Political Science

Herbert Simons Theory of organization
Herbert Simon is well known for his discovery of the organizational theory of economics which drew its attention mainly to rationalism in decision making. He discovered the behavioral theory of decision making in economics that is founded on the bounded rationalism.

Herbert, in his discover in the 1950s, claims that agents are limited in their decision making because they fall short of focus to project on the future business state  as well as cost factors by relating the present information.  Therefore, the agents end up being assuming the bounded rationality in decision making thus they do not make decisions that are fully rational.  They end up making decisions that are not based on maximization but rather, satisficing decisions. They set a level of production or generate costs and sale targets that when achieved they would be pleased with but if not attained these agents will try to adjust the aspired targets until they achieve that desired levels (Britannica Concise Encyclopedia, n.d).

According to Herberts research, it is clear that todays managers and business administrators satisfice because of uncertainties on the future of the business investment. Therefore, they have to set an equilibrium point for production and sales which they think or prospect the business is going to achieve depending on the present state of business.  This results from the failure to carry out thorough market research on sale and demand of goods and services offered by the company.  This administrative theory is an alternative to the maximization theory in which if one knew the exact future market requirements, then they would maximize on that particular opportunity.

The bounded rationality aspect of management introduced by Herbert rejected the economic man as an optimizer in decision making by the use of information arguing that this was only a decision maker following the problem spaces available where they map the limited information. Bounded rationality theory describes at depth how decision makers reflex unconsciously, using their habits and skills in adjusting management goals in production to fit the prevailing market conditions.  His study describes how some auto executives from the US allowed auto executive from Japan   to enlarge their domestic market ignoring the foreign trade because it was predicted that their participation in foreign trade would result to a threatened business environment (Herbert, n.d). This kind of operation takes place due to the use of limited information. If the complete information about the state of the foreign market may be withheld, the Japan auto executives would have frustrated the foreign competitor instead of allowing them take over trade. 

The satisficing strategy involves the engagement of the management in the search of minimum levels of sufficiency in the type of trade instead of thorough search of complete information for the best option in production.  The limited information is used effectively by the identification of appropriate matches of data integration.  The correct pattern matches of market strategies are found until the equilibrium production is made. At this point, the business administration is said to be satisficing rather than optimizing ( HYPERLINK httpdieoff.orgpage163.htm httpdieoff.orgpage163.htm).

Simons research is still being used by business administrators at different levels of administrative decision making within their organizations. An example of satisficing practice is for example when a manager is bound to select good site for setting up a new plant for their company. In the process of the search, heshe simply settles for the first or second choice of site just because it offers the most basic qualifications like the nearness to transport network, raw materials, low cost price and other utilities while a further search would most probably result to a better site selection. This is saticificing.

There are different reasons as to why many managers may satisfice for example, managers may consider the price offered in a certain project for example, if the price of site is low, they may select it though it could be for personal interest that differs from the best interest of the company.  The managers may saticfice due to lack of commitment towards the company interests so they simply settle for the bear minimum qualifications.  Political interest and alienation in organizations could compel the manager to satisfice.  For example, if he is alienated to a certain political block, he may choose to make a decision in favor of his advisors from the political block of his interest.   In this case, there are many reasons for imperfection by the management because they fail to look for thorough information.     

In his research, Herbert A. Simon also established that the formalization and specification of goals have a contribution to the organizational rational behavior. He stated that the means end chains introduces goals hierarchy.  He further stated that each organizational level is termed as an end by itself as compared to the other levels of organization. Structures that are formalized support decision making in a rational manner by the simplification of border responsibilities that are found within the partisans.  This also provides guidelines to the procedural handling of the formalized structures (Simon, n.d).

In conclusion, rationality can either be defined as technical rationality that is obtained through means that direct us to preset ends (goal).  The technical rationality underscores efficiency of instrumental means-ends.