Adaptive aspirations: Performance consequences of risk preferences at extremes and alternative reference groups

S. Hu, D.P. Blettner, R. Bettis

Research output: Contribution to journalArticleScientificpeer-review

59 Citations (Scopus)

Abstract

Goals or aspirations and their relationships to risk taking and performance are important issues in both psychology and strategic management. The concept of adaptive aspirations, as discussed in Cyert and March's Behavioral Theory of the Firm, has long been a topic of interest in both fields. Moreover, many studies in strategy have focused on risk and/or extreme performance. In the current paper, we build on earlier models of adaptive aspirations. We introduce into the models a new risk preference function that incorporates changes in risk preference at extremes of performance. Based on empirical studies and the managerial literature, we also introduce alternative strategies for setting reference groups. Simulations of the resulting models suggest important differences in outcomes from earlier studies and this invites further empirical investigation. These simulations also have significant implications for managerial goal setting.
Original languageEnglish
Pages (from-to)1426-1436
JournalStrategic Management Journal
Volume32
Issue number13
DOIs
Publication statusPublished - 2011

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