Resource Allocation in Divisionalized Groups : A Study of Investment Manuals and Corporate Means of Control

How do corporate management in divisionalized groups control the direction of investments? There are many case-studies and postal surveys of capital budgeting procedures. This study represents a different approach, being founded on analyses of investment manuals and interviews with corporate managers of Swedish-based groups. Comparisons are made with UK and US studies throughout the book. The book shows how investment requests are handled and the means of control which corporate managers deem important. The book also analyses the content of the investment manual, the determination of cash flows, project evaluation techniques, the treatment of inflation and taxes, and ex-post review. Investment decisions are more centralized in certain groups. The book explains why, analyses whether resource allocation systems can cause short-term practice, past and future developments of the resource allocation system; it also contains a fictitous investment manual. Contents: Introduction; The firm and its investments; Administrative routines; The investment manual; Cash flow determination practice; Profitability criteria; A few issues in capital budgeting; Resource allocation and organizational structure; Requirements and trade-offs between investments; Resource allocation systems in change, Appendice