Managerial Risk Taking | Zendy

Robert E. Hoskisson | Zendy; Francesco Chirico | Zendy; Jinyong Daniel Zyung | Zendy; Eni Gambeta | Zendy

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Managerial Risk Taking

Author(s) -

Robert E. Hoskisson,

Francesco Chirico,

Jinyong Daniel Zyung,

Eni Gambeta

Publication year - 2016

Publication title -

journal of management

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 7.491

H-Index - 224

eISSN - 1557-1211

pISSN - 0149-2063

DOI - 10.1177/0149206316671583

Subject(s) - socioemotional selectivity theory , prospect theory , outcome (game theory) , agency (philosophy) , perspective (graphical) , principal–agent problem , upper echelons , business , economics , microeconomics , marketing , strategic management , psychology , corporate governance , sociology , computer science , finance , social science , developmental psychology , artificial intelligence

Managerial risk taking is a critical aspect of strategic management. To improve competitive advantage and performance, managers need to take risks, often in an uncertain environment. Formal economic assumptions of risk taking suggest that if the expected values for two strategies are similar but one is a greater gamble (uncertain), managers will choose the strategy with a more certain outcome. Based on these assumptions, agency theory assumes that top managers should be compensated or monitored to achieve better outcomes. We review the theory and research on agency theory and managerial risk taking along with theories that challenge this basic assumption about risk taking: the behavioral theory of the firm, prospect theory, the behavioral agency model and the related socioemotional wealth perspective, and upper echelons theory. We contribute to the literature by reviewing and suggesting research opportunities within and across these theories to develop a comprehensive research agenda on managerial risk taking

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