{"status":"ok","message-type":"work","message-version":"1.0.0","message":{"indexed":{"date-parts":[[2026,10,3]],"date-time":"2026-10-03T22:03:22Z","timestamp":1791065002212,"version":"4.1.0"},"reference-count":42,"publisher":"Wiley","issue":"13","license":[{"start":{"date-parts":[[2011,10,27]],"date-time":"2011-10-27T00:00:00Z","timestamp":1319673600000},"content-version":"vor","delay-in-days":0,"URL":"http:\/\/onlinelibrary.wiley.com\/termsAndConditions#vor"}],"content-domain":{"domain":[],"crossmark-restriction":false},"short-container-title":["Strategic Management Journal"],"published-print":{"date-parts":[[2011,12]]},"abstract":"<jats:title>Abstract<\/jats:title>\n                  <jats:p>Previous research on capital investment has identified a tendency in multibusiness firms toward cross\u2010subsidization from well\u2010performing to poorly performing divisions, a phenomenon that has previously been attributed to principal\u2010agent conflicts between headquarters and divisions (Stein, ). In this paper, we argue that cross\u2010subsidization reflects a more general tendency toward even allocation over all divisions in multibusiness firms that is driven, at least in part, by the cognitive tendency to na\u00efvely diversify when making investment decisions (Benartzi and Thaler, ). We observe that this tendency also leads to partition dependence in which capital allocations vary systematically with the divisions and subdivisions into which the firm is organized or over which capital is allocated. Our first study uses archival data to show that firms' internal capital allocations are biased toward equality over the number of business units into which the firm is partitioned. Two further experimental studies of experienced managers examine whether this bias persists when participants are asked to allocate capital to various divisions of a hypothetical firm. This methodology eliminates the possibility of agency conflicts. Nevertheless, allocations varied systematically with the divisional and subdivisional structure of the firm and with a centralized or decentralized capital allocation manner. Copyright \u00a9 2011 John Wiley &amp; Sons, Ltd.<\/jats:p>","DOI":"10.1002\/smj.966","type":"journal-article","created":{"date-parts":[[2011,9,28]],"date-time":"2011-09-28T10:42:33Z","timestamp":1317206553000},"page":"1465-1483","source":"Crossref","is-referenced-by-count":122,"title":["Corporate capital allocation: a behavioral perspective"],"prefix":"10.1002","volume":"32","author":[{"given":"David","family":"Bardolet","sequence":"first","affiliation":[],"role":[{"vocabulary":"crossref","role":"author"}]},{"given":"Craig R.","family":"Fox","sequence":"additional","affiliation":[],"role":[{"vocabulary":"crossref","role":"author"}]},{"given":"Dan","family":"Lovallo","sequence":"additional","affiliation":[],"role":[{"vocabulary":"crossref","role":"author"}]}],"member":"311","published-online":{"date-parts":[[2011,10,27]]},"reference":[{"key":"e_1_2_7_2_1","doi-asserted-by":"publisher","DOI":"10.1257\/aer.91.1.79"},{"key":"e_1_2_7_3_1","doi-asserted-by":"publisher","DOI":"10.1016\/0304-405X(94)00798-6"},{"key":"e_1_2_7_4_1","doi-asserted-by":"publisher","DOI":"10.1093\/rfs\/hhg050"},{"key":"e_1_2_7_5_1","doi-asserted-by":"publisher","DOI":"10.1016\/j.jfineco.2005.07.002"},{"key":"e_1_2_7_6_1","doi-asserted-by":"publisher","DOI":"10.1016\/j.jfineco.2005.07.002"},{"key":"e_1_2_7_7_1","volume-title":"Managing the Resource Allocation Process","author":"Bower JL","year":"1970"},{"key":"e_1_2_7_8_1","doi-asserted-by":"publisher","DOI":"10.1287\/mksc.18.3.230"},{"key":"e_1_2_7_9_1","doi-asserted-by":"publisher","DOI":"10.1287\/mnsc.35.12.1504"},{"key":"e_1_2_7_10_1","doi-asserted-by":"publisher","DOI":"10.1287\/mnsc.1050.0409"},{"key":"e_1_2_7_11_1","doi-asserted-by":"publisher","DOI":"10.1037\/0096-3445.134.4.538"},{"key":"e_1_2_7_12_1","article-title":"How companies make good decisions: McKinsey Global Survey Results","author":"Garbuio M","year":"2009","journal-title":"McKinsey Quarterly"},{"key":"e_1_2_7_13_1","doi-asserted-by":"publisher","DOI":"10.1093\/oso\/9780199277445.001.0001"},{"key":"e_1_2_7_14_1","doi-asserted-by":"publisher","DOI":"10.1016\/S0304-405X(01)00044-7"},{"key":"e_1_2_7_15_1","doi-asserted-by":"publisher","DOI":"10.1111\/j.1540-6261.1996.tb04065.x"},{"issue":"3","key":"e_1_2_7_16_1","first-page":"259","article-title":"Capital