Risk taking. In their seminal work on strategic issues, Staw, Sandelands,
and Dutton (1981) theorized about how organizations responded to threatening or crisis situations. Their model of threat rigidity suggests that organizational decision makers tend to become more conservative and restrictive in
their information sharing when experiencing a threat. As a result, the authors
argue that decision makers are more likely to narrow the scope of organizational activity and rely increasingly on well-learned or habitual behavior. To
varying degrees, each of these responses moves the organization away from
risk taking by narrowing the range of possible response options. To be clear,
we do not advocate for unnecessary risk, but to the extent that risk taking is
associated with creative thinking and innovation, the tendency to be risk averse
may hinder the firm’s ability to strategize novel ways for overcoming a crisis.