Research on organizational responses to performance feedback has often viewed risk-taking as an almost mechanistic response to performance relative to aspirations, without considering the characteristics of organizations’ opportunities.
In this study, we argue that performance relative to aspirations not only triggers risk-taking but also drives how decision-makers process information regarding risky opportunities.
Specifically, we argue that organizations process information regarding two attributes characterizing risky opportunities (the likelihood of adverse/positive outcomes and the magnitude of potential losses/gains) depending on the performance relative to aspirations and the salience of the performance feedback based on deadline proximity. We test our ideas by analyzing 26,514 fourth-down decisions from the National Football League in the 2009–2016 seasons.
Specifically, we find that deadline proximity regulates decision-makers’ attention between the attributes characterizing risky opportunities and attainment discrepancy.
Far from the deadline, both attributes of risky opportunities strongly affect the organization’s decision, whereas close to the deadline, decision-making becomes dominated by the attainment discrepancy.
We further find that close to the deadline, when decision-makers incorporate information about the attainment discrepancy, the relevance of each intrinsic attribute of the risky opportunity – likelihoods and magnitudes – is regulated by attainment discrepancy.