Assessing the Generalizability of Managerial Discretion: An Empirical Investigation in the Arab World

Abstract

The purpose of this paper is to examine the generalizability of national-level managerial discretion and to assess whether the national context play a role in changing mainstream research findings. Based on a sample of three Arabian countries and using a panel of prominent cross-cultural scholars who provided 138 discretion scores for the sampled countries, we replicate the national framework of Crossland and Hambrick (2011) (2011), we demonstrate that individualism and uncertainty tolerance have the same positive effect on CEOs discretion even in a different cultural setting. In contrast, we show that power distance has a positive and significant effect on managerial discretion. Our results indicate that executives can take idiosyncratic and bold actions to the extent to which the cultural environment allows them to do so. Accordingly, we contribute by showing the importance of the national setting in affecting the generalizability of discretion findings.

Exploring cultural heterogeneity

“…Top managers are exposed to and face a population of distinct stakeholder groups, each with different motives and heterogeneous behaviour (Bridoux and Stoelhorst, 2014). The heterogeneity of constraints or the dissimilarity of behaviours is overlooked so far in both studies (Crossland and Hambrick, 2011; Haj Youssef and Christodoulou, 2017a) that investigated the effect of culture on managerial discretion. Furthermore, Hambrick and Finkelstein (1987: 374) state thatTo us, constraint exists whenever an action lies outside the ‘zone of acceptance’ of powerful parties who hold a stake in the organization….…”

“…Executives’ discretion in this case is a function of both the holder-specific discretion, particularly to each stakeholder group, and the aggregate discretion (the shared behaviour), which is common across all stakeholder groups. In the cultural realm, managerial discretion has been considered from the latter dimension only – the aggregation of stakeholders’ zones of acceptance using cultural values or practices (Crossland and Hambrick, 2011; Haj Youssef and Christodoulou, 2017b). However, the particularity of each stakeholder group’s zone of acceptance is of great importance.…”

“…Individualism, the cultural practice that relates to autonomous as opposed to consensus-based behaviours and actions is arguably the most prominent (Gelfand et al, 2011). Societies with a general tendency to act in an individualistic manner, will provide larger zone of acceptance for executives’ decision-making (Crossland and Hambrick, 2007; Haj Youssef and Christodoulou, 2017b). Bold, idiosyncratic and unilateral actions are acceptable.…”

“…Another cultural dimension that, if shared among all societal members, has shown positive relationship with managerial discretion is uncertainty tolerance (Crossland and Hambrick, 2011; Haj Youssef and Christodoulou, 2017b). This dimension refers to the tolerance for unpredictable, means-ends ambiguity and quantum actions.…”

“…Such approach to defining context has been largely overlooked by research in the cross-cultural management literature and particularly in the discretion field. Studies that investigated the impact of context on discretion – namely Crossland and Hambrick (2011) and Haj Youssef and Christodoulou (2017a) – relied solely on the constraints and opportunities dimension of context without taking into consideration the configuration approach or in other words the similarity and dissimilarity of behaviours. The latter dimension is the missing factor which is the core focus of our article.…”