1 Introduction

Cyert and March’s (1963) seminar work, ‘A Behavioral Theory of the Firm’ (BTF), has served as an influential, theoretical groundwork for organizational theory and strategic management literature for six decades. Especially, their four major relational concepts, problemistic search, uncertainty avoidance, organizational learning, and quasi resolution of conflict, provide valuable insights for researchers and practitioners to understand the decision-making processes within firms (Cyert & March 1992).Footnote 1

Despite the tremendous scientific attention given to BTF, literature based on its relational concepts remains fragmented. Most scholars mainly focus on individual relational concepts, leading to parallel and decoupled insights rather than cohesive and complementary explanations of organizational decision-making. The lack of a holistic view through the lens of all relational concepts by Cyert and March may hinder the development of realistic predictions of organizational decision behavior. In addition, different terms (e.g., problem-driven search (Arrfelt et al. 2013) or problem-oriented search (Greve 1998)) are employed to refer to the same relational concept (e.g., problemistic search). The lack of unified vocabulary impedes the identification of relevant insights and a complete portrayal of the current state of research. Based on these issues, we derive our research question of how BTF, and particularly its four relational concepts, have been applied to predict organizational decision-making.

Our systematic literature review of 114 publications addresses this question, and thereby contributes to the literature of BTF in two ways. First, we identify different research streams emerging from BTF’s four relational concepts. We find that a multitude of BTF-related scholars predominately applying problemistic search and organizational learning to various decision areas, such as organizational change (e.g., Miller and Chen 1994; Park 2007), innovations (e.g., Gaba and Joseph 2013; Greve 2003a), research and development (R&D) search (e.g., Blagoeva et al. 2020; Rudy and Johnson 2016), expansions (e.g., Audia and Greve 2006; Ref and Shapira 2017), acquisitions (e.g., Iyer and Miller 2008; Kuusela et al. 2017), network decisions (e.g., Baum et al. 2005; Shipilov et al. 2011), and corporate fraud (e.g., Harris and Bromiley 2007; Mishina et al. 2010). Second, we provide a holistic view on these relational concepts for a more realistic explanatory approach for firms’ decision-making. We conceptualize an integrative process framework based on the four relational concepts to integrate the existing findings, discuss controversies, and identify opportunities for future research.

The structure of our review is as follows. We begin by explaining the theoretical foundation of the BTF and its four relational concepts. Subsequently, we describe the method and sample used in our systematic literature review. We move forward by discussing our findings on the application of BTF’s relational concepts in various decision areas and developing an integrative process framework that synthesizes the existing findings. Guided by our framework, we highlight future research directions and conclude by reflecting on the past six decades of BTF work.

2 Theoretical foundation of the BTF

In the period from the late forties to the early sixties, ‘Administrative Behavior’ (Simon 1947), ‘Organizations’ (March and Simon 1958), and ‘A Behavioral Theory of the Firm’ (Cyert and March 1963) laid the foundations for research on organizational decision-making and firm behavior (Argote and Greve 2007; Gavetti et al. 2012). These three influential bodies of literature built the intellectual roots for what has come to be called the ‘Carnegie School’. The identity of the ‘Carnegie School’—based at the Carnegie Institute of Technology, Pittsburgh, Pennsylvania—stems from three main premises: taking “organizations as the ultimate object of study, decision-making as the privileged channel for studying organizations, and behavioral plausibility as a core principle underlying theory building” (Gavetti et al. 2007, p. 523). All of the three Carnegie’s cornerstones were enriched through a broad interdisciplinarity. The school’s concepts and insights did not only draw from economics, but also from political science, psychology, and sociology (Augier and March 2008). The latest of these three publications—‘A Behavioral Theory of the Firm’—builds on the ideas and concepts of the preceding works and refines them. In this publication, the authors express their critique of the traditional economic assumptions. Based on their critiques, they formulate alternative concepts that include a more realistic view on organizational decision-making.

Cyert and March’s (1992) main critique of the neoclassical theory of the firm can be divided into two separate arguments. First, they question the motivational and cognitive assumptions employed by the neoclassical theory of the firm: profit maximization and perfect knowledge (Cyert and March 1992). According to Cyert and March (1992), profit maximization should not be considered as the only objective of a firm. Every individual inside an organization pursues personal goals. Hence, profit maximization is either one among many goals or not a goal at all (Cyert and March 1992). Even if the maximization of profits is the dominant objective of a firm, a more realistic assumption would be the satisfaction instead of the maximization assumption. Firms set aspiration levels and benchmark their actually achieved profits on previously set levels, rather than striving for absolute profit maximization (Cyert and March 1992). Aspiration levels are “the smallest outcome that would be deemed satisfactory by the decision maker” (Schneider 1992, p. 1053). They build on comparisons with their own past performances (historical aspiration) and / or performances of other peers (social aspiration) (Cyert and March 1992; March and Shapira 1992; Ref and Shapira 2017). Second, Cyert and March (1992) were skeptical about the assumption of perfect knowledge because a firm needs to gather information and does not have it in advance. Finally, they doubt that the real firm has much in common with the firm characterized by neoclassical theory (Cyert and March 1992). Theory assumed, for example, that there are no complex organizations, no problems of control, and no standard operating procedures (Cyert and March 1992). Neglecting these characteristics, the firm loses most of its original identity and meaning. All these aspects together raised the need for a more realistic behavioral theory of the firm, and thus, built the antecedents of Cyert and March’s studies.

Originally, ‘A Behavioral Theory of the Firm’ was mostly built around three related but largely independent ideas: bounded rationality, imperfect environmental matching, and unresolved conflict (Cyert and March 1992). Bounded rationality implies that, due to biases in decision-making as well as limited information, rational actors do not exist. Inconsistent with traditional economic theories, Cyert and March (1992) posit that time-consuming calculations of optimal behavior are often costly or impossible, and should thus be avoided. The second idea, imperfect environmental matching, emphasizes the importance of organizational adaption. Rules, forms, and practices that an organization uses are not inevitable determined by the demands of its environment, and therefore, not perfectly matched. Unresolved conflict assumes that latent goal conflicts are prevalent in every organization, which cannot be entirely resolved by contracts (Cyert and March 1992).

3 Four major relational concepts

Instead of focusing on a grand theory, Cyert and March (1992) aim to generate little but powerful and realistic ideas to explain organizational behavior (Liu et al. 2015). Originating from the three above-mentioned ideas (bounded rationality, imperfect environmental matching, and unresolved conflict), they develop four relational concepts that represent the core of the BTF: problemistic search, uncertainty avoidance, organizational learning, and quasi resolution of conflict (see Fig. 1) (Cyert and March 1992).

