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

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By complementing prospect theory with organization-level behavioral theory and the threat-rigidity thesis, I study how factors unique to an organizational level can interact with the individual-level tendencies predicted by prospect theory. I tested this approach by examining organizational decisions to divest or retain formerly acquired units in a longitudinal setting. The results show that divestiture decisions are influenced by both individual- and organization- level factors that cannot be explained solely by one theory and provide a richer understanding of organizational risk-seeking behaviors. Copyright of the Academy of Management, all rights reserved.

Original languageEnglish
Pages (from-to)1495-1514
Number of pages20
JournalAcademy of Management Journal
Issue number6
Publication statusPublished - 2007 Dec


ASJC Scopus subject areas

  • Business and International Management
  • Business, Management and Accounting(all)
  • Strategy and Management
  • Management of Technology and Innovation

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