16.06.2022New Article by Prof Keil accepted in Administrative Science Quarterly

New Article by Prof Keil accepted in Administrative Science Quarterly

The article «The Two Blades of the Scissors: Performance Feedback and Intrinsic Attributes in Organizational Risk-Taking» jointly authored with Xavi Sobrepere, (Barcelona School of Management at Pompeu Fabra University, Spain) and Pasi Kuusela (University of Groningen, Netherlands) has been accepted for publication in Administrative Science Quarterly. The paper draws upon the behavioral theory of the firm and prospect theory to examine how performance feedback –decision context– and the characteristics of the alternatives –decision content– that decision-makers face jointly determine organizational risk-taking choices. While the behavioral theory of the firm has identified the important role of performance feedback in driving organizational risk-taking decisions, it has failed to consider the intrinsic attributes of alternatives, specifically the magnitude and likelihood of their outcomes, which have been the focus of prospect theory. We argue that these two intrinsic attributes play an important role in assessing alternatives; however, because achieving organizational goals is the prime objective in organizations, performance feedback drives how information regarding them is processed. Analyzing 23,895 fourth-down decisions from the National Football League, we find that decision-makers weigh attainment discrepancy and the magnitude and likelihood of outcomes in their choices depending upon deadline proximity. Furthermore, the size and valence of attainment discrepancy also modify the weight of the magnitude and likelihood of outcomes in a risky choice. Our arguments and findings suggest extensions to the behavioral theory of the firm and imply modifications to prospect theory when applied to the organizational context. We also discuss practical implications for decision-makers in organizations.