I would like to bring to your attention a PDW workshop focusing on the application of prospect theory to strategic management research. The purpose of this workshop is to generate discussion on how (and when) to apply prospect theory to strategy research. Given the widespread use of prospect theory in many areas of management research, we feel this workshop will be relevant to scholars from a number of disciplines. No pre-registration is required.
Program Session #: 282 Saturday, Aug 7 2010 12:30PM - 2:00PM at Le Palais Des Congres in 510B
Prospect Theory in Strategy Research: Meeting the Challenges and Developing the Potential
Facilitator: Jean McGuire; Louisiana State U
Particpants:
R. Michael Holmes Jr.; Florida State U
Cynthia E. Devers; Tulane U.
Tim R. Holcomb; Florida State U.;
Philip Bromiley; U. of California, Irvine
Jean McGuire; Louisiana State U
The purpose of this workshop is to foster and improve the application of prospect theory in strategic management by generating in-depth discussion and debate regarding its application in strategy research. Prospect theory has been applied heterogeneously by scholars. Indeed, there are often discrepancies and lack of consistency between what the theory says and how scholars use it. Therefore, the workshop will focus on 1) what the theory does (and does not) imply about decision making in organizations and, 2) the potential benefits and challenges inherent in applying prospect theory beyond individual decision making settings
This discussion is critical to prospect theory research in strategic management for several reasons. Applying prospect theory, originally developed and tested in experimental studies of individual decision making, to the complex and multi-leveled organizational context presents interrelated theoretical and methodological challenges. Prospect theory at first seems deceptively simple. In reality, however, Some key pillars of prospect theory (e.g., reference points, framing, 'loss' or 'gain' contexts, and probability weighting) are often ambigious and difficult to operationalize in strategic management research. Application of PT requires the researcher to make important judgments and choices. For example, what is the reference point and how is it determined? How are potential 'losses' or 'gains' evaluated? How do decision makers evaluate and weigh probabilities?
Level of analysis is also critical in applying prospect theory to organizational research. In particular, organizational scholars have made use of prospect theory at the individual level, group level, and organizational levels. The issues of framing, identification of reference points, and evaluation of gains and losses become even more problematic at the organizational level.
The following are suggestive of the topics we expect to raise:
1. How workshop participants have applied prospect theory in their research, and the challenges they faced in doing so; and the issues raised in applying prospect theory in the organizational context. An important objective of this workshop is to provide researchers with suggestions and advice in using PT in management research.
2. An important aspect of this discussion is to identify the aspects of the organizational and external context that may influence prospect theory formulations. In focusing on these issues we hope to identify areas in which organizational research can advance prospect theory.
The objective of this workshop is to encourage and assist researches using prospect of prospect theory in strategic management research. In doing so, we hope to build recognition that the implications of prospect theory go beyond 'risk averse above the reference point, risk seeking below."
Although emphasizing strategic management applications, this workshop will be of widespread interest to AoM members. Prospect theory has been applied to a range of management topics, including, individual decision making, compensation, corporate governance, team functioning, entrepreneurship, justice, motivation, and human resource management. The workshop will therefore be useful to scholars seeking to apply prospect theory to a number of organizational issues and contexts.
Jean McGuire
Professor
William W. Rucks IV Endowed Chair
Department of Management
Ourso College of Business
Louisiana State University
mcguire@lsu.edu
(225) 578-5187
Jean McGuire
Professor
William W. Rucks IV Endowed Chair
Department of Management
Ourso College of Business
Louisiana State University
mcguire@lsu.edu
(225) 578-5187