Making It Personal: Developing a New Managerial Discretion Scale to Examine CEO Traits

Managerial discretion, defined as the latitude of action that a CEO or other leader has in his or her senior role, is a model that has had considerable attention over the last thirty years. However, much of this research has relied on proxies and archival measures of managerial discretion rather than considering the discretion exhibited by the CEO. Additionally, research that operationalizes the managerial discretion construct has minimally addressed the antecedents of discretion and has avoided advancing our understanding of psychological traits and power. This study advances managerial discretion research by developing and validating a new scale and then applying the new scale to examine locus of control, cognitive complexity and ownership power as antecedents of managerial discretion. Responses from top management team members of 96 publicly traded companies validated the new multidimensional managerial discretion scale, while responses from surveys completed by their CEOs showed positive relationships...