Fading Corporate Survival Prospects: Impact of Co-selection Bias in Resource Allocation on Strategic Intent

Our field study of new business development in a German-based global pharmaceutical company reveals that the emergence of co-selection bias in project-level state-gate resource allocation engendered a corporate-level innovation portfolio imbalance. We show how the corporate portfolio imbalance resulted from incoherent managerial activities in the multilevel resource allocation process (RAP) decision context and how this caused fizzling out of the proactively established incipient strategic context of the favored-for-growth business unit. Moreover, we identify strategic RAP exploitation challenges that explain why sequential exploitation capability and exploitation drive deficits caused an exploitation trap that limited strategic discretion and stymied top management strategic intent to maintain the company’s independence. Our integrated frameworks augment strategic management theory of corporate RAP and offer guidance for future research.