CULTURAL AND PSYCHOLOGICAL DETERMINANTS OF MANAGERIAL RISK PROPENSITY : A STUDY ON INDIAN MANAGERS

Abstract

The hypothesised determinants of managerial risk propensity were broadly categorised into Individual attributes comprising of personal characteristics and personality factors along with Environmental factors consisting of organisational variables and norms and values related to national culture. These variables were measured through a multidimensional risk-assessment instrument on a sample of 285 Indian managers of Singaporean and Indian origin. Additionally, the effects of individual, organisational and cultural characteristics on perceived riskiness of decisions made by the respondent managers were studied. The statistical analysis of ANOVA and Block-wise regression analysis revealed no difference between Indian managers from India and those from Singapore in the propensity to take risks. Individual characteristics such as age, experience, tenure, managerial level and organisational characteristics such as the extent of bureaucratization and organisational risk values appeared to take precedence in influencing managerial risk propensity than personality or national culture. Younger managers appeared to be more risk seeking than their older counterparts. Also, middle-level managers appeared to be more risk seeking than those in the extremes of the managerial hierarchy. Risk aversion was directly related to the length of employment. The study found that managers who worked for privately owned organisations were more willing to take risks than those who worked for Government controlled organisations. Interestingly, managers who believed their organisations to be risk seeking were significantly more risk-seeking themselves. The perception of riskiness of the decision made by the manager regardless of whether the chosen option was risky or safe seemed to be determined, however, by certain personality factors. Managers with a low intolerance for ambiguity perceived more risk in their decisions than those with a high intolerance for ambiguity. Managers with an internal locus of control perceived less risk in their decisions than managers with an external locus of control. Interestingly. it was also found that those managers who perceived themselves to be risk seekers saw more risk in their decisions than those who did not. Besides the above mentioned personality factors. personal factors such as age, nationality and extent of governmental control also seemed to influence the perception of riskiness of the decisions made by the manager. Older managers and managers who had relatively spent more time in the same position in the organisation perceived less risk in their decisions. Managers with shorter length of employment perceived more risk in their decisions. Singaporean-Indian managers appeared to perceive more risk in their decisions than their Indian counterparts. Managers who worked in organisations controlled by the Government perceived more risk in their decisions than managers in private organisations.