Exploring the role of environmental context in organizational aspiration determination

Abstract

This dissertation extends knowledge on the behavioral view of organizational aspiration determination following the seminal work of Cyert and March (1963), which suggests that organizations determine aspiration levels based on three reference points: historical aspiration, past performance, and social reference group performance. Addressing gaps in this literature, my investigation is grounded in three specific research questions regarding the role of environmental context. I develop the arguments drawing on logics from the research on the behavioral view of organizational aspirations, the attention-based view, environmental context, environmental jolts, and strategic issue interpretation. The first research question addresses the contingent role of three environmental dimensions in aspiration determination. The second research question investigates how an environmental jolt leads to aspiration level changes and attention shifts among the three reference points. The third research question addresses the role of opportunity and threat orientations in aspiration determination during environmental jolts.

I collected data from multiple sources and used a panel sample of U.S. publicly traded firms (1998-2016) to test my hypothesized relationships. I find that, (1) organizations shift their attention among the three reference points under varying environmental conditions regarding munificence, dynamism, and complexity; (2) organizational aspiration level and attention allocation among the three reference points are different during an environmental jolt versus a non-jolt period; (3) organizations’ opportunity and threat orientations during environmental jolts play an important role in regulating attention allocation among the three reference points.

This research mainly contributes to the behavioral aspiration literature. First, my investigation explicitly theorizes and tests the contingent role of three environmental dimensions, thereby advancing the explanatory power of aspiration determination models by accounting for attention shifts under different environmental conditions. Second, my research investigates organizational aspiration determination in a sudden and discontinuous environmental jolt; thus, it complements previous aspiration theory that focused on relatively stable environments. Third, my work enhances behavioral aspiration models by incorporating decision maker cognition as a salient contingency. Overall, my research adds to knowledge on environment-inclusive, ABV-based, and cognition-oriented aspiration determination models with increased explanatory power.