We investigate the influence of top management team (TMT) risk takingpropensities on firm performance. Diverging from previous work on the risktaking-performance relationship, we rely on perceptual (rather than archival)measures of risk taking. In addition to financial performance, we examineother performance outcomes of risk taking, such as innovativeness andstakeholder satisfaction. Contrary to the findings of Bromiley (1991J andBowman (1980), we find that risk taking has a strong positive influence onfirm performance. In addition, the risk taking-performance relationship ismoderated by the dynamism of the firm's industry. More specifically, we findthat the benefits of TMT risk taking are reduced in more dynamic environments.
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Gilley et al. (1970) studied this question.
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