The Impacts of Managerial Autonomy on Firm Outcomes

Namrata Kala

No 26304, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The allocation of decision rights within organizations influences resource allocation, expansion decisions, and ultimately outcomes. Using a newly constructed dataset, I estimate the effects of an earned autonomy program for State Owned Enterprises (SOEs) in India. The program gave managers (the board of directors) of profitable SOEs more autonomy over strategic decisions such as capital expansion and the formation of joint ventures. I find that autonomy allows SOEs to increase their capital stock and form more strategic partnerships which leads to greater sales and profits. I also find that the likelihood that a manager subsequently joins a board of a private firm is greater for managers of those SOEs which were granted autonomy, indicating that career concerns is a consistent explanation for these managerial decisions. Taken together, these results indicate that large gains in SOE performance are possible without privatization (by policies like earned autonomy) and may occur partly through managers' career concerns.

JEL-codes: D2 D23 D73 D92 M12 M38 M51 O38 O53 (search for similar items in EconPapers)
Date: 2019-09
New Economics Papers: this item is included in nep-hrm and nep-lma
Note: DEV PR
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Citations: View citations in EconPapers (1)

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