When facing demand declines, some firms "go for broke" by entering new markets while others "stick to their knitting" by remaining focused on current business. Models of strategic choice and decision making similarly focus on increased risk-taking versus risk avoidance. The current research uses appropriateness rather than consequential, rational choice logic to suggest that decision makers' internal evaluations of their identity and competence are essential determinants of their strategic decisions. Two experiments model key features of the go-for-broke versus stick-to-your-knitting decision and find that risky, endeavor-switching decisions depend on identity and competence with the new task.

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