How are Allocation Decisions Made? Managerial Autonomy and Institutional Factors

Observed resource allocation is the result of a resource allocation process where managers implement that intended allocation. Extant research has focused on capital allocation within a corporation, and a variety of organizational and institutional characteristics that are associated with different levels and types of capital allocation. This paper will focus on the resource allocation practices regarding how these decisions are made across personnel activities (hiring and firing) and product activities (sales and marketing and new product development expenditures). We document new patterns of managerial autonomy in resource allocation decisions across countries, institutional contexts and governance structures. We find significant heterogeneity in autonomy across these categories, and that these differences in autonomy are associated with differences in final expenditure allocations.