The Influence of Organizational Form on Managerial Discretion.

Abstract

In this dissertation, I explore how managerial discretion varies under different organizational forms, that is, the formal structures by which the behavior of members of firms is coordinated and controlled. In the first study, I examine the effect of ownership type (for-profit, government, and not-for-profit) on managerial discretion. I argue that organizational goals that differ across ownership types affect organizational constraints, which, in turn, determine the level of managerial discretion. Specifically, I hypothesize that the level of managerial discretion will be highest in for-profit, lowest in government, and lie somewhere in between in not-for-profit, organizations. The first study involves both quantitative and qualitative analyses. The study context is the US hospital industry, in which large medical malpractice lawsuits trigger changes in behavior among doctors who want their choices better defended in court. I study the effect of ownership type by examining how the effects of malpractice lawsuits on hospital expenditures differ across ownership types. In the second study, I examine differences in levels of managerial discretion in the firm relative to the market. This study examines physician discretion in the context of the US hospital industry, specifically in terms of the effect of physician-hospital integration on physician discretion. The research design is a multiple-case, inductive study involving two types of physician-hospital arrangements: an employed model and private practice. This research design enables me to investigate how physician discretion varies across hospital boundaries and understand what organizational costs are incurred after integration.