budgeting and delegation","volume":"50","author":"Harris M","year":"1998","journal-title":"Journal of Financial Studies"},{"key":"e_1_2_7_17_1","first-page":"1","article-title":"Cognitive repairs: how organizational practice can compensate for individual shortcomings","volume":"20","author":"Heath C","year":"1998","journal-title":"Research in Organizational Behavior"},{"key":"e_1_2_7_18_1","doi-asserted-by":"publisher","DOI":"10.1037\/0003-066X.58.9.697"},{"key":"e_1_2_7_19_1","doi-asserted-by":"publisher","DOI":"10.1162\/003355397555163"},{"key":"e_1_2_7_20_1","doi-asserted-by":"publisher","DOI":"10.1111\/j.1540-6261.1997.tb03809.x"},{"key":"e_1_2_7_21_1","doi-asserted-by":"publisher","DOI":"10.1086\/261970"},{"key":"e_1_2_7_22_1","unstructured":"LangerT FoxCR.2011.Partition\u2010dependence unit\u2010dependence and procedure\u2010dependence in investment allocation: an experimental investigation. Unpublished manuscript University of M\u00fcnster Germany."},{"key":"e_1_2_7_23_1","doi-asserted-by":"publisher","DOI":"10.1037\/0033-2909.125.2.255"},{"key":"e_1_2_7_24_1","doi-asserted-by":"publisher","DOI":"10.1016\/0749-5978(86)90047-6"},{"key":"e_1_2_7_25_1","volume-title":"Psychological Issues in Distributive Justice,","author":"Messick DM","year":"1992"},{"key":"e_1_2_7_26_1","doi-asserted-by":"publisher","DOI":"10.1111\/j.1430-9134.1992.00009.x"},{"key":"e_1_2_7_27_1","doi-asserted-by":"publisher","DOI":"10.1093\/rfs\/hhp071"},{"key":"e_1_2_7_28_1","doi-asserted-by":"publisher","DOI":"10.1002\/smj.4250060305"},{"key":"e_1_2_7_29_1","doi-asserted-by":"publisher","DOI":"10.1016\/0927-5398(94)90007-8"},{"key":"e_1_2_7_30_1","doi-asserted-by":"publisher","DOI":"10.1002\/smj.4250140303"},{"key":"e_1_2_7_31_1","doi-asserted-by":"publisher","DOI":"10.1111\/0022-1082.00200"},{"key":"e_1_2_7_32_1","doi-asserted-by":"publisher","DOI":"10.1037\/1076-898X.1.1.34"},{"key":"e_1_2_7_33_1","volume-title":"Strategy, Structure, and Economic Performance","author":"Rumelt RP","year":"1974"},{"key":"e_1_2_7_34_1","doi-asserted-by":"publisher","DOI":"10.1007\/BF00055564"},{"key":"e_1_2_7_35_1","doi-asserted-by":"publisher","DOI":"10.1111\/0022-1082.00299"},{"key":"e_1_2_7_36_1","unstructured":"SonnemanU CamererCF FoxCR LangerT.2011.Psychological biases affect economic market prices. Unpublished manuscript University of M\u00fcnster Germany."},{"key":"e_1_2_7_37_1","doi-asserted-by":"publisher","DOI":"10.1037\/0022-3514.44.2.410"},{"key":"e_1_2_7_38_1","doi-asserted-by":"publisher","DOI":"10.1016\/S1574-0102(03)01006-9"},{"key":"e_1_2_7_39_1","series-title":"NBER working paper","volume-title":"Internal versus external capital markets","author":"Stein J","year":"1994"},{"key":"e_1_2_7_40_1","doi-asserted-by":"publisher","DOI":"10.1037\/0022-3514.73.3.437"},{"key":"e_1_2_7_41_1","doi-asserted-by":"publisher","DOI":"10.1037\/0022-3514.57.4.632"},{"key":"e_1_2_7_42_1","doi-asserted-by":"publisher","DOI":"10.1287\/mnsc.34.4.431"},{"key":"e_1_2_7_43_1","volume-title":"Influence and inefficiency in the internal capital market","author":"Wulf J","year":"2005"}],"container-title":["Strategic Management Journal"],"original-title":[],"language":"en","link":[{"URL":"https:\/\/api.wiley.com\/onlinelibrary\/tdm\/v1\/articles\/10.1002%2Fsmj.966","content-type":"unspecified","content-version":"vor","intended-application":"text-mining"},{"URL":"https:\/\/sms.onlinelibrary.wiley.com\/doi\/pdf\/10.1002\/smj.966","content-type":"unspecified","content-version":"vor","intended-application":"similarity-checking"}],"deposited":{"date-parts":[[2025,10,26]],"date-time":"2025-10-26T15:43:37Z","timestamp":1761493417000},"score":1,"resource":{"primary":{"URL":"https:\/\/sms.onlinelibrary.wiley.com\/doi\/10.1002\/smj.966"}},"subtitle":[],"short-title":[],"issued":{"date-parts":[[2011,10,27]]},"references-count":42,"journal-issue":{"issue":"13","published-print":{"date-parts":[[2011,12]]}},"alternative-id":["10.1002\/smj.966"],"URL":"https:\/\/doi.org\/10.1002\/smj.966","archive":["Portico"],"relation":{},"ISSN":["0143-2095","1097-0266"],"issn-type":[{"value":"0143-2095","type":"print"},{"value":"1097-0266","type":"electronic"}],"subject":[],"published":{"date-parts":[[2011,10,27]]}}}