Premium
Managerial discretion and internal alignment under regulatory constraints and change
Author(s) -
Peteraf Margaret,
Reed Randal
Publication year - 2007
Publication title -
strategic management journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 11.035
H-Index - 286
eISSN - 1097-0266
pISSN - 0143-2095
DOI - 10.1002/smj.628
Subject(s) - discretion , context (archaeology) , contingency , premise , contingency theory , realm , perspective (graphical) , business , internal model , economics , microeconomics , computer science , management , political science , law , epistemology , paleontology , philosophy , artificial intelligence , biology , control (management)
This paper investigates the effects of regulatory constraints and their relaxation on managerial discretion and internal fit in the context of the U.S. airline industry. Our results suggest that when managers' discretion is limited in one realm of choice, they compensate by using their greater level of discretion in some other arena to achieve internal fit. We show that the pursuit of fit matters, in the sense of having measurable efficiency consequences, and that fit trumps ‘best practice,’ at least in this context. In this respect, our findings provide a validation of the contingency perspective on internal fit. The ability to achieve fit under changing conditions may express a dynamic managerial capability necessary for adaptive organizational change. Copyright © 2007 John Wiley & Sons, Ltd.