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Limited rationality, formal organizational rules, and organizational learning (OL)

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  • Kieser, Alfred
  • Beck, Nikolaus
  • Tainio, Risto

Abstract

In spite of a broad agreement among researchers in organizational theory on the importance of rules for the functioning of organizations, most theories of OL neglect or tend to underestimate the role of organizational rules in processes of OL. However, there is one important exception: James G. March, his cooperators and his students. He and Richard Cyert (1963) developed a theory of OL long before this concept became a management fashion. And since that then he and his group have continuously revised and developed this theory. These theories provide fundamental insights into processes of OL, although, so far, they have not yet received adequate recognition in the more popular management literature. These theories assume that complex organizations learn by the ways in which individuals experiment, form inferences and code the lessons of history into rules. OL is based on routines. It is history-dependent and target-oriented. To a large extent OL depends on the relation between observed organizational outcomes and the aspirations set for these outcomes (Levitt and March, 1988: 320). In this article we try to give an introduction into the theories on learning in the March school and link it with our own conceptual and empirical work.

Suggested Citation

  • Kieser, Alfred & Beck, Nikolaus & Tainio, Risto, 1998. "Limited rationality, formal organizational rules, and organizational learning (OL)," Papers 98-02, Sonderforschungsbreich 504.
    • Handle: RePEc:mnh:spaper:2885
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    References listed on IDEAS

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    1. James G. March, 1991. "Exploration and Exploitation in Organizational Learning," Organization Science, INFORMS, vol. 2(1), pages 71-87, February.
    2. James G. March & Lee S. Sproull & Michal Tamuz, 1991. "Learning from Samples of One or Fewer," Organization Science, INFORMS, vol. 2(1), pages 1-13, February.
    3. Beck, Nikolaus & Kieser, Alfred, 1997. "Standard Operating Procedures and Organizational Learning," Sonderforschungsbereich 504 Publications 97-34, Sonderforschungsbereich 504, Universität Mannheim;Sonderforschungsbereich 504, University of Mannheim.
    4. Vanberg, Viktor, 1986. "Spontaneous Market Order and Social Rules," Economics and Philosophy, Cambridge University Press, vol. 2(1), pages 75-100, April.
    5. Daniel A. Levinthal & James G. March, 1993. "The myopia of learning," Strategic Management Journal, Wiley Blackwell, vol. 14(S2), pages 95-112, December.
    6. Herriott, Scott R & Levinthal, Daniel & March, James G, 1985. "Learning from Experience in Organizations," American Economic Review, American Economic Association, vol. 75(2), pages 298-302, May.
    7. James G. March & Zur Shapira, 1987. "Managerial Perspectives on Risk and Risk Taking," Management Science, INFORMS, vol. 33(11), pages 1404-1418, November.
    8. Karl E. Weick, 1991. "The Nontraditional Quality of Organizational Learning," Organization Science, INFORMS, vol. 2(1), pages 116-124, February.
    9. Levinthal, Daniel & March, James G., 1981. "A model of adaptive organizational search," Journal of Economic Behavior & Organization, Elsevier, vol. 2(4), pages 307-333, December.
    10. Simon, Herbert A, 1979. "Rational Decision Making in Business Organizations," American Economic Review, American Economic Association, vol. 69(4), pages 493-513, September.
    11. Beck, Nikolaus & Kieser, Alfred, 1997. "Standard operating procedures and organizational learning," Papers 97-34, Sonderforschungsbreich 504.
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