Article Abstract
Research on the behavioral theory of the firm has established that the profitability goal triggers various firm actions, but it has yet to thoroughly explore which other goals may gain prominence in directing firm resources if the profitability goal has been achieved. We identify shareholder satisfaction and societal benefit as two additional organizational goals and predict that when firms have achieved their profitability aspirations, the financial resources allocated to pursue these goals depend on the dominance of coalitions supporting or opposing them. Drawing on the coalition theory within the behavioral theory of the firm, we theorize that the prioritization and pursuit of a goal depend on the relative power of its supporting coalition within a firm’s governance body, including top decision-makers like CEOs and board members. By examining 2071 Chinese listed firms, we find that the relative strength of the shareholder-value coalition (supporting shareholder satisfaction) and the state-endorsement coalition (supporting societal benefit) affects firms’ resource allocation toward dividend payments and corporate philanthropy in distinct ways.
Journal of Business Ethics, May 2025
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Boardroom Battles: How Corporate Coalitions Influence Firms’ Resource Allocation
About the researcher
Helen Hu is Professor of Strategic Management in the Department of Management and Marketing, and she is also the Director of the Centre for Asian Business and Economics (CABE) at the University of Melbourne. Helen’s research interests are corporate governance with focuses on board of directors, CSR, ESG, strategic leadership, innovation, and internationalization of Asian firms. Her research has been published in top-tier management journals, including Academy of Management Journal, Entrepreneurship Theory and Practice, Journal of International Business Studies, Journal of Management, Journal of Management Studies, and Strategic Management Journal.
Helen has received a variety of awards internationally, and she is a recipient of both the Deans' Prize for Exceptional Distinction in Research and Deans' Prize for Exceptional Distinction in Research Training (PhD Supervision) at the University. She is also a regular commentator on Sky News, SBS and China Radio International on issues relating to business in China and Asia.