Management's Attitude Toward Risk
The attractiveness of a particular strategic alternative is partially a function of the amount of risk it entails. Risk is composed not only of the probability that the strategy will be effective but also of the amount of assets the corporation must allocate to that strategy and the length of time the assets will be unavailable for other uses. Because of variation among countries in terms of customs, regulations, and resources, companies operating in global industries must deal with a greater amount of risk than firms operating only in one count The greater the assets involved and the longer they are committed the more likely top management is to de- mand a high probability of success. Managers with no ownership position in a company are unlikely to have much interest in putting their jobs in danger with risky decisions. Research indicates that managers who own a significant amount of stock in their firms are more likely 76 to engage in risk-taking actions than are managers with no stock.