Quotation Cerar, Jelena, Nell, Phillip C., Decreton, Benoit. 2020. Biases in Financial Resource Allocation to Subsidiary Projects: The Role of Psychic Distance. In Academy of Management Annual Meeting Proceedings, Hrsg. Academy of Management, 17435-17435. Canada: None.




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)."


Press 'enter' for creating the tag

Publication's profile

Status of publication Published
Affiliation WU
Type of publication Contribution to conference proceedings
Language English
Title Biases in Financial Resource Allocation to Subsidiary Projects: The Role of Psychic Distance
Title of whole publication Academy of Management Annual Meeting Proceedings
Editor Academy of Management
Page from 17435
Page to 17435
Location Canada
Year 2020
Open Access N


Cerar, Jelena (Details)
Nell, Phillip C. (Details)
Decreton, Benoit (Former researcher)
Department of Global Business and Trade DP (Details)
Competence Center for Emerging Markets and CEE WE (Details)
Institute for International Business IN (Details)
Institute for International Business (Nell) (Details)
Research areas (ÖSTAT Classification 'Statistik Austria')
2965 Knowledge management (Details)
5234 Administrative science (Details)
5307 Business and management economics (Details)
5324 Organizational research (Details)
5333 Business management (Details)
5915 Economic geography (Details)
Google Scholar: Search