Performance Feedback and Risk‐Taking: A Configurational Approach

Abstract

AbstractBased on the notion that organizations are complex systems, this study combines the configurational perspective with the performance feedback theory to explore constellations of multi‐level causal conditions that explain variations in firm risk‐taking behaviour. Using the fuzzy set methodology as our analytic approach, we derive multiple configurations based on a dataset of 1753 observations belonging to 402 firms from the US pharmaceutical industry. Our findings espouse equifinality and the differential importance of factors denoting a firm's ability, motivation and opportunity space in determining low and high levels of risk‐taking. Across historical and social aspirations, our results disclose significant differences and similarities in constellations of causal conditions leading to high and low levels of risk‐taking, respectively. Our findings contribute to the behavioural theory of the firm and have important implications for managerial practice.