| Theories of managerial perception propose that organizational success depends on the ability of managers to perceive and interpret information from the environment. Theories of power and stakeholder relationships suggest that organizational success is obtained through understanding the influence of groups affected by organizational actions.;The research reported here integrates these two perspectives to investigate managers' perceptions of their discretion, defined as the ability to take actions on behalf of their firms. Specifically, this study divided the concept of managerial discretion into two parts, objective and perceived, and argued that a close fit between the two parts is beneficial to firm performance. Using stakeholder, external control, and agency theory perspectives, arguments were developed that top managers' perceptions emerge from a confluence of stakeholder preferences, industry conditions, manager characteristics, and firm-specific factors. In addition, the determinants of perceived discretion were investigated, as were the direct relationships between objective discretion and industry performance.;A theoretical model was developed and tested on data collected from top managers of 156 U.S. manufacturing firms. Empirical results revealed that perceived discretion is related to several antecedent factors, including firm size, manager tenure, and past firm performance. The results suggest several interesting relationships among perceived discretion and industry, firm, and personal characteristics, and support the view that integration of theories about managerial perception, power and influence relationships, and specific firm actions, can advance understanding of top management decision making. |
