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 causal relationship starting from changes in environment and continuing to business strategy. Changes in task complexity, which can be measured by the introduction of a diversi ca- tion or an outsourcing strategy, are expected to result in a shift towards a more centralized or decentralized allocation of decision-making authorities. Using nationally representative Swiss rm data, OLS, Propensity Score Matching as well as a combined matching and difference-in-differences approach in order to account for endogeneity and unobserved het- erogeneity are applied. Estimates using all three approaches show a highly signi cant positive impact of outsourcing on a decentralized decision rights assignment, whereas a diversi cation strategy yields no in uence. The conclusion therefore is that a lower delega- tion risk due to a decline in complexity results in decentralized decision-making authorities in Swiss rms.