Business environment, managerial strategies, and the allocation of decision-making authorities in Swiss Firms

The allocation of decision-making authorities may be seen as the last link in a causalrelationship starting from changes in environment and continuing to business strategy.Changes in task complexity, which can be measured by the introduction of a diversica-tion or an outsourcing strategy, are expected to result in a shift towards a more centralizedor decentralized allocation of decision-making authorities. Using nationally representativeSwiss rm data, OLS, Propensity Score Matching as well as a combined matching anddierence-in-dierences approach in order to account for endogeneity and unobserved het-erogeneity are applied. Estimates using all three approaches show a highly signicantpositive impact of outsourcing on a decentralized decision rights assignment, whereas adiversication strategy yields no inuence. The conclusion therefore is that a lower delega-tion risk due to a decline in complexity results in decentralized decision-making authoritiesin Swiss rms.