Fig. 1
figure 1

BTF’s four relational concepts based on three main ideas

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The first relational concept, problemistic search, emerges from the idea of bounded rationality based on two assumptions. First, organizations are subject to limited rationality due to the imperfect knowledge of information and options required for decision-making, and consequently, they need to actively search for alternatives (Cyert and March 1992; Simon 1947). Second, organizations do not act rationally, e.g., by maximizing their profit according to the neoclassical theory. Instead, they pursue satisfaction that is determined by their predefined aspiration level (Cyert and March 1992). Problemistic search is triggered by performances below the aspiration level. Search activities of an organization never occur voluntarily and randomly (Cyert and March 1992); they are motivated and stimulated by a detected problem (Gavetti et al. 2012). Furthermore, search is simple-minded, meaning that it is based on a simple model of causality (Augier and March 2008). More precisely, organizations will “(1) search in the neighborhood of the problem symptom and (2) search in the neighborhood of the current alternative” (Cyert and March 1992, p. 170). As organizational search is biased by its prior experience and goals (Cyert and March 1992), it is closely connected to organizational learning.

The idea of imperfect environmental matching builds the foundation for the second and third concept uncertainty avoidance and organizational learning. Organizations adapt their posture to certain environmental conditions without knowing all relevant information and the outcome of the adaption in the first place (also related to the notion of bounded rationality). This poses a level of uncertainty to organizations and leads to a preference for a short-term rather than an uncertain long-term planning horizon (Cyert and March 1992). The concept of uncertainty avoidance postulates that firms try to avoid uncertain situations and make almost every situation as controllable as possible. To cope with the uncertainties, organizations impose standard operating procedures in their decision-making processes (Cyert and March 1992) and negotiate contracts with their internal and external environment to enhance their reliability (Augier and March 2008). When making decisions without all necessary information (under uncertainty), firms tend to exhibit risk-averse habits by relying on an existing set of procedures and routines and engaging in a narrow search of solutions in their neighborhood (Cyert and March 1992). Thus, uncertainty avoidance is closely tied to a firm’s risk-taking behavior, which reflects the willingness to accept potential losses associated with uncertain situations (Cyert and March 1992). However, the major difference is that uncertainty is unspecific, while risk is attached to concrete losses or negative outcomes and often quantified with a probability (Hofstede 2001).

Not only individuals show adaptive behavior over time, but also organizations do (Cyert and March 1992). The constant adaption of organizations to their environment leads to the third relational concept, organizational learning. Firms adapt their goals, known as aspiration levels, as a function of goals of previous periods and goals of comparable other organizations (Augier and March 2008). Moreover, firms can adapt their attention and search rules as they perceive and interpret certain behaviors as successful (Gavetti et al. 2012). Organizational learning can take place both locally and on the corporate level. This is because organizational functions perceive situations from their own perspective, and accordingly evaluate same events differently (Augier and March 2008).

The concept of quasi resolution of conflict stems from the idea of unresolved conflict. Organizations inevitably struggle with latent goal conflicts, as they act as a coalition of members and sub-units rather than an individual. More precisely, organizational members and sub-units have diverging, and thus potentially conflicting interests regarding profit, sales, market share, inventory, and production (Cyert and March 1992). In order to reduce the complexity of these interrelated problems and goal conflicts, organizations seek temporary compromises among different goal dimensions and action alternatives for the sake of mutual acceptance (Gavetti et al. 2012). Cyert and March (1992) assume that organizations factor its problems into local sub-problems and delegate authority to resolve them (local rationality). By assigning the resolution process to organizational sub-units, organizations need to assure that the resolution process is consistent with the organizational system (Cyert and March 1992). This consistency is, on the one hand, supported by acceptable level criteria, which replace a demanding local optimization (Augier and March 2008; Cyert and March 1992). On the other hand, solving problems sequentially rather than simultaneously increases consistency of the conflict resolution process (Augier and March 2008). However, a comprehensive resolution is almost impossible, and therefore, organizational goal conflicts are usually inevitable (Cyert and March 1992).

With the formulation of these four relational concepts, Cyert and March (1963) fundamentally contribute to the understanding of organizational behavior and decision-making. Applying these concepts to specific organizational actions, as well as reactions to both external changes and emerging challenges, should help to create a more realistic theoretical approach.

4 Method and sample

In order to conduct a systematic literature review on BTF research, we followed David and Han’s (2004) and Konlechner and Ambrosini’s (2019) approach. Thereby, we adhered to Denyer and Neely’s (2004) recommendations for explicit and reproducible criteria for searching and selecting studies. Furthermore, we followed Tranfield and colleagues’ (2003) stages for conducting systematic reviews.

We used Business Source Complete (via EBSCO) as database for the systematic search process. To guarantee a high quality of considered articles, we only included top-ranked, peer-reviewed journals.Footnote 2 Our aim was to uncover literature that describes firm behavior and specific organizational decisions that can be explained more realistically by the application of the four relational concepts. Therefore, we initially searched for studies that mention the terms behavioral theory of the firm, btf, btof, quasi resolution of conflict, uncertainty avoidance, problemistic search, or organizational learning in the title or abstract. To ensure a direct reference to Cyert and March’s theoretical foundation (all editions of the book), studies that contain one of the relational concepts in title or abstract were only considered if at least one of these terms were found in the text (including references): behavioral theory of the firm, btf, or btof. As a result, the preliminary sample included 146 articles published between 1963 and July 2023. We excluded twelve articles due to their publishing form. Most of them were short and general book reviews in direct response to the publication of ‘A Behavioral Theory of the Firm’ 1963. We then scanned the remaining 134 abstracts to confirm their relevance. We excluded three further articles with an apparently diverging focus. In the final step, we read the full paper and dismissed 52 articles that did not explicitly focus on (a) relational concept(s) and its/their application on organizational decision-making. This procedure led to a first sample of 79 studies that empirically or theoretically investigate firm behavior through the lenses of BTF’s relational concepts. However, during the literature search, we recognized that not all scholarly work rooted in Cyert and March’s (1963) BTF used exactly their original terminology. Some authors referred to problemistic search as problem-driven search (Arrfelt et al. 2013), others called it problem-oriented search (Greve 1998). Furthermore, with performance feedback, a literature stream emerged that uses problemistic search and organizational learning as foundational concepts to explain firm behavior. To ensure that our sample covered these heterogenous terminologies, we executed a second search looking for the terms aspiration*, performance feedback, attainment discrepanc*, problem-driven search, and problem-oriented search in title and abstract. In the second search process, we made sure that the studies relate directly to BTF. This procedure resulted in 97 potential studies for the sample, of which 54 overlapped with the first sample. We scanned abstracts and read full text of the remaining 43 studies, applying the same criteria employed during the first search process. This step eliminated eight articles. Combining both samples, we used a final literature sample of 114 articles as the basis for our investigations. From the 114 articles, 108 were identified as empirical, four as theoretical, and two combined both perspectives. 97 of the empirical studies included a purely quantitative approach while eight applied a computer simulation and one combined a quantitative approach with a computer simulation. Two of the quantitative studies simultaneously employed a qualitative approach within their research design. Following Su and Junge’s (2023) approach, we illustrate the search process and results in Fig. 2.

