Firm performance in strategic management research

Firm performance as a construct pervades strategy research. In the first chapter of this dissertation, three decades of recommendations are synthesized into distinct approaches for conceptualizing firm performance: the latent approach, the aggregate approach, and the separate constructs approach. Using this framework as a tool to examine current practices reveals a rupture between the theoretical and methodological treatment of firm performance. Authors tend to theorize with an abstract conceptualization of firm performance, but methodologically treat firm performance as a collection of separate constructs. This disjointing of theory and methods severely undermines the field's ability to develop and aggregate scientific knowledge. Recommendations for improving usage include striving for consistency between theory and methods and emphasizing the separate constructs approach in empirical work.; An issue complicating the academic definition and use of firm performance are the varying perspectives on the purpose of the firm. Some propose that firms are established to generate profit for shareholders, others emphasize the importance of considering a broader range of firm stakeholders. In the second chapter the relationship between beliefs about the purpose of the firm and executive leadership is investigated. Empirical evidence supports the idea that executives who believe that profit maximization is the primary purpose of the firm are perceived as less visionary and more autocratic. Executives espousing the shareholder perspective are perceived as more visionary and less autocratic.; In the third chapter, the influence of performance as a contextual variable on executive psychology is examined. Firm performance is a salient element of an executive's context and researchers in executive risk taking literature have utilized prior firm performance to predict executive risk taking. One problem is that researchers have omitted the use of probability perceptions. Incorporating probability perceptions into the strategy risk taking perspective facilitates the development of a model that emphasizes risk taking motives rather than risk taking quantity. Executive motives related to past firm performance influence the quality of risks that executives select; two executives may both engage in high levels of risk taking, but the executive motivated by discontentment will engage in poorer risk taking than the executive motivated by efficacy.