Strategic responsiveness and Bowman's risk-return paradox

Strategic Management Journal

Volumn 28, Issue 4, 2007, Pages 407-429

  Andersen, Torben J ^a   Denrell, Jerker ^b   Bettis, Richard A ^c  

^a Copenhagen Business School ^*  (Denmark)

^b STANFORD UNIVERSITY   (United States)

^c UNIVERSITY OF NORTH CAROLINA   (United States)

Author keywords

Environmental analysis; Inverse risk return relationships; Risk management

Indexed keywords

COMPUTER SIMULATION; ENVIRONMENTAL IMPACT; INDUSTRIAL MANAGEMENT; MATHEMATICAL MODELS; STRATEGIC PLANNING;

BOWMAN PARADOX; EMPIRICAL DATA; INVERSE RISK-RETURN RELATIONSHIPS;

RISK MANAGEMENT;

EID: 33947370904     PISSN: 01432095     EISSN: 10970266     Source Type: Journal    
DOI: 10.1002/smj.596     Document Type: Article

References (79)

1. Adner R, Helfat C. 2003. Corporate effects and dynamic managerial capabilities. Strategic Management Journal, Special Issue 24(10): 1011-1025.
2. Andersen TJ, Bettis RA. 2002. Strategic responsiveness: effects of learning and options creation. Paper presented at the Academy of Management Meeting, Denver, CO.
3. Andrews K. 1971. The Concept of Strategy. Irwin: Homewood, IL.
4. Baird IS, Thomas H. 1985. Toward a contingency model of strategic risk taking. Academy of Management Review 10: 230-243.
5. Barney JB. 1986. Strategic factor markets: expectations, luck, and business strategy. Management Science 32: 1231-1241.
6. Barney JB. 1991. Firm resources and sustained competitive advantage. Journal of Management 14: 99-120.
7. Barney JB. 2001. Is the resource-based 'view' a useful perspective for strategic management research? Yes. Academy of Management Review 26: 41-56.
8. Bartram SM. 2000. Corporate risk management as a lever for shareholder value creation. Financial Markets, Institutions and Instruments 9: 279-324.
9. Bazerman MH. 1984. The relevance of Kahneman and Tversky's concept of framing to organizational behavior. Journal of Management 10: 333-343.
10. Bettis RA. 1982. Risk considerations in modeling corporate strategy. Academy of Management Proceedings 42: 22-25.
11. Bettis RA, Mahajan V. 1985. Risk/return performance of diversified firms. Management Science 31: 785-799.
12. Bowman EH. 1980. A risk-return paradox for strategic management. Sloan Management Review 21: 17-31.
13. Bowman EH. 1982. Risk seeking by troubled firms. Sloan Management Review 23: 33-43.
14. Bowman EH. 1984. Content analysis of annual reports for corporate strategy and risk. Interfaces 14: 61-72.
15. Bromiley P. 1991. Testing a casual model of corporate risk taking and performance. Academy of Management Journal 34: 37-59.
16. Bromiley P, Miller KD, Rau D. 2001. Risk in strategic management research. In The Blackwell Handbook of Strategic Management, Hitt MA, Freeman RE, Harrison JS (eds). Blackwell: Maiden, MA; 259-288.
17. Cool K, Schendel D. 1988. Performance differences among strategic group members. Strategic Management Journal 9(3): 207-223.
18. Cool K, Dierickx I, Jemison D. 1989. Business strategy, market structure and risk-return relationships: a structural approach. Strategic Management Journal 10: 507-522.
19. Cyert R, March JG. 1963. A Behavioral Theory of the Firm. Prentice-Hall: Englewood Cliffs, NJ.
20. Denrell J. 2004. Risk taking and aspiration levels: two alternative null models. Academy of Management Best Paper Proceedings, New Orleans, LA.
21. Denrell J. 2005. Organizational risk taking: learning versus variable risk preferences. Working paper, Stanford Graduate School of Business.
22. Denrell J, Fang C, Winter S. 2003. The economics of strategic opportunity. Strategic Management Journal, Special Issue 24(10): 977-990.
23. Devinney TM, Midgley DF, Venaik S. 2000. The optimal performance of the global firm: formalizing and extending the integration-responsiveness framework. Organization Science 11: 674-695.