Fig. 2
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Flowchart of systematic search

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The articles included in our final sample were published in eleven journals. With 34 occurrences, Organization Science was the most strongly represented journal in our sample, followed by the Academy of Management Journal with 27. Furthermore, Fig. 3 shows the publication trend and the chronological distribution of the 114 publications. Since the early nineties, publications on BFT and specific relational concepts have increased constantly. Although the first publication of Cyert and March’s work appeared in 1963, studies relating to BTF and specific relational concepts began to evolve in the early nineties and have increased constantly since then. Compared to the large number of papers citing BTF in general, studies relating to one of BTF’s relational concepts appear relatively sparse. The reason can be seen in the broad applicability of BTF, as its core ideas and principles of BTF have influenced a great body of management and organizational studies. James March explains that “I think some of the ideas in BTF seem to me to have this quality of being little ideas with power that you can use in a lot of different situations” (Liu et al. 2015, p. 153). For example, Deb et al. (2017) argue based on BTF that slack enables adaption and innovation for a better firm performance without explicitly mentioning relevant relational concepts, such as problemistic search or organizational learning. Thus, research building on specific relational concepts belongs to the wider impact of BTF.

Fig. 3
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Publication trend over time

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To analyze and synthesize the findings, we applied a narrative approach. Narrative reviews are viewed as valuable when “attempting to link together many studies on different topics, either for purposes of reinterpretation or interconnection” (Baumeister and Leary 1997, p. 312). Due to the multitude of research directions of the relational concepts, this approach seems to be best suited. We used four categories, encompassing independent variable, dependent variable, relational concept, and organizational decision areas, to structure the results of the review and analysis process. With these categories, we show the assignment to the corresponding relational concept, reveal patterns in organizational decisions, and compare the operationalization of the variables used. Appendix provides an overview of the analyzed journal articles including the key findings in the respective categories.

5 Application of BTF’s concepts in literature

The major share of studies in our sample focuses on one or two relational concepts. The only exception is the conceptual study by Dew and colleagues (2008) which considers all four relational concepts and applies their meaning in an entrepreneurial setting. Most studies (61) center around problemistic search and its implication for organizations. This is followed by 33 studies that can be assigned to organizational learning literature. Nine studies connect problemistic search and organizational learning. Nine do not directly name one of the relational concepts but focus on aspiration levels, which build on the logic of problemistic search and organizational learning. One study (Cyert et al. 1996) uses the concept uncertainty avoidance to show that managers prefer higher short-term payouts even if they are associated with costs of dividend cuts in the future. We find that the relational concepts are mainly applied to seven decision areas: general decisions of organizational change and adaption, and specific decision areas of innovation, R&D search, expansion decisions, acquisitions and resource decisions, organizational network decisions, and corporate fraud.

5.1 Organizational change and adaption

A number of studies explore organizational behavior that is associated with change and adaption in general without specifying the concrete adaptive actions. Miller and Chen (1994) initially show that poor performance of a firm in relation to its aspiration levels leads to a problem-driven search (problemistic search). Since a firm’s managers want to explore the causes of the problem, tactical changes like changing prices or devising an advertising campaign are typical responses (Miller and Chen 1994). Confirming these results, Ketchen and Palmer (1999) find that firms that underperform in comparison to their peers are more likely to initiate strategic changes, such as addition and deletion of new technologies or services. Park (2007) examines the direction of strategic changes and find that a firm’s strategic convergence towards other firms decreases when the firm's performance increases relative to its aspiration level. In turn, strategic convergence of the focal firm towards its peer group increases when performance is below its social aspiration level (Park 2007). Thereby, aspiration levels “can be updated with different speeds, depending on how quickly decision-makers accommodate to performance that diverges from their aspiration level” (Greve 2002, p. 1). Overall, BTF’s arguments are strongly supported in diverse industry settings including railroads (Baum and Dahlin 2007), airlines (Miller and Chen 1994), hospitals (Ketchen and Palmer 1999), radio markets (Greve 1998), and within mutual funds (Kacperczyk et al. 2015).

5.2 Innovation

Several studies focus on organizational decisions or behaviors that result in a more or less innovative outcome. Looking at new product introductions from an organizational learning perspective, Katila and Ahuja (2002) show that the degree of prior search depth is curvilinearly related to the absolute number of new products. In contrast, prior search scope has a linear relationship with the number of new products introduced by a firm (Katila and Ahuja 2002). Despite depth and scope, the timing of ‘innovation search’ has a strong effect on new product frequency and innovativeness. Firms with the to attempt to stay one step ahead of their competitors introduce products with a higher degree of innovation than firms, which follow and learn from their competitors (Katila and Chen 2008). Moreover, Greve’s (2003a) investigations of innovation launches among Japanese shipbuilding firms clearly shows that problemistic search is a key driver of firm innovations. By using the conceptual logic of organizational learning and problemistic search, the majority of the studies in this topic area are associated with performance feedback literature. More precisely, they investigate the influence of performance below aspirations on firm innovations, such as new product introductions (Gaba and Joseph 2013; Mulotte 2014) or process introductions (KC et al. 2013), firms’ motivations to pursue radical technologies (Eggers and Kaul 2018), or number (Khanna et al. 2016), scope, and depth (Yu et al. 2019) of successful patent applications. Eggers and Suh (2019), however, demonstrate that prior experience in the domain starkly influences the effect of negative performance feedback. Negative feedback in new domains more often results in withdrawal toward better-known domains, and hence, missing potential opportunities (Eggers and Suh 2019).

