Revisiting the unitary actor assumption: Toward realistic aggregation of individual preferences in strategy research

Citation: Csaszar, F. A. and Eklund, J. C. (2026). Revisiting the unitary actor assumption: Toward realistic aggregation of individual preferences in strategy research. Strategy Science (forthcoming). doi:10.1287/stsc.2024.0257

Paper highlights

Strategy models often describe a firm as if it had one coherent utility function. However, real organizations contain people with different preferences, risk tolerances, and goals, creating conflict over which actions the organization should take. This paper shows how to derive a single organizational utility function from those individual preferences and the rule used to combine them.

The resulting function is not generally the average member. Organizational structure reshapes preference. Requiring everyone to approve a choice makes the organization behave as if it pays special attention to the member who likes each option least. Allowing any member to initiate makes it behave more like the member who likes each option most.

How the framework works

The model first maps each member’s utility into a probability of choosing an option. It then combines those probabilities through an aggregation structure, such as unanimity or polyarchy, and recovers the organizational utility function that would rationalize the collective choices. This lets conventional unitary-actor models incorporate heterogeneous members without modeling every internal decision anew.

Main results

Unanimity approximates the pointwise minimum of members’ utilities and tends to amplify risk aversion.
Polyarchy approximates the pointwise maximum and tends to amplify risk seeking.
Adding members or opposing preferences changes organizational behavior differently under the two structures.
These internally generated preferences alter outcomes in models of market competition and principal–agent collaboration.

The minimum and maximum are evaluated option by option. Under unanimity, an alternative is unlikely to be selected if any required approver dislikes it, so the member with the lowest utility for that alternative becomes disproportionately influential. Under polyarchy, an alternative can proceed when any empowered member favors it, so the most enthusiastic member matters most. The organization does not behave like one fixed “representative” person across all choices.

Why it matters

Organization design helps form collective preferences; it does not merely coordinate action after goals have been chosen.
Requiring every function to approve weights the strongest objection. Allowing any unit to initiate weights the strongest advocate. Neither rule is neutral.
The same logic applies to human–AI systems: an AI used as a mandatory risk gate produces a different organizational appetite from one used to sponsor overlooked opportunities.

How to use this paper

Cite this for

A framework for deriving organizational utility from individual preferences and aggregation structures.
The result that unanimity approximates a pointwise minimum of members’ utilities, while polyarchy approximates a pointwise maximum.
A formal way to relax the unitary-actor assumption without abandoning tractable strategy models.

Useful for teaching

Why organization structure shapes preferences, not only implementation.
How veto rights and initiation rights change organizational risk appetite.
How the same logic can be used to think about AI as a mandatory gatekeeper or opportunity sponsor.

Careful claim

The framework recovers the organizational utility implied by collective choice under specified aggregation rules; that utility is generally not a simple average or a fixed representative member’s preference.

Abstract

The long-standing unitary-actor assumption in strategy research—treating firms as monolithic entities with coherent preferences—misses that organizations are coalitions of individuals with diverse and often conflicting goals. Although behavioral perspectives have challenged this assumption, the field lacks an operational method for deriving an organizational utility function from the disparate preferences of its members and the specific structures used to aggregate them.

We develop a mathematical framework that (i) maps individual utility functions into choice probabilities via a random-utility model, (ii) combines those probabilities using an explicit aggregation structure (e.g., unanimity or polyarchy), and (iii) recovers an organizational utility function that rationalizes the collective behavior. This establishes organizational utility functions as operationally meaningful: they summarize and predict organizational choice, yet are generally not simple averages of members’ utilities.

Instead, aggregation structures systematically reshape preferences—unanimity approximates the pointwise minima of underlying utility functions, amplifying risk aversion; polyarchy approximates the pointwise maxima, promoting risk-seeking. We illustrate strategic implications in Cournot competition and principal–agent settings, showing how internal aggregation structures shift competitive and collaborative outcomes. Overall, the framework provides a parsimonious way to retrofit unitary-actor models with behaviorally grounded organizational preferences, reconciling the coalition view of the firm with rigorous and tractable strategic analysis.