havioral models of organizational learning since Cyert and March.^25 Typically, this
literature develops the proposition that performance above or below aspiration level
affects the likelihood of observable organizational change because performance rel-
ative to aspiration levels defines the organization’s perceptions of success and fail-
ure. Change in behavior is more likely when performance is below aspiration level,
or perceived as failure. This is a typical outcome of trial-and-error learning; behav-
ior that is associated with success tends to be repeated, while behavior that is associ-
ated with failure tends not to be repeated.^26
(a) Arguments Concerning Aspiration Levels. The original statement of the behav-
ioral theory of the firm summarized much of the basic thinking that has developed
into this conventional wisdom on the role of aspirations in decision making. For ex-
ample, Cyert and March wrote, “[m]ost organization objectives take the form of an
aspiration level rather than an imperative to maximize or minimize.”^27 The main im-
plication of this argument is that one of the most important determinants of firm be-
havior is whether the experience of the recent past is coded as success or failure; this
is determined by whether actual performance is below (failure) or above (success)
aspiration level. This work focused on how aspiration levels frame action so that or-
ganizational behavior varies significantly according to whether performance has ex-
ceeded or fallen below target. In particular, the original statement of the behavioral
theory of organizational learning focused on how performance relative to a target af-
fected search behavior and the possibility of organizational change. Cyert and
March described this process: “Search within the firm is problem oriented. A prob-
lem is recognized when the organization either fails to satisfy one or more of its
goals or when such a failure can be anticipated in the immediate future. So long as
the problem is not solved, search continues. The problem... is solved by discover-
ing an alternative that satisfies the goals.”^28 A central argument of this perspective
is that aspiration levels mediate perceptions of success and failure. These percep-
tions are important because failure is a trigger for search and change. A second core
argument concerning aspiration levels in the behavioral theory is that they adapt to
experience. Cyert and March argued that “the aspiration level changes in response
to experience.”^29 Furthermore, they predicted that performance relative to this aspi-
ration level would influence strategic choice. Thus, aspiration levels are one possi-
ble mechanism by which organizations may try to ensure that measures of perform-
ance are dynamic, at least in the sense that they change over time in response to
experience.
(b) Role of Aspiration Levels. It is also important to recognize that the role of as-
piration levels takes on additional significance when we recognize that these lev-
els are not fixed. Rather, they are continually adapting to performance feedback.
The implications of this have been explored by March^30 and March and Shapira.^31
26.2 ADAPTIVE ASPIRATIONS 26 • 5(^25) Id.
(^26) Levitt and March, 1988.
(^27) Cyert and March, 1993, p. 32.
(^28) Id., p. 28.
(^29) Id., p. 32.
(^30) March, 1988.
(^31) March and Shapira, 1992.