“’ The Impact of Interfirm Envy on Risk-Taking ”
by Sheikha Alia
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In the race for scarce market resources, top management continually evaluate the performance of their firms against other similar firms. Given that the identity of top management is tied with that of their firms, an objective or perceived inadequate appraisal of their firm compared to another may elicit feelings of envy. In this paper, I introduce the concept of interfirm envy as a situational form of envy, when top management socially compare their firm with another (perceived) similar firm (but not specific individuals within the other firm). I empirically investigate its impact on managerial risk-taking, through the underlying mechanism of the need to differentiate. I also examine the moderating role of self-construal in this relationship. Using three multi-method studies, one survey-based study and two experimental studies, I found that interfirm envy leads to a need to differentiate, which then facilitates a willingness to take risks. Furthermore, I show that managers tend to respond differently to envy based on their self-construal, independent and interdependent.