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| Innovating or Rent-seeking? Impact of Performance below Aspiration Level on Corporate Risk-taking Behavior |
| HE Qingqing,YANG Liu,PAN Zhen |
| School of Business, Nanjing Normal University |
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Abstract Drawing on the behavioral theory of the firm and the theory of reference points, this paper explores the relationship between performance below aspiration level and the innovating and rent-seeking behavior of firms, and examines the moderating effect of CEO power and the supervision of independent directors. Based on the data of non-state-owned listed companies in the Shanghai and Shenzhen A-share manufacturing industries from 2013 to 2018, the research results show that when the aspiration reference point is dominated, with the increase of the aspiration gap, the firms' willingness to take long-term risks increases, and willingness to take short-term risks decreases. However, when survival reference points are initiated, the firm's survival is threatened, firm's long-term risk-taking willingness decreases and short-term risk-taking willingness increases. Therefore, the performance below aspiration level and innovating behavior shows an inverted U-shaped relationship that increases first and then decreases, and the rent-seeking behavior shows a U-shaped relationship that decreases first and then increases. Further study shows that CEO power flattens the U-shaped relationship between performance below aspiration level and rent-seeking behavior, and supervision of independent directors steepens the inverted U-shaped relationship between performance below aspiration level and innovating behavior. This research deepens the understanding of corporate risk-taking behavior under the condition of performance gap, enriches the research results of the behavioral theory of the firm, and has important implications for managerial practice.
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Received: 03 February 2020
Published: 13 August 2020
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Corresponding Authors:
YANG Liu
E-mail: yangliu_yok@163.com
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2020, Vol. 40 
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