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The purpose of this paper is to examine the extent to which user liaison behavior and outcome control influence the process performance of information technology (IT) projects and how the IT experience, behavior observability, and outcome measurability of user liaisons affect behavior and outcome control.

A research model that integrates the IT experience, behavior observability, outcome measurability, behavior and outcome control, and performance from the perspective of user liaisons is developed. Quantitative data are obtained from 63 completed IT projects. Partial least squares technique is used to evaluate the measurement model. Hypotheses are tested through hierarchical regression analysis.

User liaisons with high IT experience exhibit decreased behavior control but increased outcome control. The outcome control of user liaisons is effective in the process performance of IT projects, whereas their behavior control insignificantly affects performance. However, the behavior observability and outcome measurability of user liaisons strengthen the effectiveness of behavior and outcome control. The behavior and outcome control of user liaisons also vary across different industries and project types.

The results of this study highlight the joint effects of the IT experience, abilities, and control decisions of user liaisons. Although the outcome control of user liaisons is an appropriate control mechanism in IT projects in consideration of the strengths of these liaisons in business knowledge and their control expenditures, the behavior control of user liaisons may also be effective in process performance if these liaisons possess high levels of behavior observability and outcome measurability.

The purpose of this paper is to propose using agency theory for assessing the likelihood of quality fade in buyer‐supplier relationships and prescribing contractual mechanisms for reducing quality fade. In this paper, quality fade, an element of supply chain vulnerability, is defined as the unforeseen deterioration of agreed to or expected quality levels with respect to product and/or service requirements. The use of outcome‐based, behavior‐based, or mix contracts can be used to reduce the likelihood of quality fade and illustrate preferred scenarios for buyer and suppliers.

This paper proposes a conceptual model for using agency theory to explain and address a type of supply chain vulnerability called quality fade. A 2×2 matrix is proposed that contrasts outcome measurability with outcome uncertainty to illustrate buyer and supplier vulnerability and to suggest contractual mechanisms that can be used to mitigate vulnerability for both parties.

A typology of governance mechanisms is presented and described with the use of a manufacturer third‐party logistics provider example to illustrate the theoretical framework. Four different scenarios are discussed and described. Contractual mechanisms are provided to mitigate vulnerabilities and reduce quality fade.

Quality fade is a term that has not been described extensively in academic literature but is a term that is relevant in the broader discussion of supply chain vulnerability. Given that quality fade is a behavioral, as opposed to process oriented, approach, it requires a theoretical framework rooted in behavioral considerations. Agency theory is an appropriate framework for studying governance options.

Project managers rely on control strategies to deliver excellent outputs. However, little is known about how clients' project managers select control strategies in projects which are knowledge-intensive and have intangible outputs. This study aims to examine how clients' project managers select project control strategies in professional service projects.

A questionnaire survey of 360 architectural and engineering (A/E) design projects was adopted. Data were analyzed through the hierarchical regression.

Both clients' knowledge of measuring outcomes and process uncertainty give rise to their project managers setting up behavior and social controls. Level of process uncertainty positively moderates the impact of client's knowledge of measuring outcomes on outcome control.

This study mainly examined the client's knowledge of measuring outcomes and process uncertainties. Future studies could be conducted to expand the scope by including other contextual factors, for instance market and regulatory factors.

From the client side, if they want to simultaneously adopt outcome, behavior and social controls, they would need to increase their knowledge of measuring outcomes by adopting established assessment tools or appointing a third party to assist in design outcome evaluation.

This study contributes to the body of knowledge by showing that the level of intangibility of project outputs influences the types of control system which project managers adopt.

The performance of service supply chains in terms of service levels and cost efficiency depends not only on the effort of service providers but also on the inputs of sub-contractors and the customer. In this sense, performance-based contracting (PBC) entails increased financial risk for providers. Allocating and managing risk through contractual relationships along the service supply chain is a critical issue, and yet there is scant empirical evidence regarding what factors influence, and how, provider willingness to bear PBC-induced risk. This paper aims to address this gap.

The paper draws on agency theory and two cases of logistics service supply chains, in the food retail and automotive industries respectively, to identify key influencing factors. Data were collected through semi-structured interviews with 30 managers of providers and sub-contractors and review of 35 documents, notably contracts and target letters.

