Discretionary Managerial Behavior

Discretionary Managerial Behavior presents a quantification of the managerial behavior within decentralized organizations. The volume provides practical insights into the internal functioning of the firm, the relationships between the managers at different organizational echelons, and the conditioning effects of the organizational controls and the market environment external to the firm. It forms a basic contribution to the theoretical modeling, methodological and estimation procedures, and empirical insights into the nature and operation of managerial discretion in decentralized organizations.
Both theoretical and empirical literature of organizational economics have not come to grips with the decision making process in such organizations. With this in perspective the volume describes four fundamentally new contributions. It presents:

• an approach to defining proximate objectives of managers at the divisional levels in a decentralized organization and the coordination by managers at higher levels,
• an approach to developing a modelling framework from a sound theoretical perspective in order to reflect the postulated behavior,
• an approach to defining an estimation technique to operationalize both (a) and (b) in a specific empirical context, and

• the richness of empirical insights which remained elusive for over thirty years. As such this study is an important step to make fundamental progress in the area of interface between business policy and microeconomic theory.

  Klappentext

  Discretionary Managerial Behavior presents a quantification of the managerial behavior within decentralized organizations. The volume provides practical insights into the internal functioning of the firm, the relationships between the managers at different organizational echelons, and the conditioning effects of the organizational controls and the market environment external to the firm. It forms a basic contribution to the theoretical modeling, methodological and estimation procedures, and empirical insights into the nature and operation of managerial discretion in decentralized organizations. Both theoretical and empirical literature of organizational economics have not come to grips with the decision making process in such organizations. With this in perspective the volume describes four fundamentally new contributions. It presents: an approach to defining proximate objectives of managers at the divisional levels in a decentralized organization and the coordination by managers at higher levels, an approach to developing a modelling framework from a sound theoretical perspective in order to reflect the postulated behavior, an approach to defining an estimation technique to operationalize both (a) and (b) in a specific empirical context, and the richness of empirical insights which remained elusive for over thirty years. As such this study is an important step to make fundamental progress in the area of interface between business policy and microeconomic theory.

  Inhalt

  1. Sources of Managerial Discretion.- 1.1. Managerial Discretion.- 1.2. Market Share.- 1.3. Product Diversification.- 1.4. Organizational Structure.- 1.5. Corporate Control.- 1.6. Incentives and Monitoring.- 1.7. Nature of the Study.- 2. The Corporate Decision Process.- 2.1. The Milieu.- 2.2. The U-Form Organization.- 2.3. The M-Form Organization.- 2.4. The Major Lessons.- 2.5. Proximate Divisional Objectives.- 2.6. Need for Progress.- 3. Modelling Framework.- 3.1. The Issues.- 3.2. The Current Practice.- 3.3. The Correct Formulation.- 3.4. Some Practical Difficulties.- 4. Method of Estimation.- 4.1. The Problem.- 4.2. The Current Status.- 4.3. The Proposed Estimation Procedure.- 4.4. Further Generalization.- 4.5. Problems of Inference.- 5. Operationalizing the Model.- 5.1. The Data Base.- 5.2. Some Accounting Definitions.- 5.3. The Variables.- 5.4. Some Limitations.- 6. Investments and Capital Structure.- 6.1. The Strategic Choices.- 6.2. The Implicit Contract.- 6.3. The Constraints on the Management.- 6.4. Managerial Preferences.- 6.5. Expected Patterns.- 6.6. Empirical Experience.- 7. Selling Costs and Market Share.- 7.1. The Marketing Decision.- 7.2. The Model.- 7.3. The Results.- 8. Production Inventory Decisions.- 8.1. The Focus.- 8.2. Modelling Framework.- 8.3. Empirical Results.- 9. In Retrospect.- 9.1. The Theoretical Progress.- 9.2. Issues of Model Specification.- 9.3. Estimation Problems.- 9.4. Conclusion.- References.