Seminar by Prof. Ari Ginsberg, NYU
Event details
| Date | 18.11.2015 |
| Hour | 12:00 › 13:30 |
| Speaker | Prof. Ari Ginsberg, NYU Stern |
| Location | |
| Category | Conferences - Seminars |
"Learning from Unusual Success: How Exit Attainment Discrepancy Influences Venture Capital Investments in an Emerging Sector"
Abstract
There is a gap in our understanding of how organizations learn from above aspiration level, infrequently occurring, positive performance outcomes. Studies of how organizations learn from rare performance events highlight the importance of performance aspirations in influencing decision makers’ attention to organizational change and risk taking. However these studies mainly focus on negative performance events. In contrast, the attainment discrepancy literature, which compares performance outcomes to aspiration levels, examines how organizations learn from positive outcomes but it does not differentiate between infrequent and regularly occurring performance outcomes. Therefore, we examine how above aspiration level, infrequently occurring, positive performance outcomes affected U.S. venture capitalist firms’ 2004-2011 clean energy investment decisions. In this context, where the positive outcomes (initial public offerings and acquisitions) were infrequent and the negative outcomes frequent, we found that decision makers paid attention to the positive performance feedback that they obtained rather than to the negative performance feedback. Above aspiration level attainment discrepancies had a significant U-shaped non-monotonic impact on investment, while below aspiration level performance attainment discrepancies did not have a significant effect. Our findings suggest that organizational decision makers in an emerging sector like clean energy learn from infrequently occurring positive outcomes when they compare them to their aspiration levels, they reduce subsequent investment when the prospects for gain are moderate, and expand it only when the prospects of gain are very great.
Abstract
There is a gap in our understanding of how organizations learn from above aspiration level, infrequently occurring, positive performance outcomes. Studies of how organizations learn from rare performance events highlight the importance of performance aspirations in influencing decision makers’ attention to organizational change and risk taking. However these studies mainly focus on negative performance events. In contrast, the attainment discrepancy literature, which compares performance outcomes to aspiration levels, examines how organizations learn from positive outcomes but it does not differentiate between infrequent and regularly occurring performance outcomes. Therefore, we examine how above aspiration level, infrequently occurring, positive performance outcomes affected U.S. venture capitalist firms’ 2004-2011 clean energy investment decisions. In this context, where the positive outcomes (initial public offerings and acquisitions) were infrequent and the negative outcomes frequent, we found that decision makers paid attention to the positive performance feedback that they obtained rather than to the negative performance feedback. Above aspiration level attainment discrepancies had a significant U-shaped non-monotonic impact on investment, while below aspiration level performance attainment discrepancies did not have a significant effect. Our findings suggest that organizational decision makers in an emerging sector like clean energy learn from infrequently occurring positive outcomes when they compare them to their aspiration levels, they reduce subsequent investment when the prospects for gain are moderate, and expand it only when the prospects of gain are very great.
Practical information
- General public
- Free