Centralization versus Delegation in an Experimental Capital Budgeting Setting

In an experiment, we model two stylized facts about capital budgeting practice, budgetary slack creation and delegation of decision-making authority. In our setting, under centralization, headquarters announces a budget, the division manager gives a cost report, and headquarters decides on the project. Under delegation, headquarters allocates a budget to the manager, and the manager is authorized to make the investment decision. We argue that the ability of headquarters to commit to a budget moderates the effect of delegation, and we find evidence in favor of our argument as there is an interaction effect of delegation and commitment to budgets. The effects of delegation are particularly strong when budgets are non-binding as delegation serves as a substitute for commitment in this case. This leads to smaller expenditures and to a higher headquarters’ payoff under delegation than under centralization. In contrast, when headquarters can commit to the budget, the descriptive data are consistent with our conjectures about the effects of honesty preferences, but the effects are too small to be significant.

Virtual Reality as a Support Tool for Ergonomic-Style Convergence

The competitive industrial context compels companies to speed-up every new product design. In order to keep designing products that meet the needs of the end user, a human centered concurrent product design methodology has been proposed. Its setting up is complicated by the difficulties of collaboration between experts involved inthe design process. In order to ease this collaboration, we propose the use of virtual reality as an intermediate design representation in the form of light and specialized immersive convergence support applications. In this paper, we present the As Soon As Possible (ASAP) methodology making possible the development of these tools while ensuring their usefulness and usability. The relevance oft his approach is validated by an industrial use case through the design of an ergonomic-style convergence support tool.