24. Drazin R, Van de Ven AH. 1985. Alternative forms of fit in contingency theory. Administrative Science Quarterly 30: 514-539.
25. Eisenhardt KM, Martin A. 2000. Dynamic capabilities: what are they? Strategic Management Journal, Special Issue 21(10-11): 1105-1121.
26. Fiegenbaum A. 1990. Prospect theory and the risk return association: an empirical examination of 85 industries. Journal of Economic Behavior and Organization 14: 187-203.
27. Fiegenbaum A, Thomas H. 1986. Dynamic and risk measurement perspectives on Bowman's risk-return paradox for strategic management: an empirical study. Strategic Management Journal 7(5): 395-407.
28. Fiegenbaum A, Thomas H. 1988. Attitudes toward risk and the risk-return paradox: prospect theory explanations. Academy of Management Journal 31: 85-106.
29. Fiegenbaum A, Thomas H. 2004. Strategic risk and competitive advantage: an integrative perspective. European Management Review 1: 84-95.
30. Fiegenbaum A, Hart S, Schendel D. 1996. Strategic reference point theory. Strategic Management Journal 17(2): 219-235.
31. Fischoff B, Watson SR, Hope C. 1984. Defining risk. Policy Sciences 17: 123-139.
32. Foster G. 1986. Financial Statement Analysis. Prentice-Hall: Englewood Cliffs, NJ.
33. Gooding RZ, Goel S, Wiseman RM. 1996. Fixed versus variable reference points in the risk-return relationship. Journal of Economic Behavior and Organization 29: 331-350.
34. Hartman S, Nelson BH. 1996. Group decision making in the negative domain. Group and Decision Management 21: 146-162.
35. Heath C, Tversky A. 1991. Preference and belief: ambiguity and competence in choice under uncertainty. Journal of Risk and Uncertainty 4: 5-28.
36. Henderson AD, Benner MJ. 2000. The evolution of risk and return in high-velocity settings. Academy of Management Best Paper Proceedings, Toronto, Canada.
37. Henkel J. 2003. The risk-return paradox for strategic management: disentangling true and spurious effects. Paper presented at the annual meeting of the Academy of Management, Seattle, WA.
38. Hofer C, Schendel D. 1978. Strategy Formulation: Analytical Concepts. West Publishing: St Paul, MN.
39. Jegers M. 1991. Prospect theory and the risk-return relation: some Belgian evidence. Academy of Management Journal 34: 215-225.
40. Jemison DB. 1987. Risk and the relationship among strategy, organizational processes, and performance. Management Science 33: 1087-1101.
41. Jemison DB, Sitkin S. 1986. Acquisitions: the process can be a problem. Harvard Business Review 64(2): 107-116.
42. Johnson HJ. 1992. The relationship between variability, distance from target, and firm size: a test of prospect theory in the commercial banking industry. Journal of Socio-Economics 21: 153-171.
43. Kahneman D, Tversky A. 1979. Prospect theory: an analysis of decisions under risk. Econometrica 47: 263-291.
44. Kahneman D, Tversky A. 1984. Choices, values, and frames. American Psychologist 39: 341-350.
45. Lehner JM. 2000. Shifts of reference points for framing of strategic decisions and changing risk-return associations. Management Science 46: 63-76.
46. March JG. 1991. Exploration and exploitation in organizational learning. Organization Science 2: 71-87.
47. March JG, Shapira Z. 1987. Managerial perspectives on risk and risk taking. Management Science 33: 1404-1418.
48. March JG, Shapira Z. 1992. Variable risk preferences and the focus of attention. Psychological Review 99: 172-183.
49. McNamara G, Bromiley P. 1997. Decision making in an organizational setting: cognitive and organizational influences on risk assessment in commercial lending. Academy of Management Journal 40: 1063-1088.
50. McNamara G, Bromiley P. 1999. Risk and return in organizational decision making. Academy of Management Journal 42: 330-339.
51. Miller KD. 1998. Economic exposure and integrated risk management. Strategic Management Journal 19(5): 497-514.
52. Miller KD, Bromiley P. 1990. Strategic risk and corporate performance: an analysis of alternative risk measures. Academy of Management Journal 33: 756-779.
