A normative assumption of government reform efforts such as New Public Management is that fostering a more innovative, proactive, and risk-taking organizational culture—developing what has been described as an “entrepreneurial orientation” (EO)—improves performance. But in arenas like urban sustainability, performance can be an ambiguous, multifaceted concept. Managers’ assessments of their own nimbleness, innovative thinking, and risk culture are also likely to influence how they interpret the risk-reward balance of opportunities to enhance organizational performance. This study examines how meso-level organizational decisions impact managers’ individual risk-assessments of sustainability initiatives. We do so through a combination of Bayesian structural equation modeling of US local government survey data collected over two time periods, and an artifactual survey experiment with empaneled local government employees. This multimethod design allows us to examine the role of organizational performance and EO—meso-level learning heuristics—in shaping the micro-foundations of managerial risk assessment. The organization-level observational results indicate that local governments engage in risk-seeking behavior in order to minimize their potential for losses of prior effort. Experimental results confirm local government administrators are loss-averse when asked to evaluate the merits of initiating a hypothetical sustainability program.

Understanding how the public assesses the performance of complex, intergovernmental efforts such as sustainability is critical for understanding both managerial decision-making and institutional design. Drawing from the performance and federalism literature, this study investigates the role that distinctive elements of negativity bias play in citizen assessments of intergovernmental performance. In three survey experiments, this study exploits a well-known intergovernmental initiative to explore the effects of episodic performance information on citizen support for varying sustainability-related activities. Two inter-related research questions are addressed. First, does the positive or negative valence of citizen performance assessments vary with the type and scope of activity? Second, does positive or negative performance information tend to dominate in more realistic scenarios in which both types of stimuli interact? The results advance theoretical understanding of public performance with evidence that the type of activity can influence citizen assessments both positively and negatively. Additionally, partisan cues can overwhelm otherwise positive views of performance in some contexts, a concept described in the psychology literature as negativity dominance. The findings add important insights by showing that biased reasoning of citizens is not just a blanket affective association with constant treatment effects across any type of governmental effort, but is contingent on both the activity and political context.