A Behavioral Resource-Based View of the Firm: The Synergy of Cyert and March (1963) and Penrose (1959)

Abstract

Cyert and March’s (1963) seminal behavioral theory is one of the two major economics-based theories of the firm that goes inside the “black box” (the firm)—the other being the contribution of Edith Penrose. The two theories have differences, but also similarities, and substantial scope for cross-fertilization that has gone unnoticed in the literature. In this paper, we try to integrate important ideas from both books, paying particular attention to the issue of “excess resources,” slack, and (intrafirm) conflict. We then build on the integrated framework by delving into the nature of intrafirm conflict and its relationship to the degree of intrafirm rivalry, as they may impact the possible use of slack by firms. We derive propositions common to the two theories and new ones of importance to our understanding of organizational growth and change.