Ownership, empowerment, and productivity: Some empirical evidence on the causes and consequences of employee discretion



Abstract This paper uses a sample of professional engineers employed in the public and private sector to investigate the effect of sector employment, indicators of task complexity, organization size, number of rules, importance, and attentiveness and agreement among various principals (customers or clients, peers, mid- and top-level management, and politicians) on both employee discretion and a subjective measure of employee productivity. The results show that disagreement among important and attentive proximate principals (mid-level managers) expands discretion, but disagreement among important and attentive distant principals (top executives and politicians) reduces discretion. Sector has no direct or indirect effect on discretion. When customers or clients and peers are important and attentive principals, discretion increases, and so does productivity. Monitoring by mid-level management has no effect on productivity. Because disagreement among distant principals is greater in the public sector, devolution of authority alone is unlikely to increase public sector productivity. © 2000 by the Association for Public Policy Analysis and Management.