Title

Agency Influences on Risk Reduction and Operating Performance: An Empirical Investigation Among Strategic Groups

Department

Management & Entrepreneurship

Document Type

Article

Publication Date

7-1997

Abstract

The relationships between risk and performance were tested employing within and between analyses at the level of strategic groups in three different industries. As hypothesized, systematic risk did not exhibit a consistent relationship with performance. By contrast, all of the total correlations, the between-group correlations, and the within-group correlations of total risk with performance were in the hypothesized negative direction. These findings suggest that when risk-averse managers reduce total risk, the firm's carnings performance is enhanced. The hypothesized differences between strategic groups in total risk were evident primarily in the computer and pharmaceutical industries. Performance also differed across strategic groups in these two industries, as well as among airlines. Contrary to expectations, systematic risk also differed across strategic groups in all three industries. These ANOVA results indicate that differences in strategic profiles between strategic groups engender differences in total risk, systematic risk, and performance.

Journal

Journal of Business Research

Journal ISSN

0148-2963

Volume

39

Issue

3

First Page

219

Last Page

230

Digital Object Identifier (DOI)

10.1016/S0148-2963(96)00206-8