Carrying on the Legacy of Herbert Simon, Coursework Example

Abstract

This article evaluates Herbert A. Simon’s contribution and insights to organization theory, which refines our knowledge of understanding, studying and leading public organizations today. He does so by placing special emphasis on the criterion of bounded rationality. Simon had critically criticized the orthodox version of organizational bureaucracy and interpreted that organizational theory consisted of analytically evaluating the psychology of individual and collective behavior.

Key words: Herbert A. Simon, organization, limited rationality, decision theory, institutional economics.

Organization Theory

The path of the thematic evolution of organizational theory encompasses the change theories in decades largely dependent on the ideological framework of the society and requirement. The modern public sector organizational theory can be thought of as the product of two fields of study: government and management. Each of these disciplines stand upon a foundation built by the theories of Marx, Weber, Freud, Maslow, Simon and so on. The historical review of organization theory illustrates that all major contributions of the theories were conceived to apply broadly across all types of organizations.

Max Weber claimed that his analysis of bureaucratic organizations applied to both government agencies as well as business firms. Frederick Taylor applied his scientific management processes in government and public administration. Similarly, members of the administrative management schools ought to develop standard principles for all organizations. Hawthorne studies emphasized on social and psychological factors, while Lewin pursues the organization development procedures that is applied in government agencies today (Rainey, 2009). Herbert Simon (1946) implicitly framed much of his work as being applicable to all organizational settings, both public and private. Beginning as a political scientist, Simon co-authored a book in Public administration (Simon, Smithburg and Thompson, 1950)

Simon and the decision Mechanisms: Last of the Classics

Simon is not regarded as one among the classical writers but as the title suggests we can regard him as the last of the classics. In his book, Administrative Behavior, published in 1947, Simon expressed sharp criticism at the then hegemonic administrative management represented by Fayol and successors. He took his idea of the central importance of decisions from Chester  Barnard’s influential book “The Functions of the Executives” and went to the extent of claiming that “decision making is the heart of administration” (Skoldberg, 2002)

Decision making is central to organization practice. Yet, Simon thought that it is too gross and complicated to be manageable for organization analysis and can be likened to a “great river, drawing from many of its tributaries the innumerable component premises of which it is constituted”; it is impossible to say who really has made the decision. Hence a “more appropriate unit of analysis” is required. And Simon finds one such premise called the decision premise. The decision premise constitutes the myriads of conditions that precede the decisions. Such an analytical division of reality into its constituent units is typical of the Metonymic school of thought (Skoldberg, 2002)

Thereby the behavior of individual also becomes rational, since it can be regarded as a “process of drawing conclusions from premise”. Behavior in this way becomes the result of purely logical calculus (Von Wright’s rational Action theory). In this context, Simon rejects the sociological role theory of action, developed by Parsons and others contending that this dramaturgical conception ends up in irrationality; since it presupposes that the individual merely plays a role, without any underling reason.  Thus, it is an axiomatic truth for Simon that human action is “rational”; a first principle and point of departure that cannot be disputed. This, together with a style that analyzes down to the smallest constituent units, is a clear indication of the norm of trope of Metonymy (Skoldberg, 2002)

Organizational efficiency, is therefore, achieved by influencing the decision premises of organization members, and not only through authority and functional division as in the administrative management school. This influence is all the more necessary since individuals act under bounded rationality and hence rejects the traditional micro-economic picture of “economic man.”

His research led him to propose the famous concept of “bounded rationality” as opposed to the neoclassical concept of rational man, which leads to behavior “satisfactory” and not “Maximizer.” His contributions in this field earned him Nobel economics prize “for his pioneering research on decision making within organizations “(Simon, 2001, p.119). Simon is one of the proponents of artificial intelligence program extensions to the theory of rational decisions and behavior of administrative business. His achievements has largely effected game theory logistics while his collective rationality are being synchronized into management models of public expenditure theory, applied finance, and programming argumentative (Sent 2004)

When in Colombia, the debate on economic institutions theory was an important matter of concern for both firms and organizations, since a society is plagued with inequalities of income and quality of life. These questions were pertinent enough to demonstrate economic debate questions raised by H. A. Simon: What kind of rationality inspires distribution of public spending? How to improve the working environment of the organization? What influences the rationality of individual behavior in the collective spirit and identity of the company? How to consider utility functions with social equity criteria? What to do in case of failure of organizational media? How to link efficiency and program results to better quality of life for workers in companies?

