In Administrative Behavior, Herbert A. Simon provided a basis for a scientific theory of management as well as a model of human beings who make satisfactory rather than optimal decisions.
The basis of Administrative Behavior (1947) was Herbert Simon’s doctoral dissertation at the University of Chicago. The book advanced the literature on administration in three important ways, thus making the literature more useful to practicing managers.
First, Simon pointed out problems that existed with then-current principles of administration. To replace those principles, he proposed approaching administrative problems in a more rigorous and scientific manner. Second, influenced by the work of Chester Irving Barnard, Simon provided a description of how managers actually make decisions. This description came to be known as the theory of bounded rationality. Decision makers with bounded rationality were profoundly different from the decision makers described by writers on economics and administration who preceded Simon. Third, Simon presented clear and workable terms, concepts, and frames of reference for the study of administration. This clarification may be the most important part of the book, because it formed a basis for later thinking and writing about organizational problems.
Simon was not the first to consider the possibility of applying scientific principles to the management task. Frederick Winslow Taylor introduced the ideas of work measurement and human engineering in his writings during the early twentieth century. The single most important idea provided by Taylor was the use of the scientific method in management. The use of the scientific method meant a whole new way of looking at management problems. Taylor believed that until it had data, theory, principles, and laws, no one was likely to take management science seriously.
In developing his approach to the study of administration, Simon was influenced by Charles Edward Merriam, head of the political science department at the University of Chicago while Simon was a doctoral student there. Merriam was a founder of the Chicago School of political science and an early advocate of applying the tools of psychology researchers to the study of politics. Clearly influenced by Merriam, Simon took a psychological or behavioral approach in Administrative Behavior.
Administrative Behavior challenged much of the received administrative theory of its day and provided a new conceptual framework, that of decision making, for the analysis and description of organizational phenomena. Although other authors, such as Luther Gulick, had attempted to articulate principles of administration as a basis for a science of administrative behavior, Simon was quick to point out that these attempts to establish principles of administration were seriously flawed and not very useful.
One principle of administration of that time stated that administrative efficiency increased with an increase in specialization. Simon asked how such a principle could be a useful guide for managers. To illustrate Simon’s question, consider a manager’s attempt to provide nursing care in a particular geographic region. Should specialization be by place or by function? That is, should one nurse specialize in treating all patients within a single geographic region, or should one nurse specialize in treating all patients afflicted with a certain disease? The specialization principle of administration is not helpful in answering the question. Simon argued that administrative decisions cannot be guided by simple-minded adherence to a single management principle. Instead, good decisions result from consideration of a number of decision criteria and application of importance weights to those criteria.
To a significant extent, before Administrative Behavior was published, an administrator was thought of as a person who got things done. Although this is certainly true, such a statement ignores the fact that a decision always precedes an action. Thus, when thinking about the administrator’s job, an important consideration is decision making. Simon’s intent was not to develop a normative theory of decision making, describing how decisions should be made. Instead, he was interested in a descriptive theory of decision making, or discovering how decisions are actually made.
From this interest in a descriptive theory of decision making, Simon came to distinguish between the “economic man” of classical economic theory and what he termed “administrative man.”
In place of economic man, Simon suggested administrative man. The rationality of administrative man is different from economists’ description. Administrative man is not omniscient and does not have unlimited computational powers. Unlike economic man, administrative man is not completely rational; his or her rationality is bounded, or limited, but is by no means absent. Most important, administrative man is not a true maximizer. Rather, he or she strives for satisfactory rather than optimal solutions. In Simon’s terminology, administrative man has “bounded rationality” and is a “satisficer.”
Simon wanted to develop a science of administration. He was convinced that ethical statements and factual statements could be separated. Simon suggested that the management writing preceding Administrative Behavior included both factual statements and ethical statements. He insisted that a science must consist of factual statements, that is, statements that can be verified through experience. Ethical statements (that is, normative statements expressing value judgments) have no part in a science of administration, according to Simon.
A major contribution of Administrative Behavior is the vocabulary and analytic scheme it provided. As Simon points out, before a science can develop principles, it must possess concepts. Following the example of Charles Edward Merriam, Simon clarified concepts such as rationality, efficiency, authority, power, equilibrium, identification, and causation. These concepts became central to thinking and writing about administrative problems.
Administrative Behavior influenced managerial thought in several ways. First, the publication and popularity of the book allowed Simon to become associated with the Ford Foundation as an adviser. In the late 1950’s and early 1960’s, the Ford Foundation was highly critical of business education and became a major force in shaping management education. Simon had close ties to the Ford Foundation, especially Bernard Berelson, another behaviorist there. As a result of this relationship between the foundation and Simon, Simon had a receptive audience for his ideas about the way management education should be carried out. The foundation was especially powerful because it had the resources to back up its recommendations for business education. It provided more than $35 million to improve business school curricula in the 1960’s.
