Date of Award

Winter 2012

Document Type

Dissertation

Degree Name

Doctor of Philosophy (PhD)

Program/Concentration

Business Administration-Strategic Management

Committee Director

William Q. Judge

Committee Member

Larry Filer

Committee Member

Lance Frazier

Committee Member

Anil Nair

Abstract

The three essays that comprise this dissertation collectively explore strategic risk taking. The dissertation is underpinned by the notion that corporate executives take strategic risks not randomly, but based on the expectation that outcomes are more likely to be positive rather than negative. Each essay examines how and why decision makers come to vary in their cognitive evaluation of the acceptability of strategic risk taking.

Essay 1 draws from the approach/inhibition theory of power, to explore how power not only provides the means for CEOs to exert their risk preferences, but actually affects what the risk preferences are. Power is theorized to influence CEO cognitions, such that there is a prevailing focus on the upsides of strategic risk taking and a tendency to underestimate the downsides, increasing the proclivity to engage in such actions. Focusing on upsides as opposed to downsides is also evoked in explaining why stock options induce risk taking, thus the possibility that there are interaction (complementary or substitutive) effects with CEO power is also explored in a sample of firms listed in the S&P 1500 from 2003–2007.

Essay 2 uses the behavioral agency model, to examine how the risk bearing attributes of specific CEO compensation elements affect the decision to engage in cross-border acquisitions. This subsequently increases the proclivity to engage in cross-border acquisitions. Moderating effects of managerial discretion are also evaluated. The theoretical model is tested in a sample of US firms operating in four industries from 2007–2011.

Essay 3 combines the behavioral theory of the firm idea that firm behavior is goal directed and history dependent with arguments from national social culture literature. A multilevel model is presented and tested with a multinational sample of firms operating in the paper products industry. Findings demonstrate outperforming competitors in the past motivates firm R&D investment and that various cultural dimensions (future orientation, institutional collectivism, power distance and uncertainty avoidance) of a firm's home country either encourage or discourage firm R&D investment.

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DOI

10.25777/5xwm-9118

ISBN

9781267890436

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