Perceived managerial discretion and firm performance: The moderating role of market competition

Xi-Ping Zhao1, Po-Young Chu2, Chia-Yi Chen3
1Xi’An Jiao-Tong University, People’s Republic of China
2National Chiao Tung University, People’s Republic of China
3National Pingtung University of Science and Technology, People’s Republic of China
Cite this article:  Zhao, X., Chu, P., & Chen, C. (2010). Perceived managerial discretion and firm performance: The moderating role of market competition. Social Behavior and Personality: An international journal, 38, 145-158.

Volume 38 Issue 2 | e1971 | Published: March 2010 | DOI: https://doi.org/10.2224/sbp.2010.38.2.145

Abstract
Full Text
References
Tables and Figures
Acknowledgements
Author Contact

Despite being widely discussed in the literature, the impact of managerial discretion on firm performance remains inconclusive. In this study it is proposed that market competitiveness plays an important role in determining the influence of perceived managerial discretion on firm performance. In a survey of 169 top managers of Chinese enterprises, it was found that in highly competitive markets, perceived managerial discretion was positively related to firm performance. In contrast, where there is little competition, perceived managerial discretion and firm performance were negatively correlated. These results suggest that companies operating in highly competitive markets should permit managers greater discretion to make strategic choices to react to the dynamics of the environment. Conversely, companies in less competitive markets should limit managerial discretion to prevent managers abusing this power for personal benefits.

Please login and/or purchase the PDF to view the full article.
Please login and/or purchase the PDF to view the full article.
Please login and/or purchase the PDF to view the full article.
Please login and/or purchase the PDF to view the full article.
Please login and/or purchase the PDF to view the full article.