Behavioural Theory of Cyert and March

Modern business firm as a group of individuals who are engaged in the decision-making process relating to its internal structure having multiple goals.
They deal not only with the internal organisation of the firm but also with the problem of uncertainty ie. environment.
They reject the assumption of certainty in the neoclassical theory of the firm.
They emphasise that the modern busi­ness firm is so complex that individuals within it have limited information and imperfect foresight with respect to both internal and external developments.

According to theory, Goal of business organization would depend upon the multiple objectives of each groups and their collective demands. Various kinds of conflicts and problem would certainly affect the decision making process of the organization.

Maximising behaviour of actors, where participants receive inducements from the organisation in return for their contributions and they aim to maximise these inducements. This assumption  is  extended  in  the  literature  with  the  argument  that  decision  making  in organisations  is  rational  and  goal  oriented.  Hence,  managerial  decisions  are  aiming  at maximising both personal and organisational outcomes.

Goals  are  derived at  in  the  process  of bargaining  between  individual  participants  within the firm. In this  process of bargaining and negotiations of goals participants develop expectations regarding  the  behaviour  of  the  others,  and  may  adjust  their  own  goals  according  to  the expectations of others. The goal adaptation process frames different strategic opportunities and modifies alternative  organisational  choices  of  actors  within firms.  Organisational  choices  are defined  as  outcomes  from  the  goal  adaptation  and  the  decision-making  process.  On  these grounds some authors reject the assumption of the profit-maximisation of the firm as an overall orientation  in  the  marketplace,  and  suggest  that  decision-making  and  negotiations  lead  to optimising behaviour.