Authority and Discretion: Tensions, Credible Delegation, and Implications for New Organizational Forms
AbstractWe analyze a key problem in organization theory and design, namely the potential tension between authority (i.e., the power to make decisions which guide the decisions of another person) and the discretion of employees (i.e., the ability of an agent to control resources including his own human capital). The problem is rooted in the fact that in organizations, decisions rights are always loaned rather than owned; a hierarchical superior can always in principle overrule a hierarchical inferior. We provide an integrative treatment of the tensions that are involved in the interaction between authority and discretion, and the motivational problems that may result from this tension. We discuss how these problems may kept at bay by credible managerial commitments and other mechanisms. The framework is then applied to an analysis of the governance choice between traditional hierarchies and new organizational forms, specifically internal hybrids. Thus, the framework adds to the understanding of the costs and benefits of alternative organizational forms.
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Bibliographic InfoPaper provided by Department of Industrial Economics and Strategy, Copenhagen Business School in its series IVS/CBS Working Papers with number 2002-08.
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Managerial intervention; credible delegation; new organizational forms; organizational economics.;
Other versions of this item:
- Kirsten Foss & Nicolai J. Foss, 2002. "Authority and Discretion Tensions, Credible Delegation and Implications for New Organizational Forms," DRUID Working Papers 02-11, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
- L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
- L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
- M12 - Business Administration and Business Economics; Marketing; Accounting - - Business Administration - - - Personnel Management; Executives; Executive Compensation
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