Strategic heterogeneity: the impact of stakeholders on local government resource allocation in China

Abstract

Resource allocation is crucial for local governments to effectively achieve their policy objectives. However, there is a gap in studies regarding how local government’s diverse resources are strategically allocated. This study contributes an additional explanation for local government resource allocation in the context of the ‘Targeted Poverty Alleviation’ in China. Stakeholder theory provides a comprehensive view of the influences of central and local governments. Evidence was derived from a panel dataset for the 2014–2020 period, along with 30 semi-structured interviews. Our findings indicate stakeholders exert heterogeneous influences on local government resource allocation: the central government dominantly impacts fiscal resource allocation, whereas local governments demonstrate significant autonomy in allocating both fiscal and human resources, showing significant regional variation. These findings challenge the conventional assumption that the central government acts as a principal while local governments function as agents making solitary decisions. This article offers valuable insights into public management theory by highlighting stakeholders’ diverse roles in shaping local government resource allocation decisions.