With the evolution of theories on organizations and changes in technological parameters, the need to complement these changes from a broader conception of rational collectively was required. The effects and impact of the programming models in companies resulted from the creation of digital communication systems, with the theory of economic returns located halfway between the modeling abstract mathematics and common sense (Simon 1978b). In this complex and major transformations in contemporary society it was contemplated to theoretically propose Simon’s edifying ideas.

During the 1960s, Herbert A. Simon and James March write a Organizations work entitled leading to a paradigm shift on the approach of the bureaucratic organization proposed by Max Weber. The authors summarize this book a variety of field experiences and results confronted with empirical research that leads them to discover certain anomalies in the functioning of the bureaucratic scheme of the organization. In its findings, Simon and March show how some inconsistencies of the Weberian model of bureaucracy may be one reason
crisis both for its durability.  Herbert A. Simon sees the task as a labor management necessary in the organization when it takes a practical rationality in making decisions (in terms of organizational goals).

Of all the issues posed by Simon, perhaps the one which emphasizes the importance on public administration as the process of decision making is the most relevant and influential. The criterion of rationality in the conventional version of the results highlighted on the processes, the rationality of the conventional model is as a device that draws the ends. But Simon felt that one of the greatest strengths for the growth of the companies was their ability to state openly the possibility of reasonable decisions positively affecting the interests of managers and subordinates, deliberating and examining the media. Therefore, the primary referent organizational decisions would not be a board of corporate governance but a philosophy of collective actions reasonably identified per worker, in a deliberative work environment (Simon 1991a). Simon began his work in public administration and research as a consultant. As a result of its performance in various universities could integrate their experience various aspects of the administration both the private and public sector (March & Augier 2002). In Carnegie-Mellon University (Pittsburgh) deepened his study of the theory of decision making use of computers as a means of simulating human thought. Simon’s work with models computer programming contributed to deeper integration close relationship between information technologies and systems in making collective decisions (Chen 2005). For Herbert A. Simon management is synonymous with making decisions, what mainly interested in studying the ways takes this process. The source of his theory is reflexive rationality.

As figure 1 illustrates, the classical approach which is in the left of the figure. It points out the direct and simple line of power from the organization to the single individual. In Simon, the organization exerts its power on the single individual through his or her decision premises, as illustrated by the black arrows. While the shaded arrows represents the results similar to the early classics. The double arrows represent the higher sophistication and thereby efficiency of Simon’s revisionist approaches: the organization can influence individual in more and better ways.

He argues that corporate decisions are relevant while can be effective and deliver results. He suggested that the process of decision-making there are basically three stages:

• Find instances in which there is a decision to take, we can associate with an intelligence activity in the sense military.
• Inventing, developing and analyzing possible courses of action, which might be called a design activity.
• Choose a particular course of action of all possible options.

Conclusion

Simon’s influence in the contemporary debate on the social sciences is strengthened by contributions such as bounded rationality, organizations, decision theory, collective action, individual behavior. The advantage of Simon with regard to inherited tradition is that he manages to incorporate a philosophical reflection line in a context as pragmatic as the signature field and organizational efficiency. Thus, his theories had given us an insight into the working of organizations and contribute to organization theory that refine how we understand, study and lead public organizations today.

Reference

Chen, Shu-Heng (2005) “Computational intelligence in economics and finance: Carrying on the legacy of Herbert Simon”, Information Sciences, 170(1): 121-131.

March, James G. y Mie Augier (2002) “A model scholar: Herbert A. Simon (1916-2001)”, Journal of Economic Behavior & Organization, 49(1): 1-17.

Rainey, H. G. (2009) Understanding and Managing Public Organizations, Published by Josey Bass

Simon, Herbert A. (1978b) “The uses of mathematics in the social sciences”, Mathematics and Computers in Simulation, 20(3): 159-166.

Simon, Herbert A. (1979) “Rational decision making in business Sent, Esther Mirjam (2004) “The legacy of Herbert Simon in game theory”, Journal of Economic Behavior & Organization, 53(3): 303-317.

Simon, Herbert A. (2001) “¿Por qué la administración pública?”, Revista Economía Institucional, Bogotá, Universidad Externado de Colombia,4: 119-122.