5.3 R&D search

Another prominent decision area related to organizational change and innovation is R&D search or intensity. R&D investment decisions inherently bear a level of risk due to the uncertainty in their desired performance outcomes (Palmer and Wiseman 1999). Most of the studies associated with R&D search directly use problemistic search as an antecedent to explain changes in R&D behavior. When performance is below aspiration level, a further performance decline leads to an increase in R&D intensity (Rudy and Johnson 2016). Chrisman and Patel (2012) find that family firms (compared to non-family firms) exhibit a smaller variability of R&D investments due to their long-term orientation. Organizational search is also driven by information interpretation and conveyance of a firm’s top managers (Fang et al. 2014). However, not only perception influences a top manager's reaction to R&D search on performance feedback, different types of CEO power (Blagoeva et al. 2020), CEO promotion and prevention focus (Mount and Baer 2022), as well as CEO stock option grants (Lim and McCann 2014) likewise do. Blagoeva et al. (2020) examine the causes of different CEO reactions to inconsistencies between performance feedback and performance prospects and linked this with the power of the CEO. They find that CEOs engaged in less R&D search when they had more structural power or ownership power and engaged in more R&D search when they had a high level of prestige power (Blagoeva et al. 2020). Furthermore, Lim and McCann (2014) demonstrate that high values of CEO stock option grants decreased a firm’s R&D intensity. This suggests that CEOs in poorly performing firms may be already facing personal compensation and employment risks, which weakens their overall risk attitude towards the R&D expenditure of the firm (Lim and McCann 2014). These results show the complexity of situational and individual factors that have multiple different interdependencies within its influence on R&D search.

Besides CEO influences, the extent of a firm’s R&D search intensity depends on the distance below aspiration levels (Chen & Miller 2007). On the one hand, if performance falls below aspirations, R&D search intensity will first rise, while on the other hand, search efforts will decrease, as a firm approaches bankruptcy (far below aspirations) (Chen and Miller 2007). Based on these outcomes, the authors propose a framework with more than one reference point and an inverted U-shape relationship. Organizational responsiveness varies with the focus of attention, which in turn depends on organizations’ situations (Ocasio 1997). Besides performance situations, Vissa and colleagues (2010) find that organizational form influences focus of attention, and therefore organizational response in form of R&D search. In their study, business group affiliates are more focused on a historical comparison (historical aspiration levels) for R&D search than a social comparison (social aspiration levels). In contrast, Ye and colleagues (2021) argue that performance below social aspiration (compared to historical aspiration) leads to more innovative search. Furthermore, organizational slack is found to have a significant positive effect on R&D search intensity (Chen 2008; Salge 2011). In conclusion, adaptions in R&D behaviors are often considered as solutions to underperformance and subsequent problemistic search (Rhee et al. 2019).

5.4 Expansion decisions

The problemistic search argumentation (problem-driven decision-making) is often used to explain organizational expansion within a certain market (Audia and Greve 2006), the entry in a new market (Ref and Shapira 2017), or offshoring decisions (e.g., Elia et al. 2022). For example, Barreto (2012) examine firm’s decision about the extent and selection of branch openings based on performance feedbacks. In contrast to the predictions of the BTF, Audia and Greve (2006) find that the further firm performance falls below its aspiration level, the lower its tendency for factory expansion (as a measure for risk-taking). Managers of small firms interpret a decline in performance even worse than managers of large firms, as the heightened anxiety about organizational failure and survival in small firms provokes a more risk-averse response (Audia and Greve 2006). In contrast, Greve (2008) uncovers that the further an organization performs below its social aspiration level, the faster it grows. Joining this active debate and combining both of the above-stated perspectives, Ref and Shapira (2017) provide empirical evidence that a firm’s probability of entering a new market first increases as its performance falls below or rises above aspiration levels. After a certain point this relationship decreases, showing an inverted U-shape relationship (Ref and Shapira 2017).

Some studies take an organizational learning perspective to investigate antecedents of either organizational failure or success during the internationalization process. Dencker et al. (2009) find that pre-entry management experience and knowledge of the business activity increase a firm’s survival time in a new market. Moreover, early-stage business planning decreases firm survival whereas product-line change is associated with an increase in survival time (Dencker et al. 2009). Examining the market entry and possible subsequent exit from the Brazilian telecommunications market, Perkins (2014) provided evidence that prior internationalization experience in a host country that has a comparable institutional environment as the home country, has a positive effect on the time to failure. However, Musaji et al. (2020, p. 205) indicated that even with prior experience, it takes about 19 decisions during a new market entry to get to the learning curve, which is defined as the “point after which performance trends reliably positive”.

5.5 Acquisitions and resource decisions

Some studies investigate the impact of performance feedback, and hence problemistic search, on organizational decisions that cover acquisitions (Haleblian et al. 2006; Kuusela et al. 2017), allocations (Arrfelt et al. 2013; Baumann et al. 2019), and investments of resources (Bromiley 1991; Smulowitz et al. 2020; Washburn and Bromiley 2012; Zhang and Gong 2018). Iyer and Miller (2008) state that performance feedback has a significant influence on a firm’s propensity to engage in acquisitions. They find that the threat of a bankruptcy inhibits acquisitions and the acquisition hazard rate increased as performance improved up to aspirations (Iyer and Miller 2008). Kuusela et al. (2017) show that firms respond to negative performance feedback close to aspirations more often by resource-consuming acquisitions. However, performance far below aspiration levels increases the tendency of resource-freeing divestments (Kuusela et al. 2017). Furthermore, financial slack acts as a moderator on this relationship (Kuusela et al. 2017). Looking at responses to positive performance feedback, Vidal and Mitchell (2015) find that firms appear to use divestitures in a ‘complementary Penrose effect’. This term is used to describe how “divestitures can free resources that firms can reinvest as they focus on new opportunities, which can help the firms maintain their performance gains” (Vidal and Mitchell 2015, p. 1106). Solely applying historical aspirations, Desai (2016) does not support the hypothesis that negative performance feedback is a cause of service line divestitures of for-profit hospitals in California. He further argues using social aspiration level in addition to historical aspirations does not lead to more information about the decisions (Desai 2016). Conversely, Kim and colleagues (2015) show that the use of historical or social comparisons significantly influences a firm's acquisition behavior.

