This study examines the role of reputation on decision making under ambiguity. Drawing on social cognition and behavioral theories, we propose that a firm's reputation exerts dual pressures on its decision making under ambiguity. On the one hand, reputation increases firm aspirations for future performance and promotes engagement in risky strategies to achieve them. On the other hand, preserving the already established reputation requires firms to deliver consistent performance over time, which promotes greater use of risk reduction strategies. Our analyses of the U.S. venture capital firms' investments in the clean energy sector from 1990 to 2008 demonstrate that while reputable firms are more likely to invest in the emerging sector, they also employ risk reduction strategies more extensively. The sector's legitimation further influences these firms' investment decisions both directly and through its interaction with firm reputation.