Analyzing Managerial Discretion: An Assessment Tool to Predict Individual Policy Decisions

Abstract

This paper develops the concept of managerial discretion. Discretion, defined as individual empowerment to act, has received increased attention in the management literature, particularly in the policy area. This research develops an instrument to measure discretion of individual managers. Vignettes are used to measure the willingness of managers to act in response to dilemmas that have organizational policy implications. The investigation of the reliability and validity of the developed measure, the Individual Discretion Questionnaire (IDQ), reveals that it identifies variability in managerial response and correlates significantly with two other established measures: locus of control and organizational ethical culture. The results suggest that this assessment tool may provide a means to identify how willing individual managers are to take preventive action in situations that present financial and sociopolitical risks to their organization.

Can I read your mind? Perception gaps in supply chain relationships

“…A concern shared by the extant buyer-supplier relationship literature regarding survey type studies is the examination of negative responses (Helm et al, 2006). On the contrary, a scenario-based experiment permits investigations under situations where firms are normally unwilling to share information (Pilling et al, 1994;Eckerd and Bendoly, 2011;Stevens, 2011), and its validity has been empirically supported (Key, 1997). Moreover, use of a scenario-based experiment has the advantage of reducing retrospective biases and memory loss (Wathne et al, 2001), generating more reliable data for studying respondent attitudes than using surveys to solicit opinions (Alexander and Becker, 1978).…”

The ethical decision-making processes of professional auditors in the people's republic of China

“…Based on this theoretical foundation, the Ethical Culture Questionnaire (ECQ) was developed by Trevino et al (1995) to measure both the formal system and informal system of the organizational ethical culture. The results of previous studies (e.g., Key, 1997;Shih and Tsai, 2005;Shih and Chen, 2006) provide evidence to support the use of the ECQ to capture the characteristics of ethical culture within organizations.…”

“…Research focusing on organizational ethical culture in business contexts has increased in the past years (e.g., Key, 1997;Shih and Tsai, 2005;Shih and Chen, 2006). Key (1997) documents the relationship between managers' perceptions of their organizational ethical culture and managerial discretion measured by the willingness to take preventive actions in situations presenting financial and socio-political risks to the organizations. The findings indicate that when the organizational ethical culture is perceived as being more positive or ethical, managers will be more willing to take discretionary actions, which would reduce the risks.…”

“…Participants responded to the ECQ 8 developed by Trevino et al (1995Trevino et al ( , 1998 (see Appendix B). This questionnaire has been widely used in the behavioural business ethics literature (e.g., Key, 1997;Shih and Tsai, 2005;Shih and Chen, 2006). Two items were excluded from the original questionnaire because they referred to organizational ethical codes, which could not be assumed to be applicable to the PRC CPA firms since these firms follow professional codes of conduct rather than organization-specific codes.…”

“…Many studies have examined the effects of perceptions of organizational ethical culture on individuals' behaviour in professional dilemmas (e.g., Key, 1997;Trevino et al, 1998;Shih and Tsai, 2005;Shih and Chen, 2006). However, previous research has not addressed the issue of organizational ethical culture in certified public accounting (CPA) firms, or the effect of the perceived organizational ethical culture in such firms on individuals' ethical decision-making processes.…”