Humanistic Model of Decision-Making in an Organizational Context
38 Pages Posted: 5 Nov 2008 Last revised: 1 Dec 2008
This paper attempts to take steps towards the formulation of a more human approach to the theory of the firm from the starting point of the conventional economics-based models. Bounded rationality and self-interest are shown to be crucial assumptions of conventional economic theory, together with competitive markets and X-efficiency. Then, I put forward the essential assumptions of such an approach. Finally, I will show the implications for management decision-making of such assumptions, emphasizing that at least three criteria have to be considered in any non-trivial decision in an organizational context.
Keywords: Theory of the firm, bounded rationality, self-interest, distinctive competence, mission, identification
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