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.

No abstract

Research Summary: A firm's stakeholder orientation toward its employees is argued to be beneficial for firm outcomes. However, this orientation may also have disparate impacts on particular behaviors and outcomes, such as local versus distant search, which impose contradictory firm requirements. We find that while a strong firm–employee relationship leads to increasingly higher levels of local search (exploitation), it also leads to increasingly lower levels of distant search (exploration). In additional supplementary analyses, we find similar disparate effects on the productivity of innovation and its market value, as well as a moderating effect of the firm's relationship with other stakeholders which exacerbates both the positive and negative impacts of firm–employee relationships. We discuss the implications of these findings for both the innovation and the instrumental stakeholder literatures. Managerial Summary: Motivating employees toward generating new ideas and innovations is an important challenge for most firms. Establishing the firm as a trustful and good partner for employees may engender in them the commitment and willingness to invest in such activities. However, questions remain as to how “well” the firm should “treat” its employees, and the potential adverse consequences from over‐investing in such relationships. This paper examines these important practical questions and finds that establishing strong relationships with employees can be simultaneously beneficial and harmful for the firm depending on the type of new ideas it seeks. We find that such strong relationships helps with motivating employees to build on and perfect existing knowledge, but is harmful with respect to bringing in new and unfamiliar knowledge.

SummaryThis article compares life cycle assessment studies performed on imaging equipment for the consumer market in order to identify common practices, limitations, areas for improvement, and opportunities for standardization. The analysis suggests that comparisons across studies are significantly hampered by variability in scope, transparency, data sources, and assumptions; it identifies sources of discrepancy and variability. Of particular concern to printing devices was the definition of a functional unit, which can vary significantly depending on the capabilities and use patterns of a printer. Standardization of the functional unit and related assumptions has a high potential to increase quantitative comparability across studies. At the same time, standardizing the functional unit by paper usage excludes the possibility of comparison to alternative communication media.

No abstract