Does Risk Taking Beget Undesirable Behaviors? Testing a Duality Paradox

The present study extends the theoretical linkages of a firm’s entrepreneurial orientation (EO) to test if it can have both beneficial and detrimental effects (a duality paradox) on perceptions and behaviors at the individual-level. We suggest EO will positively influence perceptions of organizational trust, and positive behaviors (OCBs and creativity), but due to the risk-taking within EO, it might also encourage undesirable behaviors (counter productive work behaviors, CPWB). We test organizational trust as a mediator and include leader’s dark triad as a moderator, to include additional detrimental forces. We then combine to test a moderated-mediation model using a sample of 302 managers, time-lagged data, and different focal points for constructs (firm, leader, subordinate and self). We find EO is positively related to managers’ organizational trust and behaviors including CPWB, supporting our premise that EO can be both positive and negative. Our mediation analysis shows that broadly, EO influences organizational trust, which in turn affect behaviors within the firm. Leader’s dark triad has detrimental direct and moderation effects and two significant moderated-mediation effects which show that a leader’s dark triad facilitates the mediating effect of organizational trust at all levels of the dark triad, with the mediating effect strengthening as leader’s dark triad increased. We discuss the implications for firms, theory and researchers.