One of the most common mistakes that business leaders make in resource allocation is that senior managers have to cope with their own emotions to deal with challenging situations; they also have to pay attention to the emotions of other stakeholders such as employees and investors to maintain or gain these stakeholders’ support (Huy and Zott, 2019). Other common mistakes business leaders make in resource allocation include not aligning resources with strategic priorities (Moses and Kabeyi, 2019), failing to clearly define resource needs (Moses and Kabeyi, 2019), over-allocating resources to low-priority projects (Grabner and Moers, 2021), and failing to adapt to changing business needs (Grant et al., 2019). Unclear resource allocation among employees can impact their productivity and motivation whereas human capital resource management is only important to the extent it is related to performance behavior and outcomes that contribute to competitive advantage of the firm (Ployhart, 2021).
A firm’s ability to adapt to changes in the external environment through integration, reconfiguration, renovation, and allocation of its resources, skills, and capabilities promotes gaining and maintaining competitive advantage (Medeiros et al., 2020). The most detrimental mistakes are those that lead to significant under- or over-allocation can impact profitability, and can be avoided by implementing a data-driven approach (Grabner and Moers, 2021). Organizations with an entrepreneurial attitude create value and achieve competitive advantage by integrating resources in a creative way to take advantage of opportunities in the environment, which frequently results in new enterprises, goods, services, processes, and technology (Baker and Singh, 2019).
Baker, J. & Singh, H. (2019). The roots of misalignment: Insights on strategy implementation from a system dynamics perspective. Journal of Strategic Information Systems, 28(4). doi:10.1016/j.jsis.2019.101576
Grabner, I., & Moers, F. (2021). Determinants and Consequences of Budget Reallocations*. Contemporary Accounting Research, 38 (3), 1782–1808. doi-org.lopes.idm.oclc.org/10.1111/1911-3846.12681
Grant, K., White, J., Martin, J., & Haines, T. (2019). The costs of risk and fear: a qualitative study of risk conceptualisations in allied health resource allocation decision-making. Health, Risk & Society, 21(7/8), 373–389. doi-org.lopes.idm.oclc.org/10.1080/13698575.2019.1667962
Huy, Q., & Zott, C. (2019). Exploring the affective underpinnings of dynamic managerial capabilities: how managers’ emotion regulation behaviors mobilize resources for their firms. Strategic Management Journal, 40(1), 28–54. doi-org.lopes.idm.oclc.org/10.1002/smj.2971
