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Wednesday, May 20, 2020 | History

3 edition of A risk/return paradox for strategic management found in the catalog.

A risk/return paradox for strategic management

by Edward H. Bowman

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Published by Massachusetts Institute of Technology in Cambridge, Mass .
Written in English

    Subjects:
  • Strategic planning.,
  • Risk management.

  • Edition Notes

    StatementEdward H. Bowman.
    SeriesWorking paper / Alfred P. Sloan School of Management -- WP 1107-80, Working paper (Sloan School of Management) -- 1107-80.
    ContributionsSloan School of Management.
    The Physical Object
    Pagination25, 4 p. :
    Number of Pages25
    ID Numbers
    Open LibraryOL14052865M
    OCLC/WorldCa15503540

    FACULTYWORKING PAPERNO DynamicandRiskMeasurementPerspectiveson Bowman'sRisk-ReturnParadoxforStrategic Management:AnEmpiricalStudy AviFiegenbaum HowardThomas. “The strategy paradox arises from the need to make strategic commitments in the face of strategic uncertainty. Strategic uncertainty—which is different from operational or financial uncertainty—increases as one attempts to plan over longer time horizons/5(21).

    One of the most enduring puzzles in the strategy literature is the negative association between risk and return known as the Bowman paradox. This paper formalizes a model of strategic conduct based on the concept of strategic fit and the heterogeneity of firm strategic by: FIEGENBAUM, A. AND H. THOMAS, "Attitudes Toward Risk and the Risk-Return Paradox: Prospect Theory Explanations," Acad. Management J., 31, 1 (), Google Scholar FIEGENBAUM, A. AND H. THOMAS, "Dynamic and Risk Measurement Perspectives on Bowman's Risk-Return Paradox for Strategic Management: An Empirical Study," Strategic Management J Cited by: 2.

    A growing number of articles in the area of strategic management employ a mean-variance approach to risk-return relationships. Some researchers investigating risk-return relationships in this fashion claim to have found negative associations between the levels of return and by:   Michael Raynor, Distinguished Fellow, Deloitte Consulting and author of The Strategy Paradox and The Innovator’s Solution, explored the relationship between strategic commitment and risk management in determining whether a firm will be successful at the Septem ERM Roundtable. Raynor provided an overview of the conventional thinking around strategic commitment .


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A risk/return paradox for strategic management by Edward H. Bowman Download PDF EPUB FB2

C.d df#^sylibrary workingpaper choolofmanagement arisk/returnparadoxforstrategicmanagement wp march massachusetts. A risk/return paradox for strategic management [Bowman, Edward H, Sloan School of Management] on *FREE* shipping on qualifying offers.

A risk/return paradox for strategic managementCited by: Measuring risk as the variance of a series of accounting‐based returns, Bowman obtained the puzzling result of a negative association between risk and mean return.

This finding, known as the Bowman paradox, has spawned a remarkable number of publications, and Cited by:   A risk/return paradox for strategic management by Bowman, Edward H; Sloan School of ManagementPages: THE RISK-RETURN PARADOX FOR STRATEGIC MANAGEMENT: DISENTANGLING TRUE AND SPURIOUS EFFECTS JOACHIM HENKEL* TUM Business School, Munich University of Technology, Munich, Germany The concept of risk is central to strategy research and practice.

Yet, the expected positive association between risk and return, familiar from financial markets, is elusive. Measuring risk as the variance of a series of accounting-based returns, Bowman obtained the puzzling result of a negative association between risk and mean return.

This finding, known as the Bowman paradox, has spawned a remarkable number of publications, and various explanations have been suggested. A Risk/Return Paradox for Strategic by Edward H. Bowman* Strategic management is concerned with choosii g environmental domains, determining the nature of the interaction:; with these domains, and making the internal adjustments suggested or required by these choices.

