Strategic Delegation

Abstract

This article reviews the strategic delegation literature and provides a theoretical framework that integrates this perspective into management research. The strategic delegation literature is built on the observation that, under strategic interdependence, delegation of decision making and accompanying actions can serve as commitments that influence competitive interactions with rivals and lead to beneficial outcomes. In this article, the authors first integrate diverse models and streams of research on strategic delegation in an organizing framework and highlight points of agreement and departure. This is the first comprehensive review of formal game-theoretical research purporting to show the strategic effects of delegation. The authors then integrate strategic delegation into strategic management and organization theory research in three main ways: They propose a common set of assumptions that would attune the strategic delegation perspective with other views and make it more relevant for management research, they outline ways in which the strategic delegation perspective can be linked to a set of theories of management, and finally they point out additional empirical research avenues that can exploit interindustry heterogeneity, intraindustry heterogeneity, and international differences in delegation instruments. and two anonymous JOM reviewers.

A reconsideration of the link between vertical externality and managerial incentives

“…Because of the separation of ownership and control in modern corporations, managerial compensation has become a core component of corporate governance. 1 In this regard, it is well established that compensation contracts may serve both internal and external functions (Sengul et al 2012). For one thing, managerial compensation schemes can be designed to mitigate agency problems by reducing managerial discretion (Jensen & Meckling, 1976).…”

“…For an excellent survey on the topic, the reader is referred toShleifer and Vishny (1997).2 SeeKopel and Pezzino (2018) for a theoretical survey on strategic delegation theory andSengul et al (2012) for a review of the implications this literature has for strategic management. 3 FollowingPark (2002) andKopel and Pezzino (2018), we could think…”

Confidence bias and advertising in imperfectly competitive markets

“…3 For a review of the literature on strategic delegation, see Sengul and Gimeno (2012). Englmaier (2010) and Englmaier and Reisinger (2014) present specific examples of prominent CEO hires that credibly signaled a change in firm strategy.…”

External bargaining versus internal manipulation: A theory of managerial delegation

“…1 The implications of strategic delegation on various issues in oligopoly can be found; for instance, see Stackelberg competition (Basu, 1995;Berr, 2011), equivalence of price and quantity competition (Miller & Pazgal, 2001), mergers (Ziss, 2001), distribution channel (Bhardwaj & Balasubramanian, 2005), choice of incentive scheme (Jansen, van Lier, & van Witteloostuijn, 2007), wage bargaining (Szymanski, 1994), trade policy (Fanti & Buccella, 2017;Wang, Wang, & Zhao, 2009), environmental damage control (Barcena-Ruiz & Garzon, 2002), and many others. Sengual, Gimeno, and Dial (2012) reviewed the strategic delegation literature and provided a theoretical framework that integrates this perspective into management research.…”