ABSTRACT
S. Cleland argues that the firm should be studied within the framework of general organisation theory and that the entrepreneur should be seen as a manager-executive who adopts different roles as he performs different functions of organising, planning and controlling. According to H. A. Simon's theory of Administrative Behaviour, decision makers in organisations can only ‘satisfice’ in contrast to the entrepreneur of economic theory who is able to optimise. The empirical work of the behavioural theory suggests that five goals are of significance in decisions about price and output. These goals are production, sales, market share, inventory and profit. The standard operating procedures of the organisation are acquired through a ‘learning’ process. The literature on management and business organisation reveals managerial objectives which include salary, status, power, prestige, security, and professional excellence, and these are incorporated into O. E. Williamson’s managerial utility function by translating them into preferred expenditures.
