The "Logic" of Organizational Irrationality

Abstract

This article examines the stability of rational decision making in complex, tightly coupled administrative organizations. In particular, it analyzes a process of decisional "tunneling" in which members of a set of decisions progressively undermine the rationality of one another, degrading organizational means-ends calculations. Under these circumstances, the pursuit of even boundedly rational decision making is displaced by "pathology"—behavior that is logically self-defeating, both organizationally and in relation to the self-interest of individual participants. The implications of this phenomenon are analyzed, both for organization theory and for exercises in organizational design.