Managerial Discretion

Abstract

Scholars have long been interested in when and to what degree managers are able to exert control over their organizations. In this review, we examine managerial discretion, or the latitude of action available to managers. Since its introduction, scholars have attempted to explain when managers will have discretion, what discretion means for organizational outcomes, and how discretion may differentially influence organizational outcomes when it enables or constrains leaders. Our review indicates that while a significant number of studies have examined discretion, few have attempted to validate the prescriptions of the managerial discretion construct. Furthermore, studies to date have primarily focused on the industry task environment as a measure of discretion, with less attention focused on the manager's characteristics and the internal organization. We then assess construct validity and the measurement of managerial discretion, offering recommendations to future researchers for improving the operationalization of this construct. Finally, we consider how discretion forces may interact as either complements or substitutes and how such interactions may have both organizational-and individual-level consequences.

Searching for managerial discretion: how public managers engage managerialism as a rationalization for increased latitude of action

“…There is much literature concerning the identification and measurement (Hambrick and Abrahamson 1995) of how these different levels affect managerial discretion (see eg. the extensive review by Wangrow, Schepker, and Barker 2015), but much still remains unclear.…”

Assessing the Generalizability of Managerial Discretion: An Empirical Investigation in the Arab World

“…age, size, capital intensity), resource scarcity/availability, powerful inside stakeholders and other internal organizational factors are considered the second loci of managerial discretion (Wangrow et al, 2015). These organizational features define the extent to which the firm is amenable to a variety of possible choices and consequently will feed the CEO with greater latitude of actions which will in-turn affect firm outcomes (Hambrick and Finkelstein, 1987).…”

“…Besides, managerial discretion has not been studied in such business environments, which makes our attempt an interesting opportunity to discover new insights. Most importantly, by using a different sample of countries, we provide construct validity to managerial discretion (Wangrow et al, 2015) and shed the light on new verdicts.…”

The Role of Perceived Managerial Discretion on Strategy Implementation and Its Implication on Organizational Performance: A Conceptual Model

“…O 'Reilly et al (2010) and Wangrow, Schepker, & Barker (2014) stated that to be able to implement strategy effectively, it requires continuous communication and discretion at all levels of the organization. A person is said to have discretion when he knows what options he has for acting that is acceptable to important stakeholders, through his insight and political intelligence (Hambrick & Finkelstein, 1987).…”

“…A review of literatures by Wangrow et al (2014) indicate that managerial discretion plays a role in organizational outcomes such as the diversity of organizational performance, commitment to predetermined activities or even compensation of the chief executive. Moreover, studies related to strategy implementation and change management indicate that middle managers have important role in explaining change and ensuring strategy is well implemented.…”