Managers' Context: How Government Capability Affects Managers

We draw attention to two changes in management research over the past 25 years: more focus on the different contexts that constrain management action, and applications of management knowledge to non‐business societal challenges. There has been much speculation but little comparative empirical research on how government quality affects what managers do. Building on theory and research from international business, organization theory and organizational behaviour we propose and test an account of the ways government capability affects organizational performance through its effects on managerial assumptions and actions. In a sample of managers working under four different governments, we find that the more capable the government the less managers depend on their personal relationships to get their work done, and these in turn mediate governments' effects on the managerial cultivation of relationships with government officials, their use of personal relationships for competitive business advantages, and their greater distrust, secrecy and withholding of information from business associates. The implications for cross‐national management research and public policy for economic development are highlighted.