Leader self-efficacy and resource allocation decisions

This study examined the extent to which small business leaders' self-perceived strengths (self efficacy) influence their resource allocation decisions. Small businesses are typically resource constrained and more reliant on the leader as sole decision maker, making an understanding of decision factors important. The question examined is whether a small business leader's self perceived business strength will influence the decision to invest people and dollars in that particular support function of the business. The relationship between self-efficacy and resource allocation in small businesses that support the federal government is examined using the resource-based view (RBV) of the firm as an interpretive lens. Firm overhead resources allocated served as indicators of resource allocation decisions. Analysis of responses from 577 small businesses suggest that knowing the leader's perceived area of self-efficacy improves the ability to predict how organizational resources will be allocated.