Four influencing factors were found: performance attributability within the service supply chain; relational governance in service supply chain relationships; provider risk and reward balancing; and provider ability to transfer risk to sub-contractors. The propositions developed address how these factors influence provider willingness to bear PBC-induced risk.

The factors identified are external to the provider mindset and refer to the management of contractual relationships and service delivery interactions along the service supply chain. The paper contributes to agency theory by stressing the risk allocation implications of bi-directional principal-agent relations in service supply chains.

The study suggests ways in which providers can increase their capacity to bear and manage financial risk related to PBC design.

The paper identifies factors that influence provider willingness to bear financial risk induced by PBC in service supply chains.

The purpose of this paper is two‐fold: to examine two approaches buying firms can utilize to manage supplier quality; and to investigate the ways in which factors inherent in supply chain relationships affect the use of these approaches in supply chain quality management.

Drawing on agency theory, this paper proposes a conceptual framework that relates the underlying factors of a supply chain relationship to the use of quality management approaches. Two types of approaches, outcome‐based and behavior‐based, are discussed in terms of their focuses, purposes, and methods. Propositions are developed about the effects of these factors on the decisions buying firms make about supply chain quality management.

This study suggests that rather than relying on one generic supply chain quality management approach for all suppliers, firms need to choose different management mechanisms for different suppliers based on the salient attributes of individual suppliers and their relationships with the buyers. Five types of agency‐based factors are discussed. These factors – information asymmetry, goal conflict, risk aversion of suppliers, length of relationship, and task characteristics – can be expected to influence how firms design and manage their quality management systems for supply chains.

A better understanding of the distinction between outcome‐based and behavior‐based approaches helps managers evaluate which approach is best suited to managing the quality of their suppliers. The propositions pertaining to the key factors provide managers with some guidelines about the critical conditions they should consider when building their firm's supply chain quality management system.

Having an effective quality management system of a supply chain is essential for maintaining a smooth supply of high quality products and services to customers. However, little is known about how a firm should design this supply chain quality management system. The paper addresses this gap by applying agency theory to examine the two essential approaches to managing supplier quality and to explore the critical factors that should be taken into account when considering the appropriate approaches for different suppliers.

This paper aims to examine the extent to which exporter difficulties in evaluating foreign sales agent performance affect export performance, either directly or as mediated by opportunism.

In developing the hypotheses, the study integrates transaction cost theory and principal-agent theory. The proposed relationships between the constructs (performance ambiguity, opportunism, and export performance) are examined for a multi-industry sample of Norwegian exporters in their dealings with foreign sales agents. A survey of 410 qualified key informants yielded 101 usable questionnaires – a response rate of 24.6%. Structural equation modeling is used for data analysis and hypothesis testing.

The analysis finds support for the hypothesis that sales agent performance ambiguity relates negatively to export performance. While performance ambiguity is positively related to sales agent opportunistic behavior, opportunism does not significantly influence export performance. It seems that the adaptation costs created by the evaluation problem are of greater importance in reducing export performance than the costs created by opportunistic behavior.

In focusing on the core dimensions of sales agent performance in foreign markets, other factors influencing export performance are not included. The fact that small Norwegian firms dominate the sample, further limits application and generalization of the findings. Hence, results should be interpreted with caution and the study considered as investigative. Nevertheless, the results indicate to export managers and theory potentially deteriorating dimensions in the relationship between exporter and foreign independent sales agent.

To the best of the authors’ knowledge, this study is the first to examine how performance ambiguity and opportunistic behavior among foreign sales agents affect export performance. By concentrating on basic deteriorating dimensions, the study adds to the few that focus on inhibiting drivers of exporter – foreign–sales–agent relationships.

Despite the increasing use of the agency perspective in studies of headquarters-subsidiaries relations in the multinational corporation (MNC), opponents fundamentally question its utility. In an attempt to contribute to this debate, we evaluate prior studies and develop considerations for future research. Our review of extant studies of headquarters-subsidiaries relations that make (explicit) use of the agency perspective reveals two significant shortcomings. First, we identify a need to validate the underlying assumptions when using the agency perspective in studies of headquarters-subsidiaries relations. Second, we detect a need to better account for the complex nature of headquarters-subsidiary relations in the MNC. A focus on these two areas can improve the use of the agency perspective and, ultimately, help resolve the contentious debate over the utility of the agency perspective.

