Purpose: This study aims to investigate the relationship between task environment, organizational agility, perceived managerial discretion and strategy implementation on unit performance. Design/methodology/approach: Based on the literature review, a structural model was developed. A 74-item questionnaire was circulated among middle managers in sales and marketing. The data collection method used purposive sampling. A total of 228 valid responses were obtained. This study was conducted in a leading pharmaceutical company in Indonesia. The data were analyzed using structural equation modeling. Findings: Based on the data analysis, this study shows that task environment and organizational agility act as antecedents of perceived managerial discretion, which drives strategy implementation resulting in unit performance. Originality/value: Different from previous studies that examined the linkage of inertial forces and discretion, this research scrutinized the effects of organizational agility on perceived managerial discretion and the direct role of perceived managerial discretion on internal strategy implementation. © 2020, Emerald Publishing Limited.