We have described four basic concepts that seem to us fundamental to an understanding of the decision-making process in a modern, large-scale business organization. The quasi resolution of conflict, uncertainty avoidance, problemistic search, and organizational learning are central phenomena with which our models must deal. In our judgment, the natural theoretical language for describing a process involving these phenomena is the language of a computer program. It is clear that some parts of the theory are susceptible to representation and solution in other forms, but the general structure of the process can be conveniently represented as a flow chart. Such a flow chart is outlined in its most general form in Fig. 6.1. In Chapter 7 we elaborate the basic structure to illustrate the use of the framework in an empirical investigation. In Chapter 8 we elaborate the structure into a working general model.
Figure 6.1 is intended to illustrate two things. On the one hand, it shows abstractly the step-by-step decision process. For convenience, we have started the process at the point of receiving feedback from past decisions. Since the decision process is continuous, this start is arbitrary. Starting from the feedback, the figure shows the sequence of steps taken by a particular subunit in the firm with respect to a specific decision and a specific goal. Other decisions by other subunits using other goals would occur in parallel with this one. Loose connections among the subunits and decisions are secured by the environmental feedback and (when indicated) by expanded search.
At the same time, the figure shows (by the vertical columns) the relation between the basic concepts of the theory and the decision process flow chart. At a general level, each of the concepts is represented in a decision process having this structure. Obviously, when a specific decision in a specific content (e.g., Chapters 7 and 10) is considered, this abstract description of the process must be substantially elaborated with specific content.
Clearly, models based on these concepts will deviate significantly from models based on the approach of classical economics. Such differences are not surprising. We have emphasized the fact that the behavioral theory of the firm is designed to answer a set of questions different from those to which traditional theory of the firm is directed. We think that these concepts will prove useful in dealing with organizational decision making as it is reflected in business firms. The demonstration of the utility of the concepts, however, depends on defining specific models, based on the concepts, that yield definite, testable predictions. It is to such a task that we now turn.
Figure 6.1 Organizational decision process in abstract form.
Source: Skyttner Lars (2006), General Systems Theory: Problems, Perspectives, Practice, Wspc, 2nd Edition.