In the early 1960’s, the Ford Foundation made various recommendations for improving business education. At the time these recommendations were made, Simon was closely associated with the foundation and had recently published the second edition of Administrative Behavior. An important foundation recommendation was for increased emphasis on academic research. The clear and workable terms, concepts, and frames of reference contained in Administrative Behavior were useful in carrying out this recommendation. Researchers could use Administrative Behavior as a guide in developing an administrative science. In emphasizing the need for research, the foundation recommended cooperation between business researchers and researchers trained in other areas, such as behavioral sciences. Simon surely would have agreed with this idea.
Administrative Behavior influenced managers by clarifying the nature of rationality in the decision process, particularly the cognitive limitations of human decision makers. A major impact of the book is that managers have a better understanding of how decision making occurs. Managers can use either a satisficing or an optimizing model when approaching a decision. Because of its efficiency, the satisficing model is often appropriate and useful and may therefore be useful for routine decisions. Using a satisficing model, a manager does not have to consider all possible courses of action; instead, the manager’s decision model may include just a few possible courses of action, one of which will be “good enough,” though not necessarily optimal. There are situations in which the optimizing model is more appropriate. Simon provided managers with the knowledge that there are multiple types of decision models. It is the manager’s responsibility to use each type of model appropriately.
The concept of bounded rationality
Administrative Behavior provided managers with an understanding of organizations, one that could be used to carry out specific managerial responsibilities such as organizing an accounting department. Consider Simon’s comments on the role of the organization. People spend most of their adult waking lives functioning in organizations. Thus, organizations have a tremendous influence on personal qualities and habits. Further, organizations provide to those in responsible positions the means of exercising authority and influence over others. Thinking about an organization in this way affects the way managers do their jobs.
Administrative Behavior influenced the management literature in other ways. The management literature recognized that the management process was much more complicated than previously thought. No set of management principles could be used in all management situations, and scholars began to study contingencies under which various decision strategies work best. Knowledge obtained in other areas, such as psychology and sociology, was brought to bear on management problems.
The book was also the beginning of a process of making the professional manager’s role more respectable and justifying professional training in management. Administrative knowledge consisted not of a set of proverbs, but of a set of clearly defined concepts and an analytical structure. Administrative Behavior extended the body of management knowledge that could be taught in universities. It showed that sound management principles could be tested in the same way as were principles in the natural sciences. Management concepts were subjected to the same logical scrutiny as were legal concepts. Thus, management began to be considered as a profession, similar to law and medicine. Simon’s book helped bring about a realization that professionally trained managers bring particular expertise to the job and deserve to be compensated accordingly.
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Augier, Mie, and James G. March, eds. Models of a Man: Essays in Memory of Herbert A. Simon. Cambridge, Mass.: MIT Press, 2004. Dozens of essays in this comprehensive collection reflect on the foundational work of economist Herbert Simon. Highly recommended. -
Barnard, Chester I. The Functions of the Executive. 1938. Anniversary ed. Cambridge, Mass.: Harvard University Press, 1968. A difficult but challenging book that questions much of the conventional wisdom about management. The discussion of authority is especially reasoned and interesting. Written for practicing managers, but understandable to undergraduates. -
Crowther-Heyck, Hunter. Herbert A. Simon: The Bounds of Reason in Modern America. Baltimore: Johns Hopkins University Press, 2005. A biographical account that focuses on Herbert Simon’s economic and administrative theories. Highly recommended. -
Duncan, W. Jack. Great Ideas in Management: Lessons from the Founders and Foundation of Managerial Practice. San Francisco: Jossey-Bass, 1989. Integrates classic management ideas from the eighteenth century forward in a clear and readable way. Briefly discusses concepts such as the art and science of management, decision making, rationality, goals, motivation, coordination, and change. Easy to read. -
March, James G., and Herbert A. Simon. Organizations. 1958. 2d ed. Cambridge, Mass.: Blackwell, 1993. A continuation and development of the ideas presented in the first two editions of Administrative Behavior. Many propositions but little empirical support for them. The theory presented in the book has aged well. Appropriate for undergraduates. -
Simon, Herbert A. Administrative Behavior. 4th ed. New York: Free Press, 1997. Provides a clear description of Simon’s concept of bounded rationality and the effects of the organization on managers’ decisions. Introduction allows the reader to trace the evolution of Simon’s thought. Easy to read. -
_______. Models of My Life. New York: Basic Books, 1991. An autobiography. Describes the path of Simon’s research and places Administrative Behavior in the context of all of Simon’s writing. Easy to read, interesting, and fun.
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