We integrate prospect theory and the research on organizational embeddedness to argue that unsatisfactory performance drives, and embedded market structure enables or hinder organizational risk taking. We link performance feedback to group-based market structure and examine their interactive effects on the probability of risk taking initiated by market followers. The analysis of longitudinal data from 73 airlines operating on 80 routes in 1990-2008 shows that in a market with a large proportion of competitors belonging to competing alliance groups, market followers are less responsive to negative performance feedback, while in a market with a large proportion of competitors belonging to the same alliance group, market followers become more responsive to negative performance feedback.