Abstract
Organizational goals play a central role in driving firm decision making. The behavioral theory of the firm conceptualizes goals as situational aspirations that guide organizational adaptation through performance feedback. However, this aspiration-directed logic implicitly assumes the short-term orientation of decision makers, while the effect of long-term strategic goals on firm decision making is less explored. Our study focuses on long-term strategic goals, which, we argue, influence firm decision making through decision makers’ commitment. Borrowing insights from strategic communication research, we conceptualize strategy specificity to capture decision makers’ commitment to strategic goals and theorize its implications for firm strategic risk-taking. Additionally, we examine the interactive effects of strategy specificity and performance feedback on strategic risk-taking, with contingencies of managerial discretion and board shareholding. Using panel data on 1,074 Chinese listed firms in manufacturing industries, we find that firms with higher strategy specificity engage in more strategic risk-taking. However, this behavioral tendency is weakened when firms receive strong negative or positive performance feedback. Moreover, we find that the moderating effect of performance feedback on strategy specificity is enhanced by managerial discretion but mitigated by board shareholding.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have