The more you value, the less you practice: a study on culture and managerial discretion

Abstract

Purpose The purpose of this paper is to examine cross-cultural differences in managerial discretion and the extent to which variations and interaction of cultural practices and values affect the degree of freedom in decision making that is accorded to executives. This paper offers a holistic approach to investigating culture in addition to acknowledging its paradoxical nature. Design/methodology/approach Using a panel of prominent management consultants to rate discretion across 18 countries, the authors further develop the national-level construct of managerial discretion by empirically investigating the influence of cultural practices and values on CEOs’ discretion. Findings The study reveals that cultural values moderate the relationship between cultural practices and managerial discretion for three cultural dimensions: individualism, uncertainty tolerance and power distance (PD). By adopting the logic of marginal utility, the authors also show that the more a society values individualism, uncertainty tolerance and PD, the weaker the effect of their practices on managerial discretion. Originality/value Few research has attempted to assess both cultural values and practices in relation to managerial discretion. By showing the mechanism in which culture affects the level of managerial discretion, the authors offer new theoretical insights and practical implications, overall contributing to the field of cross-cultural and strategic management. Finally, this will offer CEO’s a new perspective of leveraging culture as a tool, enhancing their decision-making capabilities in the aim of improving organizational performance.

The cost of foreign ownership: Voluntary sustainability reporting and financial performance in an emerging economy

“…For instance, adopting GRI is shown to help financial companies gain credibility and attract new investors (del Mar Alonso-Almeida et al, 2014). In a word, sustainability reportin is an important means for emerging economy firms to communicate with their shareholders and mitigate information asymmetry for gaining legitimacy (Alsahali and Malagueño, 2022;Swarnapali and Le, 2018;Youssef et al, 2020). Therefore, we hypothesize: H1a.…”

“…Since the regulations are less stringent in an emerging economy to protect various stakeholders' interests, these emerging economy firms have a high degree of discretion in incorporating sustainability initiatives. Preliminary studies on the developed economy firms in sustainability reporting suggest that the companies that voluntarily adopt the practice of sustainability reporting are in a better position to resolve the conflicting stakeholders' Foreign ownership and sustainability reporting legitimacy concerns, modify internal business operation practices and ensure the stable growth of the corporations (Swarnapali and Le, 2018;Youssef et al, 2020). Recent research, however, pointed to how companies' reporting on sustainability practices has a negative association with the company's accounting performance based on both valuedestroying and resource-crowding effects.…”

“…The current study's findings contribute to the sustainability reporting literature mainly two-fold. First, underpinned by corporate governance literature and legitimacy perspective, we study foreign ownership and help explain the mixed relationship between sustainability reporting and financial performance (Griffin and Mahon, 1997; Margolis and Walsh, 2003; Rowley and Berman, 2000; Youssef et al ., 2020). Particularly, due to the less developed civil society and weaker regulatory institutions in promoting sustainability, some emerging economy multinational corporations (EMNCs) are shown to decouple reporting practices from substantive sustainability practices due to the less apparent economic benefit associated with sustainability initiatives (Tashman et al ., 2019; Wang et al ., 2016); on the other hand, some state-owned EMNCs may experience internationalization pressures for adapting either the form or the content of reporting practices (Marquis et al ., 2017).…”

When MNEs bribe more? The role of managerial discretion

“…Managers, through their choices, have a great role in affecting firms' actions and outcomes (Finkelstein et al, 2009;Haj Youssef and Teng, 2019;Li and Tang, 2010;Wang et al, 2019), including bribery (Collins et al, 2009). Researchers have asserted that organization's outcomes should be understood by specifying the input of individual managers (Barney and Felin, 2013;Haj Youssef et al, 2020). This paper therefore invokes the concept of managerial discretion and examines when top managers of foreign subsidiaries have considerable leeway to substantially influence MNEs' engagement in bribery in the host countries.…”

“…, 2009). Researchers have asserted that organization’s outcomes should be understood by specifying the input of individual managers (Barney and Felin, 2013; Haj Youssef et al ., 2020). This paper therefore invokes the concept of managerial discretion and examines when top managers of foreign subsidiaries have considerable leeway to substantially influence MNEs’ engagement in bribery in the host countries.…”