Biases in Financial Resource Allocation to Subsidiary Projects: The Role of Psychic Distance

Jelena Cerar, Phillip C. Nell, Benoit Decreton

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Abstrakt

This paper investigates biases of senior managers in the financial resource allocation process. In particular, we analyze the role that perceived psychic distance plays in headquarters (HQ) managers’ decisions to fund entrepreneurial initiatives stemming from their subsidiaries. We used an experimental vignette approach with 109 managers from 35 countries. We find that psychic distance to a subsidiary country is negatively related to resource allocation of HQ managers only when proposals were submitted by expatriates. A potential explanation is that expatriates are perceived to lack relevant contextual knowledge for such initiatives to be valuable. This result is particularly striking because the payoff functions of our experimental design were clearly not dependent on these characteristics. We contribute to the literature on psychic distance, biases and resource allocation within multinational corporations (MNCs).
OriginalsprogEngelsk
TitelProceedings of the Eightieth Annual Meeting of the Academy of Management
RedaktørerGuclu Atinc
Antal sider1
UdgivelsesstedBriarcliff Manor, NY
ForlagAcademy of Management
Publikationsdato2020
Artikelnummer17435
DOI
StatusUdgivet - 2020
Udgivet eksterntJa
BegivenhedThe Academy of Management Annual Meeting 2020: Broadening Our Sight - Virtual
Varighed: 7 aug. 202011 aug. 2020
Konferencens nummer: 80
https://aom.org/events/annual-meeting/past-annual-meetings/2020-broadening-our-sight

Konference

KonferenceThe Academy of Management Annual Meeting 2020
Nummer80
LokationVirtual
Periode07/08/202011/08/2020
Internetadresse
NavnAcademy of Management Proceedings
ISSN2151-6561

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