Rationalizing Organizational Change: A Need for Comparative Testing

Behavioral theory explains that organizational change is prompted by performance relative to a firm-specific aspiration. Although this explanation has been empirically confirmed, it has not been tested comparatively alongside other explanations, most notably rational choice. This lack of comparative study implies that prior research may be committing Type I errors—confirming aspiration-level decision making when it is not actually occurring. This paper contributes to behavioral theory in two specific ways. First, we show that several foundational studies purporting to provide empirical support for aspiration-level decision making may actually represent maximizing behavior. To consider this potential, we simulate a sample of subjectively rational agents who choose strategies by maximizing expectations. We show that it is possible and highly probable to diagnose satisficing when agents are, in fact, maximizing. Second, we develop and implement recommendations for comparative testing to demonstrate reliability. Analysis shows that the recommendations are effective at reducing Type I and II errors for both behavioral theory and rational choice. This paper is meant to inspire the design of future studies on aspirations and, indeed, all studies of organizational change