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

Songcui Hu, Daniela Blettner, Richard A. Bettis

Research output: Contribution to journalArticle

56 Scopus citations

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 (US)
Pages (from-to)1426-1436
Number of pages11
JournalStrategic Management Journal
Volume32
Issue number13
DOIs
StatePublished - Dec 1 2011
Externally publishedYes

Keywords

  • adaptive aspirations
  • psychological foundations of strategy
  • reference group strategies
  • risk preference function
  • risk taking at extremes

ASJC Scopus subject areas

  • Business and International Management
  • Strategy and Management

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