Furthermore, other studies find that performances below aspirational level lead to adaptions of resource allocations (Busenbark et al. 2022; Desai 2008), capital expenditures (Schumacher et al. 2020), or simply higher utilization of slack resources (Bromiley 1991; V. Titus et al. 2022), believing that these resource investments will improve future performance. Some studies demonstrate the impact of performance discrepancies on human resources decisions. For example, Ertug and Castellucci (2013) show that organizations with a low product quality relative to their aspirations are likely to recruit human resources with an above average previous performance. Additionally, they find that organizations with low-revenue performance relative to their aspirations have a higher tendency to recruit high-status human resources (measured as number of awards and honors) (Ertug and Castellucci 2013). In terms of top management composition, firms tend to select board-level member with higher expertise diversity and lower ascriptive (such as gender, race or ethnicity) diversity in order to facilitate effective solution search and decision-making when performances are below the aspired level (Jung et al. 2023).

5.6 Organizational network decisions

Research also indicates that problemistic search and organizational learning can impact the initiation and dissolution of interorganizational relationships. Whereas Baum et al. (2005) show that firms with a rising gap between performance and aspirations are more likely to engage in non-local ties, Shipilov et al. (2011) observe that these ties are additionally more often of a status-homophilous nature in situations that greatly diverge from historical aspirational levels. In context of make-or-ally decisions, Ren and colleagues (2022) find a U-shaped relationship between historical alliance performance and the likelihood of independent new product introductions, i.e., reduction of previous alliances. The decision of maintaining or dissolving alliances (e.g., by turning to acquisitions) does not only depend on the performance discrepancy to aspiration level but also on how firms attribute the failure or success of existing alliances (Lee et al. 2023). Focusing on vertical relationships, Clough and Piezunka (2020) investigate the influence of vicarious performance feedback on dissolution decisions with a supplier. Despite the impact of own performance relative to aspiration levels, the authors find that firms monitor the performance of comparable organizations when evaluating suppliers (Clough and Piezunka 2020). After an episode of negative historical performance feedback of the competitor, the focal firm has a higher tendency to dissolve the relationship with its supplier (Clough and Piezunka 2020).

5.7 Corporate fraud

Harris and Bromiley (2007) demonstrate the relevance of problemistic search in the context of corporate fraud, which represents a potential response of organizations to performances below aspiration. Extremely low firm performance relative to social aspiration levels substantially increases the firm’s propensity of financial misrepresentation (Harris and Bromiley 2007). While firms with performance close to average industry performance strive to achieve aspiration levels via legitimate means, firms performing far below their aspirations are more willing to accept the risk of illegal solutions to overcome this performance shortfall (Harris and Bromiley 2007). Focusing on positive performance feedback, Mishina and colleagues (2010) discover a positive relationship between performance above social aspirations and the likelihood of corporate fraud. However, the authors also show that negative performance feedback decreases the likelihood of corporate fraud, especially for prominent firms (Mishina et al. 2010). A cause of these contrasting results might be the difference in database (voluntary restatement of firm financial earnings in a Government Accountability Office (GAO) report vs. involvement in illegal incident as reported in news), as “the results from empirical tests [on financial misconduct] can depend on which database is accessed” (Karpoff et al. 2017, p. 129).

6 Towards an integrative process framework of BTF's concepts

Our review identifies a vast number of studies drawing on BTF’s relational concepts of problemistic search and organizational learning in different organizational setting and decision areas. Both concepts are applied to organizational adaption in a generic way (e.g., Miller and Chen 1994; Park 2007) or in more specific forms, such as innovations (e.g., Gaba and Joseph 2013; Greve 2003a), R&D search (e.g., Blagoeva et al. 2020; Rudy and Johnson 2016), or market expansions (e.g., Audia and Greve 2006; Ref and Shapira 2017). More precisely, extant research focuses on the relationship of a firm’s performance to aspiration level and the outcomes of specific adaptions (e.g., R&D intensity, product introductions, or other investments). This relationship is influenced by characteristics of the aspiration level (social vs. historical, distance to aspiration level), individual (e.g., CEO power, stock options, etc.) and situational factors (e.g., slack resources).

In contrast, the other two relational concepts, uncertainty avoidance and quasi-resolution of conflicts, seem underrepresented in the extant study. There are two possible reasons for this development. First, the research on uncertainty avoidance and organizational conflicts is partially diverged from BTF and uses other theories and definitions. A large body of literature (e.g., Bertrand and Lumineau 2016; Debus et al. 2012; Hamann et al. 2022) centering around uncertainty avoidance refer to Hofstede (2001), who introduces uncertainty avoidance as one of five dimensions of culture. In fact, Hofstede’s concept of uncertainty avoidance also builds on BTF and its explanation of how organizations avoid uncertainties. Similarly, organizational conflicts are examined in various research streams, such as conflict management (e.g., Pondy 1967), organizational behavior (e.g., Salvato and Rerup 2018), and intergroup relations (e.g., DiBenigno 2018), in which BTF is mentioned as one among many other theoretical underpinnings. The concept of conflict is by nature a general social phenomenon, to which a large body of theoretical explanations exists (e.g., Cosier and Rose 1977; March and Simon 1958; Pondy 1966; Thomas and Schmidt 1976). Thus, BTF’s idea of unresolved conflict has not become a dominant theory in the relevant literature. Second, uncertainty avoidance and quasi resolution of conflicts are treated as a latent construct rather than a primary concept in studies on BFT. Unlike problemistic search and organizational learning, which are applied as central mechanisms of organizational decision-making, the two underrepresented relational concepts can be seen as underlying principles or assumptions, which set the boundary conditions for organizational search. For example, a firm’s risk-taking behavior as a response to uncertainty avoidance is also considered as impacting factor in studies focusing on problemistic search and organizational learning (e.g., Audia and Greve 2006; Eggers and Suh 2019; Lim and McCann 2014). The majority of the strategic actions are associated with risk-taking behavior. Firm acquisitions, investments in R&D, or new market entries always bear the risk of possible uncertain outcomes, and hence represent a risky choice (Desai 2008). In similar vein, quasi resolution of conflict is viewed as prerequisite for stable firm performances (Reus et al. 2016), budget allocation (Weber 1965), acquisitions and other investments (Carter 1971).

How can all relational concepts be leveraged holistically for a more realistic and comprehensive prediction of organizational decision-making? The four relational concepts are interrelated rather than stand-alone concepts that are independently applicable to different decision areas. It seems more appropriate to follow a process-based view on them. Based on the original framework of Cyert and March (1992) and taking into account all further research developments, we link the four complementary concepts to an integrative processual framework for a more comprehensive explanation of organizational decision-making (see Fig. 4). Starting with the definition of a reference point, organizations set a satisfactory goal and aspiration level for their future performance outcomes. Based on the performance evaluation compared to the aspiration level, organizations engage in organizational search for performance-increasing options. The decision for specific options will lead to respective performance outcomes which serve as feedback for the definition of aspiration level and performance evaluation.

