Works
- A Behavioral Theory of the Firm, 1963
In Tactics of Organizational Politics
Ideas
The firm as a bargaining coalition. Because the firm is a coalition, its goals are set by bargaining among members whose priorities and information differ, and members are held in the coalition by side payments. The resulting goals are compromises that must all be met, following an implicit order of priority.
Organizational slack. Cyert and March describe the firm as a coalition of groups, such as managers, workers, stockholders, and suppliers, whose goals are compromises negotiated among them and whose bargaining is largely over the distribution of side payments. Organizational slack is the difference between the firm's total resources and the payments needed to keep the coalition together; it plays a stabilizing and adaptive role, giving the firm room to meet competing demands when conditions change.
What it explains
Cyert and March explain why decisions in firms come out of bargaining and side payments among coalition members, and why slack resources make agreement easier. Trading across issues and compensating those who lose are the ordinary mechanics of that bargaining.