Managerial Discretion and Performance in China
The theoretical and empirical literature to date has fallen short of reaching a consensus as to whether granting more managerial discretion to managers tends to enhance, not alter or diminish organizational performance (the discretion puzzle). This book aims to build a bridge between these contradictory results by synthesising principal-agent theory, stewardship theory, and managerial discretion theory into a new empirically-validated model. Using a representative sample of 'double-blind' interviews with managers of 467 firms in China and applying partial least squares path modelling (PLS), the study identifies a potential cause of the discretion puzzle: the failure of the extant literature to account for granularity in the way that managers use their discretion. This generates far-reaching implications for theoretical and empirical research as well as practical recommendations for managing managers in multinationals and Chinese companies.
New approach to resolving the discretion puzzle – the contradictory impacts of managerial discretion on performance – by integrating principal-agent theory, stewardship theory, and managerial discretion theory Actionable advice for multinationals and Chinese firms on how to manage their managers Based on interviews with managers of 467 firms in ChinaEnd-to-end tutorial on applying partial least squares path modelling (PLS) to predicting managerial behaviour under differing influences