In this Ph.D. thesis, I study the allocation of resources from three different perspectives. The first chapter develops an understanding of how a firm’s level of adjustment in its resource allocation affects its financial performance. This inquiry aims to address the research puzzle about whether the strategic approach of dynamism or persistence is superior when it comes to resource allocation adjustments. Based on a large sample of firms listed on the S&P 1500 Index, my study finds evidence of an inverted U-shaped relationship between firm performance and the degree of adjustment in resource allocation to strategic business units. The inverted U-shaped relationship is modified in highly dynamic industries where firms that incur a high degree of adjustment achieve greater returns than firms in less dynamic industries. Further, companies operating in highly competitive environments are punished more for failing to adjust their resource allocation properly. The paper has received an invitation to revise and resubmit at the Strategic Management Journal.

In the second chapter, drawing on the concept of private information, I develop and test theory of why some multi-business firms show stronger tendencies to inertia in their resource allocation than others. Results indicate that firms with high levels of unrelated diversification act less dynamically in adjusting their capital resource allocation. In addition, the paper’s findings suggest that several critical factors related to the main stages of the process of using private information moderate the relationship between a firm’s level of diversification and its degree of adjustment in resource allocation, allowing highly diversified firms to reduce their agility disadvantages. The paper has been invited for presentation at the Annual Meeting of the Academy of Management (AoM) 2020 and at the Annual Conference of the Strategic Management Society (SMS) 2020.

Finally, the third chapter aims to develop an understanding of the ‘inner workings’ of the corporate headquarters in the context of resource allocation. This conceptual paper involves a case study based on interviews with the strategy team in charge of managing the corporate-level resource allocation process at one of Europe’s largest multi-business firms. Through this project, I develop a processual understanding of corporate-level resource allocation in multi-business firms. The paper contributes to the literature by creating a more nuanced understanding of the centralized resource allocation function of the corporate headquarters (its control rights) and ultimately of the notion of a firm’s so-called private information advantage. The paper was presented at the SMS Annual Conference 2017 in Houston and at the AoM Annual Meeting 2018 in Chicago.