The effects of task environment and organizational agility on perceived managerial discretion and strategy implementation in a pharmaceutical company

Purpose This study aims to investigate the relationship between task environment, organizational agility, perceived managerial discretion and strategy implementation on unit performance. Design/methodology/approach Based on the literature review, a structural model was developed. A 74-item questionnaire was circulated among middle managers in sales and marketing. The data collection method used purposive sampling. A total of 228 valid responses were obtained. This study was conducted in a leading pharmaceutical company in Indonesia. The data were analyzed using structural equation modeling. Findings Based on the data analysis, this study shows that task environment and organizational agility act as antecedents of perceived managerial discretion, which drives strategy implementation resulting in unit performance. Originality/value Different from previous studies that examined the linkage of inertial forces and discretion, this research scrutinized the effects of organizational agility on perceived managerial discretion and the direct role of perceived managerial discretion on internal strategy implementation.

EXPRESS: REPUTATION BELONGS IN MORE STRATEGIC DECISION MODELS (AND SOME DATA TO MEASURE IT)

Organizational reputation is compelling to layman audiences, it is critical for firm performance and myriad organizational phenomena, and recent theory articulates how it shapes the very managerial discretion underpinning strategic decisions. Yet, reputation is still excluded from much of mainstream strategic organization research. We make the case for reputation’s wider inclusion in studies of managerial discretion or strategic decision-making. We first demonstrate reputation’s potential theoretical importance in explaining nuances or non-findings in such studies, detail ways to measure reputation accurately, provide five sources of data for readers to facilitate the inclusion of reputation in their studies, and illustrate how scholars can use freelancers to collect their own archival data for their own, context-specific purposes. By shedding light on reputation’s unique role in shaping managerial discretion and, thereby, strategic decisions, we hope this essay helps scholars better account for decision-making patterns that might otherwise defy the predictions of other organizational theories.

Product Differentiation Strategy and Perceived Financial Performance of Commercial Banks in Uganda: Moderating Effect of Managerial Discretion

The moderating effect of managerial discretion on the relationship between product differentiation strategy and firm financial performance has not received necessary empirical attention. The study sought to examine the moderating effect of managerial discretion on the relationship between product differentiation and the perceived financial performance of commercial banks in Uganda. A cross-section survey design was formulated targeting a population comprised of 210 Senior Managers and Chief Executives of 10 selected commercial banks in Uganda, which were chosen because of their relatively consistent superior financial performance in the last five years. A sample of 137 individuals was calculated using Yamane’s (1967) formula, and the technique of stratified proportionate random sampling was used in selecting sample subjects. Data was collected from these individuals using structured questionnaires and analyzed descriptively (using frequencies, percentages, means, and standard deviations) and inferentially using partial least squares structural equation modelling (PLS-SEM). The coefficient of the interaction term between managerial discretion and product differentiation strategy (MD*PD) was found positive and significant (β = 0.3421, ρ<0.05). Accordingly, the null hypothesis was rejected. It is concluded that managerial discretion is an important factor in the adoption of product differentiation strategies for purposes of enhancing the perceived financial performance of commercial banks in Uganda. The study recommends that commercial banks in Uganda should avail Chief Executives with the necessary and adequate latitude to implement product differentiation strategies if they are to maximize financial performance.

How Does Financial Reporting Quality Relate to Corporate Social Responsibility Expenditures? An International Analysis

In this study, we examine whether financial reporting quality improves corporate social responsibility (CSR) decisions. By using a sample of 3,502 observations from 18 countries, our findings show that financial reporting quality is positively (negatively) associated with CSR activities for firms that are more prone to under-invest (over-invest) in CSR. These results suggest that financial reporting quality mitigates managerial discretion in CSR activities and leads to an improvement in CSR decisions. Further, we decompose CSR into environmental and social dimensions and find that the effects of financial report quality on CSR initiatives are more pronounced for firms with a tendency to under-invest in environmental CSR.

What’s It Like Inside the Hive? Managerial Discretion Drives TMT Gender Diversity of Women-Led Firms

Do women promote other women? We investigate this question through the lens of gender role theory and managerial discretion. While the trickle-down effect suggests that women in positions of power are likely to promote other women, the queen bee phenomenon indicates that senior women distance themselves from other women. We argue these two conflicting perspectives have developed because (a) much of the literature has considered the influence of board gender representation on top management team (TMT) gender representation, ignoring the role of the CEO, and (b) an important tenet of the queen bee phenomenon has been overlooked in that women who perceive an ability to challenge traditional gender norms are less likely to engage in queen bee behavior. Thus, we suggest women CEOs, who are in a unique position of both importance and isolation, are less likely to promote other women to the TMT due to the gendered context in which they are employed, but as the CEO’s capacity to enact change (i.e., managerial discretion) increases, so too does their ability to challenge traditional gender norms. More specifically, we hypothesize and find that while the presence of women CEOs negatively relates to the proportion of women on the TMT, this relationship is weakened by CEO power, lack of board vigilance, and environmental munificence. Post hoc analyses demonstrated that while a trickle-down effect occurs from the board to the TMT, these mechanisms may not exist at the CEO-TMT interface, highlighting the importance of considering the role of CEO discretion in enhancing executive gender diversity.

The Relationships Among Managerial Discretion, Firm Performance, And Chief Executive Officer Compensation: A Simultaneous Equations System Approach

Prior executive compensation studies overlooked the endogeneity of firm performance and the simultaneity of managerial discretion, firm performance, and CEO pay. To overcome these two shortcomings, we propose a novel simultaneous equations system model to investigate the cause-and-effect relationships among research & development (R&D), advertising, firm performance, and CEO compensation, which are jointly affected by CEO’s tenure, age, ownership, firm size, risk, and industry. Although the feedback loops are positive between firm performance and CEO pay and between advertising and firm performance, the feedback loop is negative between R&D and firm performance. Firm size has a direct and indirect effect on R&D, advertising, firm performance, and CEO pay. Large firm size may entice CEOs to invest excessively in R&D, leading to poor performance and low pay. Our study implies that the positive relationship between firm performance and CEO pay depends upon the appropriateness of the strategic choices that CEOs make.