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Risk framing and business model adaptation: A conceptualization based on threat-rigidity theory
[working paper]
Abstract Firm leaders’ inclination to adapt their business model is sensitive to how risk is framed (as an external threat or an opportunity) in the macro-economic environment. We apply threat-rigidity theory to examine the relationship between risk framing and business model adaptation. We also investigate ... view more
Firm leaders’ inclination to adapt their business model is sensitive to how risk is framed (as an external threat or an opportunity) in the macro-economic environment. We apply threat-rigidity theory to examine the relationship between risk framing and business model adaptation. We also investigate if emotionality has explanatory value for how managers adapt to business models. We test our hypotheses in a field experiment involving 134 Scandinavian managers. Here, we relate managers’ inclinations to adapt to different business models to different risk scenarios. The results reveal that, in general, managers are more risk seeking in gain scenarios than in loss scenarios. This finding is in line with the threat-rigidity theory. Emotionality was found to relate more to risk aversion than to risk seeking in the domain of potential gain. We argue that emotionality has explanatory value for how managers adapt to business models, because emotions are key influences on risk perception.... view less
Keywords
Scandinavia; growth; manager; business management; business concept; theory; risk behavior; emotionality; macroeconomics; risk assessment
Classification
Management Science
Free Keywords
emotionality; risk perception; business models; risk feeling; threat-rigidity theory; prospect theory
Document language
English
Publication Year
2020
Status
Preprint; not reviewed