Inside the resource allocation process

Abstract

The world is currently a rushed environment; things change faster than ever. Technological innovations impress us again every year. Many innovations that enhance society are the result of innovating organisations. These organisations invest in innovative solutions, for their own good, but eventually also for the greater good. Allocating resources to these investments is therefor an important aspect of innovation. This thesis has been conducted to gain more insights in the resource allocation process, the process which determines the investments executed in organisations. The resource allocation process model as defined by Bower and Gilbert helps managers and executives to create awareness about allocating their valuable, finite resources. Bower and Gilbert tried to create a simple model without a lot of predefined mechanisms, but their model lacks detail and therefore the inner mechanisms of each sub-process of the resource allocation process is a gap in the literature, there are some scholars who describe specific cases in detail, but there is no generic interpretation. This research gap has been the foundation of this research and has led to the development of an agent-based model of the resource allocation process. Within the development of the simulation model all core processes had to be defined in detail. And since the objective is to develop a generic simulation model, the core of the sub-processes and inner mechanisms had to be defined. One of the most important mechanisms is the way an organisation can influence their own resource allocation process. This happens through structural and strategic context determination. With these two types of context determination, organisations can influence their allocation process in order to either execute more induced strategic action (action which corresponds with the defined corporate strategy) or more autonomous strategic action (action which lies outside the defined corporate strategy). Which type of strategic action is necessary depends on the specific situation of an organisation. With the knowledge of these two kinds of determination the sub-processes and their mechanisms had to be defined. Definition of these sub-processes happened through literature research. There are two topics within these processes: Definition and Selection. The basic principles of these two topics had to be known in order to be able to formulate a possible generic detailed definition of the sub-processes. This resulted in a conceptual model which, through formalisation could be implemented. Before implementing an agent-based model the detailed definition had to be complete in order for the model to function. The implemented model has been tested on known phenomena derived from literature. The model is able to reproduce the expected strategic action under specific organisational context settings. Within a dynamic environment the model reproduces expectations for the contextual settings. And the mechanism of an increasing opportunity space can be reproduced. The model is unable to fully capture the effect of communication and divergence on the autonomous strategic actions. These results support concluding that the developed agent-based model is able to simulate the resource allocation process of a hypothetical organisation. With the model, the boundaries of the resource allocation process can be explored on proportion of control versus organisational learning. The model is also be able to analyse the effect of organisational changes on the strategic actions. Currently the model as implemented is unable to simulate a real-world case, but the potential for use within organisations and further research is certainly there.