Performance Aspiration, Managerial Discretion and Strategic Change: An Empirical Study in China
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| Title | Performance Aspiration, Managerial Discretion and Strategic Change: An Empirical Study in China
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| Author | Lian Yanling, He Xiaogang, Zhou Bing and Marian (Dan-Wei) Wen |
| Organization | Shanghai University of Finance & Economics; National Cheng Kung University |
| Email | ylian@wharton.upenn.edu |
| Key Words | Performance Aspiration; Strategic Change; Managerial Discretion; Institutional Discretion |
| Abstract | This research paper investigates the relationship between performance aspiration and strategic change and explores the moderating effects of three different sorts of managerial discretions by incorporating behavioral theory of the firm, performance feedback theory and managerial discretion literature. The findings show that poor performance relative to organizational aspiration level triggers managerial behavior of strategic change. The larger performance-aspiration gap incurs higher level of strategic change. In addition, higher organizational discretion (higher resource endowment and lower organization inertia) and environmental discretion (better market and lower capital constraint) strengthen the degree of strategic change when mangers face the increase of performance-aspiration gap. In contrast, lack of institutional discretion constraints the discretion of managers’ decision-making, and results to the lower level of strategic change. This research enriches current understanding on the motivation of strategic change from performance aspiration perspective. More specifically, this research provides insights into the influence of managerial discretion on managers’ decision-making in the Chinese transitional economy context. |
| Serial Number | WP501 |
| Time | 2013-08-01 |
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