Fig. 4
figure 4

Integrative processual framework of BTF’s relational concepts

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Organizational decisions are not driven by profit maximization (as neoclassical theory assumed) (Cyert and March 1992). Instead of achieving absolute levels of performance, they seek a reference point, i.e., historical and / or social aspiration level (Cyert and March 1992; March and Shapira 1992; Ref and Shapira 2017). While many studies use a weighted average model of social and historical aspiration levels (e.g., Eggers and Kaul 2018; Hong 2019), others solely include one of them for their investigations (e.g., Desai 2016; Eggers and Suh 2019). A firm’s formation of their aspiration level also depends on the environmental condition and the locus of attention (Berchicci and Tarakci 2022). In a volatile environment, firms weigh historical aspiration more than social aspiration (Berchicci and Tarakci 2022). Firms with a locus of attention at their upper management tend to choose social aspirations over historical aspirations (Berchicci and Tarakci 2022). Whether the choice of historical or social aspiration will lead to different organizational decisions and outcomes remains contradictorily discussed in the literature (Desai 2016; Kim et al. 2015).

The aspiration level serves as reference point against which performances are evaluated. Depending on the discrepancy of current performance compared to the aspiration level, organizations follow two different paths of adaption. Performance below aspiration level, i.e., negative performance feedback, stimulates problemistic search, and thus triggers multiple strategic actions taken by an organization (Greve 2003a). With those strategic actions, firms try to improve their performance in order to exceed or at least meet their future aspirations. In contrast, performance above aspiration levels stimulates slack search, a search process that is associated with the excess of resources (Greve 2003b; Palmer and Wiseman 1999). In addition, the distance to aspiration level plays an important role for the subsequent search and decisions (Chen and Miller 2007). If the performance is far below the aspirational level, i.e., close to organizational failure (e.g., bankruptcy), firms often shift their focus of attention from aspiration level to survival point and reduce their problemistic search activities (Ref and Shapira 2017). In other words, companies no longer try to achieve their aspiration level with future performance but to secure their survival. Thus, organizational survival is considered as a boundary condition for any search to take place (Audia and Greve 2006; Iyer and Miller 2008). By applying these two reference points (failure point and aspiration level), some studies reveal a U-shape relationship between and strategic decisions, such as R&D search and market expansions (Chen and Miller 2007; Ref and Shapira 2017). Both forms of organizational search, problemistic and slack search, represent the two alternative reactions of organizations to performance feedback.

Organizational search, and ultimately decision-making, is subject to a firm’s level of uncertainty avoidance that determines the time horizon (short- or long-term) and the location (range of solution space) of the search activities (Cyert and March 1992). For example, technological choices are subject to technological uncertainty of deterioration and market uncertainty in terms of changing customer preferences (Dong 2021). Uncertainty avoidance can be seen as a boundary setter for the decision-making process and is tied to a firm’s risk-taking behavior, i.e., the willingness to accept risks of concrete losses associated with uncertainties (Cyert and March 1992). Risk-taking hinges on the predefined aspiration level. Although BTF proposes that performance below aspiration levels triggers the need for improvement, and thus stimulates risk-taking (Cyert and March 1992; Hu et al. 2022; Mount and Baer 2022), other researchers show a more differentiated view on risk-taking in relation to multiple reference points. March and Shapira (1992) propose two reference points (failure and success reference point) in the context of risk-taking behavior related to aspiration levels. Hu et al. (2011) add a third reference point. Firms performing below / above aspiration levels (first reference point) are risk seeking / averse. (Hu et al. 2011). Yet, firms again become risk adverse at very low performance levels, from their failure point (second reference point) downwards (Hu et al. 2011). At very high levels of performance relative to a firm’s aspiration level, precisely, upwards from its success point (third reference point), a firm’s risk seeking behavior increases (Hu et al. 2011). In addition to performance relative to aspiration level, risky decisions also depend on the magnitude and the likelihood of potential gain associated with the decision alternative (Sobrepere i Profitós et al. 2022).

The outcome of decisions serves as performance feedback for a new iteration of goal and aspiration level definition. This recurring loop of adaption and evaluation results in a constant process of organizational learning. Over time, organizations gain experiences in various areas, such as acquisition (Haleblian et al. 2006), R&D (Powell et al. 1996), market entry (Dencker et al. 2009), or operations (Baum and Dahlin 2007), which influence the subsequent organizational search process and uncertainty perception. Hence, the concepts of problemistic search (also slack search) and organizational learning are interwoven with the literature of performance feedback which is one of the major intellectual achievements originating from BTF to explain various organizational decisions. Positive performance feedback (above aspiration) confirms the validity of previous search and outcomes. Negative performance feedback is perceived as an undesirable performance gap (below aspiration), and hence endangers organizations’ survival (Desai 2008). Organizations process performance feedback based on their predefined aspirations and their beliefs to derive and choose action alternatives (Keil et al. 2022). Joseph and Gaba (2015) examine the effect of ambiguous (weakly correlated historical and social aspirations), inconsistent (negatively correlated), and consistent (positively correlated) performance feedback on new product introductions. They find that inconsistent and consistent performance feedback both have a positive effect on a firm’s product introductions, whereas ambiguous feedback reduces the firm’s responsiveness (Joseph and Gaba 2015). Ambiguous feedback can limit the perceived need for change among managers, and thus, result in misalignments in the execution of strategic actions (Joseph and Gaba 2015). The appraisal of the negative and positive feedback hinges on the experience and specialization of the decision-makers in the relevant area (e.g., Gaba et al. 2023).

Throughout the entire decision-making process, organizations face conflicts emerging from different interests of its members and subunits which influence the organizational goal setting and search process (Carter 1971; Cyert and March 1992). Therefore, they need to build coalitions and make compromises to achieve a consensual decision at the organizational level. Hu and colleagues (2023) find that firms performing below their aspirations reduce the ascriptive diversity among the board members in order to build consensus and avoid conflicts. How conflicts among organizational subunits influence the aspiration level definition, performance evaluation, and organizational search remains poorly investigated in the empirical and conceptual work of BTF-based decision-making.

