This dissertation proposes a practical, research-based theory about how colleges and universities allocate resources among budgetary units. The study uses a modified grounded theory methodology to collect and analyze data from six varied institutions in a two-phase research design. Phase I generated the initial theory from interviews with 26 central administrators and from a review of institutional documents and relevant literature. In Phase II, the theory was refined and provisionally tested through analyses of questionnaire responses from budgetary unit heads and central administrators. Quantitative analyses are bolstered by qualitative analyses of interviews and documents. The proposed theory has five key concepts: (1) Centrality--the position of a unit on a continuum from core to peripheral in relation to organizational purpose; (2) Resource Allocations--the relative share of internal organizational resources allocated to a unit, especially budgetary resources; (3) Environmental Power--the relative ability of a unit to tap the outside environment for resources needed by the organization; (4) Institutional Power--the strength of a unit's internal roots in the organization; and (5) Resource Allocation Strategies--strategies used by budgetary unit heads and/or central administrators, particularly budgetary strategies. Eights propositions, which describe relationships among these concepts, are drawn from the study. A major finding is that the combination of environmental power and institutional power explain greater budget allocation variance than either power variable alone. The variance accounted for increases further when budgetary strategies are added. Unit centrality affects the aspects of environmental power and the types of budgetary strategy that increase budget allocations. Core units gain when they bring in environmental resources related to their own goals and when they focus on unit needs, most likely because their goals are central to organizational purpose. In contrast, peripheral units gain budget resources when they contribute to the total organization and are able to bring in (at least in a troubled economy) financial resources from the outside environment. The proposed theory is applied to examine those unit types most frequently nominated as gaining or losing across the six institutions and to analyze budget reallocation experiences. Suggestions for further development and testing of the theory are offered.Ph.D.EducationHigher educationUniversity of Michigan, Horace H. Rackham School of Graduate Studieshttp://deepblue.lib.umich.edu/bitstream/2027.42/127643/2/8324194.pd