Performance Feedback and Risk-Taking: A Configurational Approach

Based on the notion that organizations are complex systems, this study combines the configurational perspective with the performance feedback theory to explore constellations of multi-level causal conditions that explain variations in firm risk-taking behaviour. Using the fuzzy set methodology as our analytic approach, we derive multiple configurations based on a dataset of 1753 observations belonging to 402 firms from the US pharmaceutical industry. Our findings espouse equifinality and the differential importance of factors denoting a firm's ability, motivation and opportunity space in determining low and high levels of risk-taking. Across historical and social aspirations, our results disclose significant differences and similarities in constellations of causal conditions leading to high and low levels of risk-taking, respectively. Our findings contribute to the behavioural theory of the firm and have important implications for managerial practice.