Strategic Resource Allocation: Top-Down, Bottom-Up, and the Value of Strategic Buckets

Jeremy Hutchison-Krupat () and Stylianos Kavadias ()
Additional contact information
Jeremy Hutchison-Krupat: Darden School of Business, University of Virginia, Charlottesville, Virginia 22903
Stylianos Kavadias: Judge Business School, University of Cambridge, Cambridge CB2 1AG, United Kingdom

Management Science, 2015, vol. 61, issue 2, 391-412

Abstract: When senior managers make the critical decision of whether to assign resources to a strategic initiative, they have less precise initiative-specific information than project managers who execute such initiatives. Senior management chooses between a decision process that dictates the resource level (top-down) and one that delegates the resource decision and gives up control in favor of more precise information (bottom-up). We investigate this choice and vary the amount of information asymmetry between stakeholders, the “penalty for failure” imposed upon project managers, and how challenging the initiative is for the firm. We find that no single decision process is the “best.” Bottom-up processes are beneficial for more challenging initiatives. Increased organizational penalties may prompt the firm to choose a narrower scope and deter the approval of profitable initiatives. Such penalties, however, enable an effective decision process known as “strategic buckets” that holds the potential to achieve first-best resource allocation levels. This paper was accepted by Kamalini Ramdas, entrepreneurship and innovation.

Keywords: resource allocation processes; strategic buckets; empowerment; innovation strategy; new product development strategy; corporate culture (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

Downloads: (external link)
http://dx.doi.org/10.1287/mnsc.2013.1861 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:61:y:2015:i:2:p:391-412

Access Statistics for this article

More articles in Management Science from INFORMS Contact information at EDIRC.
Bibliographic data for series maintained by Chris Asher ().