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Behavioural theory of the firm

A concept proposed in the early 1960s by two American psychologists, Richard Cyert and James March, which argues that a business organisation consists of a coalition of different interest groups with different goals representing a variety of views and which are continuously bargaining for power. This means that decision-making is an inherently uncertain business – contrary to the assumptions of rational behaviour made by proponents of classical organisation theory or economic man. See also chaos theory.

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