53. Miller KD, Chen W. 2003. Risk and firms' costs. Strategic Organization 1: 355-382.
54. Miller KD, Chen W. 2004. Variable organizational risk preferences: tests of the March-Shapira model. Academy of Management Journal 47: 105-115.
55. Nickel MN, Rodriguez MC. 2002. A review of research on the negative accounting relationship between risk and return: Bowman's paradox. Omega 30: 1-18.
56. Oviatt BM, Bauerschmidt AD. 1991. Business risk and return: a test of simultaneous relationships. Management Science 37: 1405-1423.
57. Pablo AL, Sitkin SB, Jemison DB. 1996. Acquisition decision-making processes: the central role of risk. Journal of Management 22: 723-746.
58. Palmer TB, Wiseman RM. 1999. Decoupling risk taking from income stream uncertainty: a holistic model of risk. Strategic Management Journal 20(11): 1037-1062.
59. Porter ME. 1996. What is strategy? Harvard Business Review 74(6): 61-78.
60. Rivkin JW. 2000. Imitation of complex strategies. Management Science 46: 824-844.
61. Ross SM. 2000. Introduction to Probability Models (7th edn). Harcourt Academic Press: San Diego, CA.
62. Ruefli TW. 1990. Mean-variance approaches to the risk-return relationship in strategy: paradox lost. Management Science 36: 368-380.
63. Ruefli TW, Wiggins RR. 1994. When mean square error becomes variance: a comment on 'Business risk and return: a test of simultaneous relationships.' Management Science 40: 750-759.
64. Ruefli TW, Collins JM, LaCugna JR. 1999. Risk measures in strategic management research: auld lang syne? Strategic Management Journal 20(2): 167-194.
65. Shapira Z. 1995. Risk Taking: A Managerial Perspective. Russell Sage: New York.
66. Siggelkow N. 2001. Change in the presence of fit: the rise, the fall, and the renaissance of Liz Claiborne. Academy of Management Journal 44: 838-857.
67. Siggelkow N, Levinthal DA. 2003. Temporarily divide to conquer: centralized, decentralized, and reintegrated organizational approaches to exploration and adaptation. Organization Science 14: 650-669.
68. Singh J. 1986. Performance slack and risk taking in organizational decision making. Academy of Management Journal 29: 562-585.
69. Sinha T. 1994. Prospect theory and the risk return association: another look. Journal of Economic Behavior and Organization. 24: 225-231.
70. Sitkin SB, Pablo AL. 1992. Reconceptualizing the determinants of risk behavior. Academy of Management Review 17: 9-38.
71. Sneier R, Miccolis J. 1998. Enterprise risk management. Strategy and Leadership 26(March-April): 11-16.
72. Teece DJ, Pisano G, Shuen A. 1997. Dynamic capabilities and strategic management. Strategic Management Journal 18(7): 509-533.
73. Tripsas M, Gavetti G. 2000. Capabilities, cognition, and inertia: evidence from digital imaging. Strategic Management Journal, Special Issue 21(10-11): 1147-1161.
74. Tversky A, Kahneman D. 1986. Rational choice and the framing of decisions. Journal of Business 59: S251-S278.
75. Wang H, Barney JB, Reuer JJ. 2003. Stimulating firm-specific investment through risk management. Long Range Planning 36: 49-59.
76. Winter SG. 1995. Four Rs of profitability: rents, resources, routines and replication. In Resource-Based and Evolutionary Theories of the Firm: Towards a Synthesis, Montgomery C (ed). Kluwer Academic: Boston, MA; 147-178.
77. Wiseman RM, Bromiley P. 1991. Risk-return associations: paradox or artifact? An empirically tested explanation. Strategic Management Journal 12(3): 231-241.
78. Wiseman RM, Bromiley P. 1996. Toward a model of risk in declining organizations: an empirical examination of risk, performance and decline. Organization Science 7: 524-543.
79. Wiseman RM, Catanach AH. 1997. A longitudinal disaggregation of operational risk under changing regulations: evidence from the savings and loan industry. Academy of Management Journal 40: 799-830.