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'Tying the manager's hands': constraining opportunistic managerial intervention

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Author Info

  • Kirsten Foss
  • Nicolai J. Foss
  • Xosé H. Vázquez

Abstract

We discuss and examine empirically a firm-level equivalent of the ancient problem of 'tying the King's hands', namely how to avoid managerial intervention that is undertaken to reap private benefits but is harmful to overall value creation, that is, 'managerial opportunism'. The link from managerial intervention to firm-level value-creation is moderated by employee motivation. Thus, intervention in the form of managers overruling employees or reneging on delegation may demotivate employees, particularly when the intervention is perceived as being unfair, undertaken for personal gain, etc. We argue that a number of mechanisms, such as managers staking their personal reputation, employees controlling important assets, strong trade unions, etc. may function as constraints on managerial proclivities to intervene, thus reducing the problem of managerial opportunism. We derive four hypotheses from these ideas, and test them, using path-analysis, on a rich dataset, based on 329 firms in the Spanish food and electric/electronic industries. Copyright 2006, Oxford University Press.

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File URL: http://hdl.handle.net/10.1093/cje/bei107
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Bibliographic Info

Article provided by Oxford University Press in its journal Cambridge Journal of Economics.

Volume (Year): 30 (2006)
Issue (Month): 5 (September)
Pages: 797-818

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Handle: RePEc:oup:cambje:v:30:y:2006:i:5:p:797-818

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Cited by:
  1. Ciabuschi, Francesco & Dellestrand, Henrik & Kappen, Philip, 2012. "The good, the bad, and the ugly: Technology transfer competence, rent-seeking, and bargaining power," Journal of World Business, Elsevier, vol. 47(4), pages 664-674.
  2. Silvia Dominguez Martinez & Randolph Sloof & Ferdinand von Siemens, 2010. "Monitoring your Friends, not your Foes: Strategic Ignorance and the Delegation of Real Authority," Tinbergen Institute Discussion Papers 10-101/1, Tinbergen Institute.
  3. Thomas Johnsen, 2011. "Supply network delegation and intervention strategies during supplier involvement in new product development," Post-Print hal-00771835, HAL.
  4. Cécile Cézanne, 2010. "Un modèle renouvelé de gouvernance d'entreprise : une évaluation empirique sur données françaises," Post-Print hal-00628650, HAL.
  5. Dellestrand, Henrik & Kappen, Philip, 2011. "Headquarters Allocation of Resources to Innovation Transfer Projects within the Multinational Enterprise," Journal of International Management, Elsevier, vol. 17(4), pages 263-277.

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