7 Future research directions

A myriad of studies applied the BTF’s relational concepts of problemistic search and organizational learning in a multitude of different organizational settings and decisions. This shows the tremendous explanatory power, and therefore the influence of Cyert and March’s (1963) behavioral ideas. However, we see promising research opportunities to create a more holistic picture in examining (1) the interrelations among the relational concepts, (2) the choice and operationalization of aspiration level, (3) the type and measurement of performance, and (4) the types of organizations.

7.1 Interrelations among the relational concepts

Our literature review shows that the extant literature predominantly applies the relational concepts of problemistic search and organizational learning to explain various organizational decisions, while the other two concepts quasi resolution of conflict and uncertainty avoidance are only implicitly considered or not mentioned at all. In line with the original intention of Cyert and March (1992), we see the necessity for future research to investigate all four relational concepts as a whole and their interrelations in order to understand and predict organizations’ decision-making process in depth.

Problemistic search and organizational learning are both antecedents to strategic decisions, e.g., market expansion (Barreto 2012; Dencker et al. 2009; Musaji et al. 2020; Ref and Shapira 2017). However, organizational learning may have a moderating effect on the relationship between problemistic search and market expansion. For example, Ref and Shapira (2017) show an inverted U-shape relationship between positive and negative deviation from aspiration level and market expansion. The tipping point of the inverted U-shape relationship may be shifted by organizational learning effects, as previous experience in internationalization enhances firms’ confidence in their expansion endeavor (Dencker et al. 2009; Musaji et al. 2020).

Furthermore, the performance relative to aspiration level triggers problemistic search and results in organizational learning (Cyert and March 1992). March (1991) introduces two different facets of organizational learning: exploitation and exploration. The former refers to the refinement of matured solutions, while the latter focus on new possibilities (March 1991). The balance of exploration and exploitation is later defined as organizational ambidexterity (Tushman and O’Reilly 1996). Extant literature reveals that problemistic search drives innovation and market expansion (Gaba and Joseph 2013; Ref and Shapira 2017; Ye et al. 2021), which can be perceived as an explorative behavior. In order to increase their performance, organizations may also undertake exploitative actions (e.g., improvements of existing products). Future scholars should investigate how the performance relative to aspiration impacts the choice between exploration and exploitation, i.e., organizational ambidexterity. In addition, decision areas focusing on exploitative actions, such as downsizing, product refinements, and other efficiency enhancements, need to be investigated through the lens of BTF.

Future research needs to investigate the role of quasi resolution of conflict in the decision-making processes. The decision power resides in a few decision makers (e.g., CEO) with different monetary incentives (e.g., stock options) than the other organizational member (Blagoeva et al. 2020; Lim and McCann 2014). Top managers need to align strategic decisions with various stakeholders within the organization and seek coalitions for the implementation to achieve performance improvements. At the same time, conflicting interests of organizational units may compromise the organizational search of performance-enhancing solutions and dismiss radical but promising solutions at the first place. Making compromises is neither inherently bad nor good. The question is under which circumstances quasi resolution of conflict serves as an enabler or an inhibitor for effective decisions. The mechanisms of conflict resolution in the decision-making process remain largely unexplored.

The concept of uncertainty avoidance may also have a moderating effect on the organizational search and decisions-making. Facing the imperfect knowledge of the environment, organizations tend to rely on existing processes and routines or search for solutions in their neighborhood (Cyert and March 1992). This uncertainty-avoiding behavior may limit the problemistic or slack search (e.g., product innovations, market expansions) which involves capital investment with uncertain payback. However, many studies show that performances below aspiration level enhance risk-taking behavior of firms (Miller and Chen 2004; Palmer and Wiseman 1999; Schumacher et al. 2020). At some point, performances under aspiration level and the resulting need for performance improvement may overcome firm’s uncertainty-avoiding attitude. Future research needs to delve deeper into the relationship between performance relative to aspiration level, uncertainty avoidance, and organizational search.

7.2 Choice and operationalization of aspiration level

BTF research distinguish between social and historical aspiration level and applies different operationalizations in empirical investigations. This heterogeneity limits the comparison, generalization, and transferability of BTF-related research findings. We urge future research to examine the contextual factors, which determines the choice of either social, historical, or both aspiration levels, and to standardize the operationalizations based on the choice.

The choice of social and historical aspiration can make a significant difference in the subsequent decision making process, as the information about peers’ performance are imperfect and ambiguous (Kim et al. 2015). Future research needs to investigate the internal and external factors, which influence the choice of social and / or historical aspiration levels. Depending on a firm’s decision area and top executives’ characteristics, the composition of aspiration levels can vary and lead to different decision outcomes (Hu et al. 2023). Specific decision areas, such as innovation or acquisition, may require a stronger focus on historical or social aspiration level. For example, Ye and colleagues (2021) show a significant difference in a firm's innovative search depending on the use of historical or social comparisons. While using historical aspiration level provides confidence for subsequent acquisitions, social comparisons exhibit a certain level of ambiguity and uncertainty, which can lead to hesitance in further acquisition activities (Kim et al. 2015). Vissa et al. (2010) posit that business group affiliates are more focused on historical rather than social comparison when making R&D investment decisions.

Beyond the organizational boundary, stakeholders, macroeconomic factors, industry characteristics, competition, and other environmental conditions may increase the applicability of a certain aspiration model. For example, in the entrepreneurial context historical performance data can be scarce. Start-ups would necessarily need to take performances of their peers into account when defining their own aspiration level. Some recent studies show that analysts’ expectations provide input for a firm’s aspiration level and drive their subsequent decisions (e.g., Bascle and Jung 2023; Busenbark et al. 2022). Future scholars need to include the influence of various stakeholders on the choice of aspiration levels. Furthermore, the causes of underperformance may play a significant role in the choice of social or historical aspiration level. Performance drops can be the consequences of unexpected events (e.g., pandemic, natural disasters, or financial crisis), which affects a wide range of firms (Su and Junge 2023). Facing the same adverse circumstances, firms focus on recovery to the pre-adversity performance level, and hence, tend to use own historical performance as reference point. In similar vein, firms weigh historical aspirations more than social aspirations when facing environmental volatility (Berchicci and Tarakci 2022). Conversely, if a firm’s underperformance is attributed to the poor competitiveness with existing products, services, or business model, social comparisons among peers within the same industry and customer segments seem more reasonable.

