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An exploration of managerial discretion and its impact on firm performance: Task autonomy, contractual control, and compensation

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  • Yan, Yanni
  • Chong, Chan Yan
  • Mak, Simon

Abstract

Managerial discretion refers to coherent, rational, unified decisions executed by managers to achieve organizational development. This study empirically tests a managerial discretion model that posits that overall firm performance depends on the degree to which task autonomy, contractual control and management compensation influence the managerial discretion exercised in international joint ventures (IJVs). With survey data from 136 IJVs in China, the authors identify that relationship between the level of organizational commitment of IJV managers and the exploitation of firm-specific capabilities tends to increase when managers have the necessary levels of discretion. Our findings suggest that contractual control does not engender a statistically significant relationship between greater managerial discretion and superior firm performance. This study contributes to strategic management and managerial capitalism theory in that, as IJV managers gain more managerial discretion, their task autonomy and compensation positively mediate the relationship between this discretion and the performance.

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  • Yan, Yanni & Chong, Chan Yan & Mak, Simon, 2010. "An exploration of managerial discretion and its impact on firm performance: Task autonomy, contractual control, and compensation," International Business Review, Elsevier, vol. 19(6), pages 521-530, December.
    • Handle: RePEc:eee:iburev:v:19:y:2010:i:6:p:521-530
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    2. Marius G. Gehrisch & Stefan Süß, 2023. "Organizational behavior in international strategic alliances and the relation to performance – a literature review and avenues for future research," Management Review Quarterly, Springer, vol. 73(3), pages 1045-1107, September.
    3. Piotr Wajszczyk, 2016. "Informal Institutions in the Corporate Governance System in Russia," Annales. Ethics in Economic Life, University of Lodz, Faculty of Economics and Sociology, vol. 19(4), pages 113-121, December.
    4. Bouguerra, Abderaouf & Gölgeci, Ismail & Gligor, David M. & Tatoglu, Ekrem, 2021. "How do agile organizations contribute to environmental collaboration? Evidence from MNEs in Turkey," Journal of International Management, Elsevier, vol. 27(1).
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    7. Sahaym, Arvin & Nam, Daeil, 2013. "International diversification of the emerging-market enterprises: A multi-level examination," International Business Review, Elsevier, vol. 22(2), pages 421-436.
    8. Tim Heubeck & Reinhard Meckl, 2023. "Microfoundations of innovation: A dynamic CEO capabilities perspective," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 44(6), pages 3108-3126, September.
    9. Moez EL Gaied, 2018. "Investment-Cash Flow Sensitivity and Growth Opportunities," International Journal of Economics and Financial Issues, Econjournals, vol. 8(2), pages 154-160.

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