Testing a Causal Model of Corporate Risk Taking and Performance
- 1 March 1991
- journal article
- Published by Academy of Management in The Academy of Management Journal
- Vol. 34 (1) , 37-59
- https://doi.org/10.5465/256301
Abstract
The determinants of organizational risk taking and its impact on economic performance are critical issues in strategic management. Using a model that included risk, performance, performance expectations and aspirations, slack, and industry performance, this research addressed how past performance and other factors influence risk taking and how risk taking and other factors influence future performance. Not only did poor performance appear to increase risk taking—risk taking appeared to result in further poor performance, even when past performance, industry performance, and organizational slack were controlled. Overall, the results favor a model in which low performance and lack of slack drive risk taking, but the risks taken have poor returns.Keywords
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