Prospect theory, behavioral theory, and the threat-rigidity thesis: Combinative effects on organizational decisions to divest formerly acquired units

By Katsuhiko (Katsu) Shimizu. 2007

370 citations recorded by the source corpus.

Subfields: General Decision Sciences, Safety Research, Strategy and Management

View Paper: https://www.semanticscholar.org/paper/bcdb602f6af5ccb5facc4429fe09d849c7729afc

How researchers see this paper

The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.

In General Decision Sciences

In Safety Research

In Strategy and Management

Citations in the corpus

Organizational responses to performance feedback: A meta-analytic review (2019, background): “For performance below aspirations, however, the correlation can be positive if a study reported results supporting the threat-rigidity hypothesis (Shimizu, 2007; Staw et al., 1981).”
Distributed Attention and Shared Emotions in the Innovation Process (2016, background): “Empirical tests have measured only the presence of the threat perceptions with proxies such as return on assets (Greve, 2011), bargaining cycles (Griffin, Tesluk, and Jacobs, 1995), changes in the studied firms’ funding sources (D’Aunno and Sutton, 1992), and changes in the performance of an acquire”
Deciding to Persist: Adversity, Values, and Entrepreneurs’ Decision Policies (2013, background): “Shimizu (2007) investigated organizational decisions to divest or retain units that were previously acquired by larger corporations and found that the likelihood of divestiture of a poorly performing unit increases as the performance decreases, but then the likelihood tapers off as performance…”
Entry, exit, and the potential for resource redeployment (2017, background): “In contrast, Shimizu (2007) found that business unit relatedness has no effect on exit from acquired businesses, and Kaplan and Weisbach (1992) noted that divestiture rates are similar whether or not acquirers and targets share a common two-digit SIC code.”
Do CEOs Matter to Firm Strategic Actions and Firm Performance? A Meta-Analytic Investigation Based on Upper Echelons Theory (2016, background): “Because firms lose control of potentially valuable assets via divestitures, they are also risky, difficult to reverse, and have significant performance consequences (Hoskisson, Cannella, Tihanyi, & Faraci, 2004; Shimizu, 2007).”
Attention allocation to multiple goals: The case of for‐profit social enterprises (2015, background): “This opposite finding could be explained by theories on organizational reaction to low performance and “threats” (Shimizu, 2007).4 Prospect theory suggests that managers redirect their attention towards economic goals when confronted with low performance (Sullivan, 2010).”
A comparison of alternative measures of organizational aspirations (2014, background): “, 2005), innovation (Greve, 2003a), diversification (Palmer and Wiseman, 1999), capital investment (Greve, 2003b), divestment of business units (Shimizu, 2007), safety initiatives (Baum and Dahlin, 2007), bank lending practices”
Management Theory Applications of Prospect Theory: Accomplishments, Challenges, and Opportunities (2011, positive): “In addition, arguing that divesting a previously acquired business reflects risk aversion, Shimizu (2007) found that firms are likely to divest such businesses when their performance is negative, but this effect declines as their performance decreases further.”
Disentangling Risk and Change (2015, background): “Yet these seminal theories operate at different levels of analysis—organizational and individual, respectively (see Shimizu, 2007)—and individual-level determinants of risk are not clearly comparable to organizational-level determinants of organizational change.”
Organizational Aspirations, Reference Points, and Goals (2012, background): “Third, while it is widely accepted that organizational aspirations influence strategic behavior, the moderators of the aspiration–consequence relationship are understudied (Greve, 2003c; Shimizu, 2007; Short & Palmer, 2003; Vissa, Greve, & Chen, 2010).”
LOOKING BACKWARD INSTEAD OF FORWARD: ASPIRATION-DRIVEN INFLUENCES ON THE EFFICIENCY OF THE CAPITAL ALLOCATION PROCESS (2013, background): “Our findings also raise questions about the use of forward-looking models of choice such as prospect theory, which has garnered growing acceptance in studies of organizational behavior (e.g., Devers, McNamara, Wiseman, & Arrfelt, 2008; Shimizu, 2007).”
Managerial Risk Taking (2016, neutral): “In addition, the degree of experience that managers have with a type of action has been argued to shape the way in which they frame its outcomes, thus driving them to engage in greater levels of such actions (Garbuio et al., 2011; Shimizu, 2007).”