organizational action

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The field of study of organizational action, how and why organizations act the way they do. Organizational action is at the heart of strategy, in that organizations are continuously choosing their strategic course of action.

A brief overview of organizational action theory (March, 1996) --

  • Autonomous consequential action (from the seventeenth and eighteenth centuries) -- Organization action attributed to a theory of autonomous consequential choice. Choice stemmed from two guesses about the future: (1) a guess about the consequences that would stem from a particular choice, thus about expectations, and (2) a guess about the subjective value that would be associated with those consequences when they were realized, thus about preferences.
  • Autonomous consequential action elaborations (first part of the twentieth century) -- First, a probabilistic perspective was added to the utilitarian structure to create (statistical) decision theory. Second, an axiomatics was established that derived cardinal utility functions form collections of consistent choices among lotteries. These two elaborations became the basic canon of twentieth-century theories of consequential thought. The two basic guesses of consequential action are problematic though --
    • First, alternatives and their consequences are not given but have to be discovered and estimated. Identifying alternatives and anticipating their consequences requires information, calculative capabilities, and attention, all of which are scarce resources. As a result, theories of choice become intertwined with theories of search, and the field of behavioral decision theory grew very substantially.
      Second, human preferences are systematically different from the preferences anticipated by classical theories of choice. Instead of being consistent, stable, and exogenous, they are often inconsistent, unstable, and exogenous.

  • Adding search and behavioral biases (late twentieth century) -- Modern theories significantly reconstruct the theories of autonomous consequential choice. These theories are better described as theories of heuristics, attention, search, and learning than of comprehensive calculative rationality. They fold into a broad decision-making frame [of] ideas about the updating of expectations, behavioral biases, sequential attention to targets, search, the temporal sorting of problems and solutions, adaptive aspirations, variable risk preferences, and costs and benefits of information.
  • Adding identity and context -- Ideas of autonomous consequential choice developed in parallel to a second set of ideas, where an autonomous system, an individual or collective, follows a logic of appropriateness rather than a logic of consequences. Action is seen as resulting from matching rules to situations. The problematics of choice are seen as lying in the definition of the salient identity and the classification of the situation.
    Theories of choice became theories of situation recognition, socialization, institutionalization, and imitation and developed stronger links with theories of cognitive processes, artificial intelligence, and diffusion theories of calculation. They also became theories of evolution, for if standard operating procedures and other institutionalized features can be imagined to endure, provide reliability, and to have the capability of transferring form one organization to another, they could be imagined to be the ""genes"" of an evolutionary theory of organizational action.
  • Ecologies of action -- Whether action is treated as stemming from expectations and preferences using a logic of consequences or from the application of rules to situation using a logic of appropriateness, it must be fit into an ecological context. An organization reacts to the actions of others that are reacting to it. Much of what happens is attributable to those interactions and thus is not easily explicable as the consequence of autonomous action. This led to the inclusion of game theory. AS the analysis of games became a well-developed art form, it cast new light on the importance of repetitive encounters, time horizons, reputations, and trust in encounters among rational actors and led to new insights into the complications of communication, control, and cooperation in the face of conflict of interest.
  • Imitation -- The components of action are linked in ecological networks of imitation. All of these processes of imitation make theories of organizational action attentive to the network structures through which diffusion takes place and to the dynamics of their change.
  • Action, ambiguity, and interpretation -- The bases of action are not necessarily based on reality but on a perception of reality. Many factors, including identity and experience, shapes our perceptions. Preferences, expectations, identities, and definitionsnew of situations are seen as arising from interactions with a social system. thus the theory of action has come to emphasize theories of politics and technology of numbers and the social construction of accounting.
  • Other ideas -- Action is pictured as an instrument in the development of interpretation, rather than the other way around. Decision-making processes are seen as signals and symbols of legitimacy, and thus valuable in their own right, regardless of consequences for decision outcomes. The basic technology of an organization is described as a technology of narrative, as well as a technology of production.