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Economics of SharePoint Governance – Part 7 – Choosing a Behavioral Premise

In the previous sections I outlined five possible behavioral premises and variations upon them that might be taken to serve as foundations upon which might be erected a theory of content governance decision making. Other behavioral premises could be considered, and perhaps in the future yet other possibilities will surface to prominence in the literature. We now come to the task of making a selection from among them to serve us through the remainder of this text.  

By virtue of the fact that there is great diversity among the nearly twenty million identifiable business firms in the American economy, it might be defensible to argue that all five of the possible premises outlined above ought to be retained in view of the fact that there are without doubt numerous firms whose managers exhibit the behavioral characteristics of each premise. This would require the development of at least five different models of content governance behavior, and such may indeed be appropriate. In order to economize on our effort (and the volume of matter that the reader must absorb), we shall pursue a strategy of adopting one premise for primary elaboration, but make reference to variations and alternatives where appropriate.  

William Baldwin suggests the tack that virtually all writers in the field of content governance / managerial economics have followed during the past two decades:

…if we want a theory of managerial enterprise that assumes a single organizational objective subject to maximization or minimization, profit does appear to be more realistic than any of the alternatives offered. …. The findings reviewed in this paper strongly suggest…that profit maximization is a fairly close approximation to actual motives of the typical large corporation and that any losses suffered by abstracting from the complexity of interplay among real-world motives will be relatively minor.

Baldwin, concerned primarily with the “typical large corporation,” concludes the profit maximization premise to be satisfactory; yet the corporate form of business organization accounts for only about seventeen percent of all business firms in the American economy. Profit maximization can be directly correlated to business operations and thus related to the content governance of stored business data. The simple, unconstrained profit maximization premise should be acceptable with even less question for the 74 percent of the American firms organized as proprietorships. It may even serve adequately for the remaining nine percent organized as partnerships in those firms within which the partners have reached some consensus of direction for the firm.

Milton Friedman (“The Methodology of Positive Economics” in Essays in Positive Economics, University of Chicago Press, 1953) argues that the realism of the assumptions (a behavioral premise is an assumption) underlying a theory are less important than the ability of the theory to explain or predict. In Friedman’s parlance, what is important is that people behave as if the assumptions about their behavior are true, whether or not the assumptions are factually descriptive. Applying this concept to the present issue, we may argue that a model based upon the premise of profit maximization may be useful if managers behave as if they are attempting to maximize profits, irrespective of what they actually are attempting to do. So, it does not matter whether it is profit or some other behavioral objective, or whether the decision maker is attempting to maximize, satisfice, or only mediate, the relevant consideration is whether a model erected upon a profit maximization assumption can explain or predict well enough. Baldwin concluded in the quote cited above that the opportunity loss resulting from adopting the profit maximizing assumption would be small.  

There may even be reason to believe that the simple profit maximization assumption will be adequate to the modeling of satisficing behavior. Herbert Simon, the inventor of the satisficing idea, even though he judges satisficing models to be richer than maximizing models, acknowledges that “the psychological evidence on individual behavior shows that aspirations tend to adjust to the attainable. Hence in the long run…the level of aspiration and the attainable maximum will be very close together.” If this can be taken as a justification for employing a maximizing assumption where a satisficing assumption might be preferable, it is due to the richness of the satisficing approach that accommodates adaptation, rather than the adaptability of the maximization model.  

Whatever it is that business decision makers are pursuing, and whatever their behavioral pattern with respect to the objective, our conclusion is that profit maximization can serve as a satisfactory proxy in developing the theory of content governance decision making. I shall later elaborate the mathematical modeling approach to both maximization and optimization (i.e., maximization subject to one or more constraints, think content governance), and in subsequent sections I shall employ the maximization or optimization behavioral premises as appears appropriate in terms of content governance, but I shall be prepared to refer to alternative objectives or other behavioral patterns as needed.

This series is a lot of parts that I am quasi-using pieces of for a academic research paper stance so bear with me if it gets too esoteric. Or read the other governance articles available within the SharePoint Security category within the main site (available through the parent menu).

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