The observed association between performance and organizational risk taking has usually been attributed to the influence of performance on risk preferences. Here I show how a simple model of adaptation, which only assumes that organizations avoid activities with poor past performance, can...

Inspired by the behavioral theory of the firm and prospect theory, a large empirical literature has examined the association between performance and organizational risk taking. Such associations have often been attributed to the influence of performance on risk attitudes. This paper shows that a...

To what extent can one infer that superior capabilities are driving sustained superior performance? Modeling performance as some combination of differences in capabilities and processes of cumulative advantage, we argue that a Bayesian framework in which decision makers take into account the...