Managerial Discretion, Resources and Value Creation. An Application to the Spanish Banking Industry (1992-1999)

One of the main limitations of the models most frequently used in strategic management studies to explain firm performance is their implicit determinism. We aim to improve explanation by including managerial discretion as an element that mediates between market structure and firm behavior. By taking into account managerial cognition and corporate governance, we turn the deterministic model into a behavioral one. An empirical study of banks quoted on the Spanish Stock Exchange for the period 1992-1999, using panel data analysis, shows that banks? value creation seems to be explained only to a very small degree by their resource structures, while the most influential elements tested in our model are the Top Management Team (TMT) characteristics and, to a lesser extent, corporate governance mechanisms. Managerial decisions prior to the obtaining of resources seem to be more relevant to value creation than are banks? resource stocks.