Managerial risk taking

A multitheoretical review and future research agenda

Robert E. Hoskisson*, Francesco Chirico, Jinyong (Daniel) Zyung, Eni Gambeta

*Corresponding author for this work

Research output: Contribution to journalArticle

78 Citations (Scopus)

Abstract

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.

Original languageEnglish
Pages (from-to)137-169
Number of pages33
JournalJournal of Management
Volume43
Issue number1
DOIs
Publication statusPublished - 1 Jan 2017
Externally publishedYes

Keywords

  • agency theory
  • behavioral theory of the firm
  • decisions under risk/uncertainty
  • macro topics
  • top management teams/upper echelon

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