New research shows that violent traumatic events in local communities make decision-makers less focused on pursuing lofty objectives.Pixabay
Violent traumatic events - such as mass shootings and acts of domestic terrorism - have become increasingly common in the United States. Yet, despite their growing prevalence, little research has examined how these events shape the decisions made within organizations.
A new study from the University of Washington, recently published in the Academy of Management Journal, reveals that traumatic events can significantly dampen organizational risk-taking. The findings challenge the long-standing view that decision-makers - such as CEOs, executives and team leaders - are largely rational, emotionless actors. The research instead shows that emotional experiences in the broader community can spill over into the workplace and reshape strategic choices.
"People bring their whole selves to work," said Abhinav Gupta, co-author and professor of management in the UW Foster School of Business. "Whatever emotional state that's being influenced by things happening in their community eventually spills over and bleeds into how organizations conduct themselves."
The research team found that violent traumatic events in local communities make decision-makers less focused on pursuing lofty objectives. As a result, organizations become less likely to take risky actions to close performance gaps or achieve ambitious goals.
To reach these conclusions, the researchers combined two complementary methods: an observational field study and two controlled experiments. The field study analyzed nearly 40,000 fourth-down decisions made by NFL teams between 2008 and 2019 and combined that data with information on local mass shootings and other violent events.
Previous research shows that when NFL teams fall behind in games, they tend to take more risks - for example, attempting a fourth-down conversion rather than punting or trying for a field goal. In this study, teams that were underperforming were about three times more likely to attempt a conversion. However, following a traumatic event nearby, those same teams were 10% less likely to take that risk.
"I think it is a sadness effect," Gupta said. "When people are sad, they can't focus on pursuing their ambitious goals. They can still continue to avoid negative circumstances, but the pursuit of ambitious goals is driven by a strong positive drive. These traumatic events impair people's ability to pursue those goals."
Researchers also found that when the chief decision maker - the coach, in this case - had spent more time embedded in the community, the event's impact on risk-taking behavior increased. Distance also mattered: The closer to an organization the event occurred, the stronger the impact.
"It was striking that distance still matters," Gupta said. "You think it wouldn't matter with the way information spreads now, but even two miles versus 20 miles still really matters. When it's that close, you can imagine yourself or your kids being the target. Rationally, it shouldn't matter, but psychologically, it clearly does."
The two controlled experiments verified the mechanism behind the behavior changes. In each experiment, one group of participants read a Wikipedia article about a mass shooting while the other group read about a more neutral event - either a music festival or an accounting conference.
Participants then competed in a three-round game for bonus pay. In line with the field study, those exposed to the traumatic narrative took fewer risks in later rounds and reported a decreased focus on winning, suggesting that sadness diminished their competitive drive.
By demonstrating that emotionally charged events in the broader social environment can alter organizational risk-taking, the study highlights the deep interconnectivity between societal trauma and economic decision-making. It suggests that collective emotional states - such as sadness, anxiety or fear - may ripple through firms, industries and local economies, quietly seeping into strategic behaviors.
"Emotional states are dynamic, fleeting, and hard to study," Gupta said. "How they influence important organizational decisions is still an underexplored area. Much of individual-level psychology hasn't yet made its way into research on strategic decision-making. Our findings, we hope, will spark a broader rethinking of how emotion and environment jointly shape organizational behavior."
Other co-authors were Christian Schumacher of Vienna University of Economics and Business and Steffen Keck of the University of Vienna.
