The fallacy of “only the strong survive”: The effects of extrinsic motivation on the persistence decisions for under-performing firms |
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Authors: | Dawn R DeTienne Dean A Shepherd Julio O De Castro |
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Institution: | a207 Rockwell Hall, Colorado State University, Fort Collins, CO 80523, United States;bIndiana University, Kelley School of Business, Bloomington, IN 47406, United States;cInstituto de Empresa, Serrano 105, 28006 Madrid, Spain |
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Abstract: | Under-performing firms persist even though existing theoretical perspectives indicate that they should be selected out of the market. Building upon threshold theory Gimeno, J., Folta, T., Cooper, A., Woo, C., 1997. Survival of the fittest? Entrepreneurial human capital and the persistence of underperforming firms. Administrative Science Quarterly 42, 750–783.] and using Staw's Staw, B.M., 1981. The escalation of commitment to a course of action. Academy of Management Review 6 (4), 577–587.] theoretical model of commitment to a course of action, we explore and test the factors that lead entrepreneurs to persist with under-performing firms. We found environmental munificence, personal investment, personal options, previous organizational success, and perceived collective efficacy impact the decision to persist with an under-performing firm. In addition, extrinsic motivation moderates those relationships. This research adds to the growing literature on highly persistent, under-performing firms and complements and extends threshold theory. |
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Keywords: | Threshold theory Persistence Commitment Conjoint analysis |
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