Entrepreneurship (Fach) / Managerial Risk, Innovation, and Organizational Decline (Lektion)
In dieser Lektion befinden sich 8 Karteikarten
Latham & Braun
Diese Lektion wurde von joxel erstellt.
- General topic This article tries introduces managers’ personal risk considerations into the relationship between organizational decline and innovation
- Two research Questions To what extent, if at all, do managerial ownership levels and available slack resources, separately and in combination, affect innovation investments in firms experiencing decline? How do related managerial decisions concerning innovation investments affect future firm performance?
- The rigidity perspective Threat rigidity predicts that managers faced with performance threats are likely to reduce both the scope and nature of their innovation. when confronted with external threats, managers focus their decision making on initiatives of efficiency, tighter budgets, cost cutting, and increased accountability.
- The invention perspective Managers faced with firm performance residing in the domain of losses may engage in higher risk initiatives such as disruptive innovation, foreign market entry, or the hiring of new management teams in the hope of “hitting a home run” to effect turnaround and recovery.
- Hypothesis: The relationship's moderating effect between organizational decline and innovation -Negative moderating effect - Managers with higher stakes in a company become risk adverse as they cannot diversify their firm-coupled wealth - Less risk is put in the business, so uncertainty about residual outcome for manager can be reduced -rigidy behaviour
- Hypothesis: Moderating effect of slack resources on the relationship of organizational decline and innovativenion -Negative moderating effect - Managers rather stockpile slack resources than investing them in innovations - this way they try to gain control of firm decline - Slack resources are a way to buffer against bad times - Slack resources can be used to diversify or build an empire for the manager - giving him reputation instead of risk
- Hypothesis: Interaction between ownership and slack resources and its moderating effect on the relationship between organizational decline and innovation - negative o Managers with substantial equity and access to available slack significantly decreased spending in R&D (Retain money for themselves instead of putting it on risk) o In contrast, managers with little ownership and few slack resources maintained their R&D spending levels à Bet the farm (prospect theory) --> Not much to loose
- Hypothesis: Innovation in declining firms affects the likelihood of organizational survival - effect is negative -Strategies based on innovation entail higher risk-higher return characteristics -> higher failure rate -> higher likelihood that organizations do not survive