The existing literature mainly applies three different operationalization of aspiration level. The first is a separate model of aspirations based on either past performance (historical aspirations), performance of comparable firms within the same industry (social aspirations), or a mixture of both. Internal and external reference points are seen as independent impact factors (Bromiley and Harris 2014), and therefore are specified as those. The second is a weighted average model of historical and social aspirations. Whereas prior studies generally agree on a higher impact of social aspirations, the extent of the weighting is not at all consistent. Referring to Greve (2003b), Wennberg and Holmquist (2008) apply a ten percent weighting for historical aspirations and respectively ninety percent for social aspirations. By testing their model with other weightings (0.2/0.8; 0.3/0.7), they yield similar results (Wennberg and Homlsquist 2008). Following Greve (2003a), O’Brien and David (2014) constructed their final measure of aspiration levels with twenty percent of the historical and eighty percent of the social aspirations. The third measurement option is a switching model, which incorporates the switch “of attention from the external to the internal reference point” (Bromiley and Harris 2014, p. 340). Several studies (Bromiley 1991; Deephouse and Wiseman 2000; Park 2007; Wiseman and Bromiley 1996) argue that firms performing above industry average are more likely to focus on their historical aspiration level, whereas firms performing below their peers are more likely to rely upon their social aspiration levels. In an effort to standardize the model specification of aspiration levels, Bromiley and Harris (2014) empirically compared and supported the superiority of a separate model over a switching model of aspirations. Additionally, they demonstrated that a separate model and a switching model yield more robust results than a weighted average model of historical and social aspirations (Bromiley and Harris 2014).

Moreover, Moliterno and colleagues (2014) question the operationalization of social aspirations as the mean performance of an industry. However, firms may aspire higher performance level than merely the industry average. Future research should consider alternative references (e.g., top performer of an industry, performance of most visible competitors) for the definition of social aspiration level depending on a firm’s strategy.

7.3 Type and measurement of performance

The operationalization of aspirations is tied to specific performance measurement. We observe various performance indicators across extant BTF studies. Among others, ROA (Desai 2016), market share (Shipilov et al. 2011), stock return and sales growth (Zhang and Gong 2018), citation by a patent (Eggers and Kaul 2018), and operating profit margin (Gaba and Joseph 2013) are used as performance measure. This choice of performance measurement is always made with consideration of the industry context as well as decision area, and therefore mainly plausible. Nonetheless, different forms of performance indicators will yield different results. A consistent performance measure for specific decision area will contribute to more robust findings. Furthermore, many performance indicators are included in the top executives’ incentives (e.g., stock options). Thus, performance feedback can be influenced by individual goals and preferences of top managers. Future research needs to consider the potential moderating or mediating effects of individual factors, such as preferences and incentives, in the performance feedback.

The vast majority of BTF research draws on financial performance. few scientific explanations exist about the influence of social performance (e.g., Nason et al. 2018; Wang et al. 2022). Social performance is defined as voluntary business actions with social impact (Schuler and Cording 2006). Thus, social performance feedback refers to of discrepancy between stakeholders’ expectations and the firm’s actual social contributions (Nason et al. 2018). Firms interpret negative social performance feedback as a threat to its legitimacy, thereby increasing social investments (Nason et al. 2018). They also posited that firms interpret positive social performance feedback as a threat to efficiency, which will result in a reduction of investments in social performance activities (Nason et al. 2018). Within the growing body of wrongdoing and CSR literature, future research might empirically verify the existence of a social performance reference point and its impact on subsequent decision-making. Future research should provide approaches to operationalize social performance reference points, especially when facing social performance expectations held by heterogeneous stakeholder.

7.4 Type of organization

Cyert and March (1992) explicitly stated that the BTF’s predictions, developed concepts and the entire framework is solely applicable for large multi-business firms. Nonetheless, Dew et al. (2008) transferred key ideas of the BTF to an entrepreneurial context, accordingly establishing the behavioral theory of the entrepreneurial firm (BTEF). They constituted that the four relational concepts of the BTF cannot simply be transferred into entrepreneurial theory (effectuation) due to different theoretical assumptions, such as transforming environments or vague goal definitions (Dew et al. 2008). In entrepreneurial context, decision-making may reside with the founder(s) due to the smaller size of the organization. Thus, individual characteristics or personality traits of top executives can influence the appraisal of performance feedback and subsequent decisions (Hu et al. 2023). Future BTF research may also benefit from insights of the Upper Echelons Theory.

Chrisman and Patel (2012) investigate the R&D investments of family firms drawing on the behavioral agency model. Due to their long-term orientation, family firms show increased R&D investment when performing under aspiration level (Chrisman and Patel 2012). Building on Chrisman and Patel’s work, Sciascia and colleagues (2015) extend these findings to the context of small- and medium-sized enterprises (SMEs). The same logic can be applied to other types of organizations. For example, employee-owned organizations exhibit stronger shared interests and commitment to the organizational wealth (Lampel et al. 2014). Under these circumstances, they are more likely to make decisions aiming at long-term rather than short-term performance improvements. Furthermore, we see that the purpose and culture of the organization (profit vs. social impact) will have an impact on problemistic search and decision-making processes (e.g., O’Brien and David 2014). Non-profit organizations may react less sensitive to negative (financial) performance feedback or generally use other performance dimensions (e.g., social performance) when defining their aspiration level. In addition, firms with a philanthropic purpose and / or stronger common interests may also foster the resolution of conflicts as well as the formation of coalitions, which accelerate the decision-making process. In short, the heterogeneous characteristics of different organization types merit more attention when examining decision-making behavior based on BTF.

8 Conclusion

During the sixty years since publication of ‘A Behavioral Theory of the Firm’ (BTF) (Cyert and March 1963), its underlying ideas and concepts have been influential for the explanation and the prediction of organizational decision-making. Previous studies examine decision-making mainly by applying one of BTF’s relational concepts rather than taking a holistic view on all concepts. Additionally, different terminologies used across the literature impede a clear view on the applications of BTF in the decision-making processes. The objective of our review was to generate insights into different decision areas studied in the light of BTF and provide a more cohesive approach of its four relational concepts.

We identified seven decision areas, in which BTF and at least one of its relational concepts served as theoretical underpinning and found an unbalanced application of the four relational concepts. Furthermore, we revealed the ambiguous operationalizations of aspiration level and performance feedback in the extant literature. Paving the way towards future anniversaries, we encourage research to focus on the interrelations among the relational concepts in decision-making processes. Additionally, we urge a comprehensive investigation of the influence of different types and operationalizations of aspiration level as well as the underlying performance measurements. Lastly, the applicability of BTF on other types of organizations merit further attention.