Resource allocation in a few industries : Determinants and trends

• When the major corporations divisionalised their organisation after the Second World War, they devised a performance measurement system to monitor the development of their business units, and a capital budgeting system to control the direction of investments. The appraisal of investments was decentralised and capital budgeting became a bottom-up process, standardised through written routines and supervised via a pre-approval control system. Since then, investments in training, R&D, marketing, and information technology have come to comprise a steadily increasing share of total investments. In consequence thereof companies have become flatter, and knowledge-intensive companies, project-based. The importance of the capital budgeting process has declined; indeed it rarely exists in professional service groups. Notwithstanding, the industry does not invest less but concentrates on intangible types of investments. The purpose of this article is to describe and identify the factors which dictate the design of the resource allocation system in a few industries, and thereby perceive the direction in which the development is heading. The analysis identifies five factors which determine the design of the resource allocation system, and shows how this affects the resource allocation system in six industries. It also discusses different means of control and the future trends, and explains why the capital budgeting system becomes less important as industry becomes more knowledge-intensive.

Subject headings

SAMHÄLLSVETENSKAP  -- Ekonomi och näringsliv (hsv//swe)

SOCIAL SCIENCES  -- Economics and Business (hsv//eng)

Keyword

industriell ekonomi och organisation

Industrial Economics and Organisations

Publication and Content Type

ref (subject category)

art (subject category)