| The main objective of this thesis is to shed light on the factors that lead CEOs to make bold or risky strategic decisions. Others have already suggested that CEOs make bold strategic decisions either because they "want to" (driven by some personal characteristic), they "are forced to" (due to exogenous pressures), or simply because they "create their own crisis" to foster change. Managers also see bold strategic decision either as high-risk moves or as dramatic commitments. These various antecedents and definitions remain only intermittently connected, without an overall framework from which decision-makers could benefit when considering bold strategic action.;This thesis adds the perspective that these decisions also reflect stakeholder permission for the CEO to act, based on their personal legitimacy and reputation. By adding this perspective, this study finds evidence for a cognitive framing explanation for bold strategic decisions that links all previously cited antecedents and definitions, using both prospect theory and threat rigidity arguments. The results identify three normative conditions associated with executives making bold strategic decisions, depending upon the reputation of the CEO. Those with poor reputations attempt to create a positive reputation through uncertainty reduction by boldly creating something new. Moderately-reputable CEOs try to preserve their reputations through a high risk strategy in a prospect-theory induced response to rapid environmental change, while CEOs with high reputations endeavour to enhance their hard-earned reputation by "creating their own crisis" when otherwise facing little exogeneous pressures. |
