Should managers be scared of their emotions? The impact of interfirm envy on managerial behavior

In the race for scarce market resources, key decision-makers of firms continually evaluate the performance of their firms against other comparable firms. While assessing their relative performance, an objective or perceived inadequate appraisal of their firm may elicit feelings of interfirm envy. I introduce the concept of interfirm envy as a situational form of envy, when decision-makers of firms socially compare their firm with another (perceived) comparable firms (but not specific individuals within the other firms). To understand the experience of interfirm envy, I test a model of the antecedents and consequence of interfirm envy based on social comparison and social identity theories. In this dissertation, I propose that interfirm envy is elicited when decision-makers are not only aware of a better performing (non) industry referent(s) (upward social comparison), but also strongly identify with their firm (organizational identification). To further understand the interaction of comparative and identification processes in triggering an envious response, I delineate the conditions that exacerbate the experience of envy, market dynamism and firm culture. I also demonstrate the impact of interfirm envy on managerial risk-taking tendencies, through the underlying mechanism of the need to differentiate. Results from four multi-method studies, two survey-based studies and two experimental studies, support the hypothesis that an interaction of an upward social comparison and organizational identification elicits interfirm envy, especially when decision-makers function in dynamic markets. The results also indicate that interfirm envy leads to a need to differentiate, which then facilitates a willingness to take risks. Furthermore, decision-makers tend to respond differently to envy based their self-construal, independent and interdependent. The focal managerial implication is that comparative processes influences emotions, specifically interfirm envy, which in turn affects managerial decision-making. Contrary to many practitioners' belief, decisions influenced by envy tend to lead to positive risk-taking behaviors, such as investing in innovative projects.