The model of Trust Investment Behavior and the behavioral theory of the firm

A description of an organizational choice process was presented at the end  of Chapter 5. In brief, it assumed multiple, acceptable-level goals, sequential consideration of alternatives with acceptance of the first satisfactory one, and the dominance of the choice process by standard operating procedures and rules of thumb. Patently, a similar choice process is involved in the trust investment model. Although it deviates in detail from the price and output models and devotes more attention to information processing, the model presented in this chapter (like the earlier models) depicts a decision-making process that assumes a relatively simple- minded, computationally constrained, adaptively rational system.

Similarly, a comparison of the model with the key concepts summarized in Chapter 6 shows a close — though not complete — agreement between the basic attributes of the theory and the major features of the model.

With respect to the quasi resolution of conflict, two features of the model are conspicuous. First, the remarkable independence of the trust department from the rest of the organization suggests a considerable degree of local rationality within the organization as a whole. Second, the form and function of goals in the model is almost indistinguishable from the form and function specified in the theory. With respect to uncertainty avoidance, the trust investment model clearly  exhibits behavior directed toward establishing a standardized, legitimized environment. The trust officer has negotiated a substitution of “good investment practice” for the less certain “good investment.” With respect to problemistic search and organizational learning, the model is less strikingly consistent with the behavioral theory of the firm (although not inconsistent). Both long-run organizational learning and short-run reactions to failure are outside the domain of the investment model.

In general, it seems reasonable to conclude that the basic theory used to develop models of price and output determination may be useful as a basis for models of other decisions made by (or in) complex organizations. This possibility is explored briefly in Chapter 11.

Source: Skyttner Lars (2006), General Systems Theory: Problems, Perspectives, Practice, Wspc, 2nd Edition.

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