Revisiting Cyert and March's classic 1963 'Behavioral Theory of the Firm', Henrich Greve offers an intriguing analysis of how firms evolve in response to feedback about their own performance. Based on ideas from organizational theory, social psychology, and ecomics, he explains how managers set goals, evaluate performance, and determine strategic changes. Drawing on a range of recent studies, including the author's own analysis of the Japanese shipbuilding industry, he reports on how theory fits current evidence on organizational change of risk-taking, research and development expenses, invativeness, investment in assets, and in market strategy. The findings suggest that high-performing organizations quickly reduce their rates of change, but low-performing organizations only slowly increase those rates. Analysis of performance feedback is an important new direction for research and this book provides valuable insights in how organizational learning interacts with other influences on organizational behaviour such as competitive rivalry and institutional influences.
Henrich R. Greve is Professor of Entrepreneurship and Organisational Behaviour at INSEAD. He holds a PhD in organizational behavior from the Graduate School of Business, Stanford University, along with an MA in Sociology. Henrich's main research interest is the causes and consequences of strategic change in organizations, but he also studies organizational innovations, and organizational founding and growth in young industries.