Resumen de Strategic resource allocation: : top-down, bottom-up, and the value of strategic buckets
Jeremy Hutchison-Krupat, Stylianos Kavadias
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.
