"Discretion? No, Thank You! Managers’ Reluctance to Use Discretion in Allocation Decisions"

Abstract

Current organizational theories suggest that higher levels of discretion can motivate and enable managers to contribute more to their firms’ success. Challenging this view, we argue that managers often prefer to allocate outcomes or resources (e.g., project assignments, rewards, duties) to their employees based on pre-determined allocation rules, rather than using their discretionary judgment. We specifically propose that concerns about damaging the quality of relationships with employees lead managers to use more rules rather than discretion in allocation decisions. We further suggest that the valence of the allocated resource (burdens vs. benefits) and managers’ social proximity to employees enhance managers’ relationship concerns, and hence reduce use of discretion. Our theoretical model is supported across two experimental studies and one field study. We discuss implications to the literature on managerial discretion and employees’ empowerment.