Strategic Management Review > Vol 3 > Issue 1

Extending the Behavioral Theory of the Firm to Entrepreneurial Firms

Philip Bromiley, Merage School of Business, University of California, Irvine, USA, , Devaki Rau, Department of Management, College of Business, Northern Illinois University, USA,
Suggested Citation
Philip Bromiley and Devaki Rau (2022), "Extending the Behavioral Theory of the Firm to Entrepreneurial Firms", Strategic Management Review: Vol. 3: No. 1, pp 99-123.

Publication Date: 07 Feb 2022
© 2022 now Publishers, Inc.
Behavioral theory of the firmentrepreneurshipdominant coalitionsbiasesaspirationsroutinessearchlearning


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In this article:
The BTOF: A Brief Review 
Applying the BTOF to Entrepreneurial Firms 
Constructs Directly Applicable to Entrepreneurial Firms 
How Can We Extend the BTOF to an Entrepreneurial Context? 


While the Behavioral Theory of the Firm (BTOF) is one of the most popular theories of organizational change in the strategic management literature, the empirical work used to develop the theory used established firms; most empirical tests of the theory do likewise. Over the past decade or so, however, a number of studies have attempted to extend the BTOF to entrepreneurial firms. This paper examines the extent to which the BTOF applies to entrepreneurial firms. We propose that while some constructs and mechanisms specified in the BTOF (such as aspirations, routines, search, and learning) have limited relevance for entrepreneurial firms and need modifications to be relevant, other constructs and mechanisms (such as dominant coalitions and biases) have greater visibility and relevance in entrepreneurial firms than in larger firms. We conclude with a discussion of how we can most fruitfully apply the BTOF to explaining decision-making by entrepreneurial firms.