Pourquoi Pas? Rational Choice as a Basic Theory of HRM

By Matiaske, Wenzel | Management Revue, January 1, 2004 | Go to article overview
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Pourquoi Pas? Rational Choice as a Basic Theory of HRM


Matiaske, Wenzel, Management Revue


Pourquoi pas? Rational Choice as a Basic Theory of HRM**

A broad spectrum of theories from different disciplines is portrayed in contemporary HRM (as a discipline of business administration). Theories from psychology, sociology and economics correspond to the variety of problems addressed in HRM which are again situated at different levels of analysis, namely on the individual, group and organizational level. A narrow focus solely on economic approaches, as sometimes suggested in personnel economics, is therefore not sufficient.

Instead, the contemporary "rational choice" approach may serve as a "new" basis for the discipline. The approach stems from economics and sociology and, as an offspring of these, combines elements of action and structure in its basic explanatory models. Also it is able to explain effects that emerge on the system or macro level. Indepth explanations allow model building at different levels of analysis, namely on an environmental, organizational and individual level, which can be seen as a major prerequisite of explanations in HRM. In addition "rational choice" is conscious of the ignorance of its underlying action theory and this exposes it to the body of physiological and psychological knowledge. Anomalies of classic economic theory can therefore be restricted, for instance by using the method of decreasing abstraction. The method of decreasing abstraction serves as a basic principle or heuristic device for model building, in order to separate "rational choice" from traditional anti-reductionism.

This article introduces basic elements of the modern "rational choice" approach: the macro-micro-macro model of explanation, homo socio-oeconomicus as a model of man and exchange theory as a baseline model of aggregation. A final summary discusses research questions and applications of "rational choice" in HRM.

Key words: Rational Choice, Economic Sociology, Micro-macro-link, Homo Socio-oeconomicus

1. Approach

Ever since Pareto's (1935) distinction, it has generally been agreed, that the field of economics should concentrate on rational action; other areas of social science, i.e. sociology should concentrate on irrational behavior. However, economics is a broad field. Therefore it is hardly surprising that economists who are confronted with irrational human behavior or deviations from the perfect model of purposeful and rational behavior wrangle with Pareto and, in particular, with his line of distinction. Critical calls were confronted with only modest appreciation, if they were heard at all, when they suggested that unrealistic assumptions about behavior were required in order to deliver economic or normatively speaking "good" explanations (Friedman 1953). Academics in Business Administration, dealing with innovation, marketing, organization or human resources and phenomena like decision behavior, informal organizations or HRM abandoned the economic paradigm and searched for more feasible theories in other disciplines.

The historical development of HRM is not the topic of this article. However, we need to stress that we are talking about a process of convergence towards neighboring disciplines, notably (social) psychology and (organizational and industrial) sociology, which represent a "long wave" of historical ideas: Simon's (1955) revolutionary work "A behavioral model of rational choice" was published half a century ago. Since then, considerable progress has been made in both theory and empirical knowledge. And this holds true for all levels of HRM research - for the individual, group and organizational level. Worth mentioning amongst others are motivation, learning and stress theories, theories about group dynamics, power and management as well as theories about organizations and their environments. Furthermore, it is worth emphasizing tendencies towards empirical social research which evolved at the same time as behavioral science.

Economic theory was "exported" once again into HRM with the rediscovery of institutions in economic research and the development of appropriate models, such as property rights, transaction costs and information asymmetry, which all facilitated the explanation of the failure of the free market model of traditional economics (Coase 1960, Alchian/Allen 1972).

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