This study examined the relationship between risk-return performance of acquiring firms and acquisition strategy under conditions of economic instability. Effects of environmental factors such as macro-economic conditions, acquired firm's industry, firm-specific managerial factors, and acquisition size were found to be significant determinants of acquisition success.

It was found that the. A large literature in strategic management has investigated the apparent risk-return paradox, offering prospect theory (Chou et al., ;Fiegenbaum and Thomas, ;Gooding et al., --Peter L.

Bernstein, author of Against the Gods: The Remarkable Story of Risk "The Strategy Paradox is a most extraordinary business book: impeccably researched and argued, brutally honest and devoid of 'silver bullet' solutions to today's complex strategy problems. It has profound implications for business strategy research, teaching and practice and should be read by anyone interested in why some strategies Cited by: A large literature in strategic management has investigated the apparent risk-return paradox, offering prospect theory (Chou et al., ; Fiegenbaum and Thomas, ; Gooding et al., Author: Joachim Henkel.

Measuring risk as the variance of a series of accounting-based returns, Bowman obtained the puzzling result of a negative association between risk and mean return.

This finding, known as the Bowman paradox, has spawned a remarkable number of publications, and Author: Joachim Henkel. Abstract. This study attempted to explain Bowman's risk–return paradox in terms of recent research in behavioral decision theory and prospect theory.

The research emphasized the role of reference, or target, return levels in analyzing risky choices. For returns below target, a large majority of individuals appear to be risk seeking: for returns Cited by: Considerable empirical evidence, however, reveals an anomalous negative relationship between risk and return using corporate accounting variables, termed Bowman's risk-return paradox in the strategic management literature (for surveys see Andersen et al., ; Bromiley et al., ; Nickel & Rodriguez, ).

The negative relationship between firm risk and financial return is paradoxical because it calls to question prevailing assumptions about managerial decision-making Cited by: 2. The negative association between risk and return is paradoxical because risk-averse managers should only expose themselves to higher risk for higher returns.

The paradox is resolved, however, if we recognize that risk-averse managers may be taking decisions that pose risk for shareholders and not for their own careers.

We draw on the career concerns literature to explain why decisions that pose risk to shareholder returns can enhance managerial by: 2. Strategic responsiveness and Bowman's risk-return paradox, Strategic Management Journal – Anderson, C. Values-based management, Academy of Management Cited by: relationship between risk and return in most sectors, a surprise given the conventional wisdom that higher risk and higher returns go hand-in-hand, at least in the aggregate.3 This phenomenon, risk taking with more adverse returns, has since been titled the “Bowman paradox” and has been subjected to a series of tests.

In follow up studies. The strategy paradox is a consequence of the conflict between commitment and uncertainty, i.e., strategic uncertainty. Commitments are what allow an organization to create and capture value.

Uncertainty creates risk and opportunity. The Strategy Paradox is a business strategy book by author Michael E. Raynor, who is the Distinguished Fellow with Deloitte Research. The Strategy Paradox was published in by Currency/Doubleday. It was named a top ten book of by BusinessWeek, and a top five strategy book of by Strategy+: Michael E.

Raynor. One of the most enduring puzzles in the strategy literature is the negative association between risk and return known as the Bowman paradox. This paper formalizes a model of strategic conduct based on the concept of strategic fit and the heterogeneity of firm strategic capabilities.

This model is shown mathematically to yield the negative association of the Bowman paradox. Book: The Strategy Paradox: Why Committing to Success Leads to Failure (And What to Do About It) Author: Michael Raynor Definitions The Strategy Paradox The contradiction of making a strategic commitment; when a business commits to a particular strategy, it maximizes its chance of success as well as its chance of failure (all or nothing).This study attempted to explain Bowman's risk–return paradox in terms of recent research in behavioral decision theory and prospect theory.

The research emphasized the role of reference, or target, return levels in analyzing risky choices. For returns below target, a large majority of individuals appear to be risk seeking: for returns above target, a large majority appear to be risk by: Search the world's most comprehensive index of full-text books.

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