Abstract
In this paper we examine the role of variable risk preferences and aspiration levels on the growth of 23,286 new Swedish firms. Using pooled time-series regression, we find that new and small firms react to performance feedback by threat rigidity, decreasing their levels of organic growth. Larger and older firms react in the opposite way by raising their level of growth if performance falls short of their aspiration level, as predicted by the behavioral theory of the firm. Our findings suggests that as firms grow and age, they alter their risk behavior.