The aim of this paper is to understand the antecedents and effects of performance attribution challenges arising in the provision of business-to-business (B2B) services in supply chains.

The study draws on three in-depth case studies of logistics service providers (LSPs) offering supply chain solutions to their clients in Sweden. The analysis of performance attribution challenges and their antecedents and effects is based on 38 semi-structured interviews and review of 43 documents, including contracts and performance monitoring records.

Three key antecedents of performance attribution challenges are stressed. Two of these, the inseparability and contestability of service inputs, are closely related to the notion of service co-production. The third antecedent is the limited provider capability in performance data collection and analysis. Performance attribution challenges may result in provider aversion to performance-related risk and have a harmful effect on client relationships, for example, in terms of provider perceptions of opportunism and unfair allocation of gains. These effects can be mitigated through contracting, interventions in performance measurement system design and deployment of relational mechanisms.

The paper extends the service management literature that emphasises on service co-production by suggesting that inputs of the client firm and its supply chain partners may not only vary in quality but also can be inseparable from provider inputs and highly contestable. It also empirically demonstrates how performance attribution challenges and their antecedents and effects manifest themselves in B2B service provision, as opposed to supply chain settings where the main user of logistics services is the consumer.

LSP managers should contract for performance based on high-quality and incontestable external inputs they rely upon. Contractual specifications (performance indicators and related incentives) should explicate and consider the inputs required by clients and their supply chain partners to minimise their contestability.

The study proposes an empirically based framework of the antecedents and effects of performance attribution challenges, an issue that has received scant attention in logistics outsourcing research and the business services literature more broadly.

This study aims to explore the controllability of risk culture, identify and categorize risk culture controls used in firms and explore how industry and ownership structure affect the use of different risk culture controls.

This explorative study is based on 32 semi-structured interviews with 37 participants who are heads of risk management or top managers in German firms from different industries with different ownership structures.

Interviewees perceive risk culture to be largely controllable. The authors identify a wide spectrum of risk culture controls, ranging from leadership and motivational controls to risk competence controls; in each category, the authors find value-, symbol- and clan-based controls. Leadership controls were most extensively discussed by the interviewees. The use of risk culture controls varied based on industry and ownership structure.

Due to the explorative character of the approach, the authors cannot claim representativeness for the results. The study is limited to one point in time and to a German sample. The findings imply that companies should select risk culture controls according to their own context and that implementation requires support by the top and middle management.

The authors respond to the call for more organizational studies on risk management that consider cultural paradigms (Arena et al., 2010; Mikes, 2011; Power, 2009). The study systematically identifies risk culture controls used in corporate practice and categorizes them. It provides tentative evidence of the relevance of context-specific factors for the use of risk culture controls.

Digital solutions (DS) that build on recurring revenue models (RRMs) offer new opportunities to continuously create and capture superior value. However, many firms fail to engage their sales force in digital solution selling (DS selling), leading to agency problems that receive little attention in literature. This study aims to examine the drivers of agency problems that surface in the transition toward DS selling and the sales control systems that resolve these problems.

The authors conducted a qualitative, inductive study. Data were collected from interviews with 72 marketing and sales managers representing 53 industrial firms transitioning toward DS selling.

DS selling is subject to adverse selection and moral hazard caused by motivation-related, opportunity-related and ability-related drivers. Input, capability, activity and outcome controls – detailed in this study – can resolve these agency problems.

The limitations of this study’s methodology and scope suggest several directions for future research. Methodology-wise, the authors mainly relied on cross-sectional interview data from informants in Central and Northern Europe. Scope-wise, more research is needed on the capabilities, processes and steering instruments supporting DS sales. Finally, only now do the authors begin to understand which compensation plans motivate DS selling.

The controls identified in this study help managers to steer their sales force in DS sales.

To the best of the authors’ knowledge, this study is the first to investigate DS sales control systems. Thereby, the authors enhance prior understandings of solution selling, agency problems and sales control systems.