Managing the Gaps: How Performance Gaps Shape Managerial Decision Making

Abstract

Much literature provides insights on the effect of managerial decisions on organizational performance. This research has given less attention to the determinants, rather than the effects, of variance in managerial decisions. This study seeks to determine whether decisions vary when performance gaps are based on subjective clientele ratings or more objective performance output information. Using data from an original survey of hospital CEOs, the American Hospital Association and the Centers for Medicare & Medicaid Services, we find that multiple managerial decisions can be explained by both historical and social aspirational gaps but that shifts in priorities vary depending on how performance is defined.