Denrell, Jerker (2008) Organizational Risk Taking: Adaptation versus Variable Risk Preferences. Industrial and Corporate Change, 17 (3). pp. 427-466.
The observed association between performance and organizational risk taking has usually been attributed to the influence of performance on risk preferences. Here I show how a simple model of adaptation, which only assumes that organizations avoid activities with poor past performance, can explain the empirically observed U-shaped association between risk and return. The model also makes novel predictions, which are shown to be consistent with the data. The findings suggest that risk taking may be a by-product of adaptation rather than a deliberate choice motivated by variable risk preferences.
|Keywords:||Risk management; Organizational behaviour; Models|
|Subject(s):||Strategy; Entrepreneurship & Global business|
|Centre:||Faculty of Strategy, Entrepreneurship and International Business|
|Date Deposited:||11 Feb 2012 18:28|
|Last Modified:||23 Oct 2015 14:07|
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