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.
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