What is it about?

Risky decisions and actions can have far-reaching consequences for organizations, for better or for worse. But how do they affect those who take the risks? This research shows that people associate risk-taking with leadership, and risk-avoidance with followership. Risk-takers are perceived as more dominant and prestigious than risk-avoiders, which increases their chances of obtaining leadership positions, especially in the face of competition. This suggests that showing some guts can be an effective – though risky – way to get ahead.

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Why is it important?

Risk is a controversial theme in organizations. Some companies stimulate risk-taking to create innovation and growth, whereas other companies seek to curb risk-taking to prevent potentially detrimental consequences for the organization. A lot of research has focused on individual and organizational level antecedents of risk-taking, but surprisingly little is known about how risk-takers are perceived and responded to by others. Our study addresses this gap by illuminating the social-hierarchical consequences of risk-taking. This novel approach is useful as it helps explain why risky decisions and behaviors are sometimes difficult to curtail, namely because risk-takers may reap hierarchical benefits. Previous work has established that powerful organization members are more likely to take risks than powerless organization members, because power liberates behavior. We provide the first evidence for the opposite link, demonstrating that risk-prone organization members are more likely to be granted leadership positions. This means that taking risks can set in motion a self-perpetuating cycle: Risk-prone individuals are more likely to rise to leadership positions where they will in turn be more likely to take risks, and so on. This helps explain how some organizations develop a culture of irresponsible risk-taking.

Read the Original

This page is a summary of: No guts, no glory? How risk-taking shapes dominance, prestige, and leadership endorsement., Journal of Applied Psychology, November 2021, American Psychological Association (APA),
DOI: 10.1037/apl0000868.
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