Hierarchical Decomposition vs. Dynamic Capability Bundling: A Comparative Assessment of Resource Allocation Architectures Under Volatility-Induced Strategic Drift

Abstract

This study examines two dominant paradigms in corporate resource allocation—hierarchical decomposition (HD) and dynamic capability bundling (DCB)—under conditions of volatility-induced strategic drift in multinational enterprises. Drawing on a mixed-methods design integrating longitudinal panel data from 214 firms across six industries (2018–2023) with executive-level semi-structured interviews, the research empirically evaluates each paradigm's adaptive fidelity, rent-generation efficiency, and organizational resilience outcomes. Findings indicate that DCB architectures consistently outperform HD models in high-turbulence environments, whereas HD retains superior cost-governance advantages in stable oligopolistic contexts. Moderation analyses reveal that managerial cognition breadth and absorptive capacity significantly amplify DCB returns. These results contribute to the resource-based view by delineating boundary conditions under which capability orchestration supersedes hierarchical control as the dominant value-creation logic.