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Principal agent theory has its roots in the economic theory of the firm, decision theory, sociology, organizational theory, and more recently political science. However, there are only limited applications of the theory in the arena of public budgeting. This paper considers principal agent theory as an alternative method for explaining budgetary outcomes through an examination of interactive relationships not adequately captured by traditional hierarchical-based models of public budgeting. Because implicit and explicit contractual relationships pervade the entire budget making process, principal agent theory can make a major contribution toward developing more inclusive and accurate models of most stages of public budgeting.

The paper aims to explain how agency theory can be used to inform our understanding of the dynamics surrounding supply chain behaviours and relationships.

A structured review of the literature using a three‐stage refinement process is used. The articles were sourced through online databases and keyword classifications, such as “agency theory”, “principal‐agent relationships” and “supply chain management”. The search initially identified over 86 articles. After further screening these were reduced to 19 for final assessment and comparison.

Despite agency theory's prevailing descriptive and predictive qualities there is scarcity in its application to the SCM discipline. The authors posit that agency theory provides valuable insights for relationship engineering within supply chains where social, political, legal and behavioural dynamics dominate.

It is a critical task for managers to understand and mitigate abnormal behaviours across the supply chain. Agency theory serves this need by providing them with a useful tool to respond to transaction cost dilemmas through contractual and non‐contractual remedies.

This is one of the first studies that examines the current state of agency theory application in the SCM literature and suggests potential avenues for future research.

Agency theory suggests that divergences will occur when a principal, e.g. client, and agent e.g. a project manager, interests are different in the execution of a project. The purpose of this paper is to explore if the agency theory can explain the subtleties integral to the behaviours and relationships between players delivering a public-private-partnership (PPP) in the context of an international development (ID) project. The intra-/interpersonal dynamics include governments, non-governmental organisations (NGOs) and private commercial service providers. The authors develop a conceptual framework and provide evidence from a case study of the testing of a Road Safety Toolkit in Kenya to explore several propositions.

Extant literature identified application of the agency theory, and the development of a conceptual framework. A case study describing an ID project was used to validate the propositions prior to the expansion of a research instrument for data collection in the field.

Through the lens of the agency theory and the limitations imposed by exploring a series of propositions, several insightful conclusions have been derived from the case. ID projects have particular nuisances that make them unique when compared to the majority of commercial applications. An added dimension and level of complexity is a consequence of the PPP incorporating government, NGOs and private corporations. The case exemplified the need for PPP ID projects to build on partner networks to influence and disseminate outcomes. Some agency problems were far less prominent than would normally be seen in a commercial project.

The methodologies presented in this paper need to be adapted and practiced in different kinds of ID projects in order to get confirmatory analytical results. The limitations imposed by the use of the single case, whilst drawing insightful conclusions, would necessitate greater testing in the field.

Although the problems of the agency theory are well researched in the operations management literature, there is limited application to ID projects and no previous research within the context of a PPP. Therefore, this work is important for greater understanding of the specific issues associated with project delivery of an ID.

Conflicting goals between principals and agents are common for organisations, which in turn affect inter-relationships on an international footing. The agency theory has had little attention in the project management field, yet is fundamental to relationships and communication.

There has been little research that explores the agency theory in the context of a PPP involving governments, NGOs and private commercial service providers, executed as an ID project. This work, therefore, exhibits new and novel findings.

Contemporary supply chain relationships inherently rely on delegation of work between organizations and, thus, are subject to agency problems for which a wide range of governance mechanisms exist. This review of agency theory (AT), across four distinct fields, explains the connection between governance mechanisms and supply chain relationship types.

The study uses a systematic literature review (SLR) of articles using AT in a supply chain context from the operations and supply chain management, general management, marketing, and economics fields.

The authors categorize the governance mechanisms identified to create a typology of agency relationships in supply chains.

The developed typology provides parsimonious theory on different forms of supply chain agency relationships and takes a step towards a “supply chain-oriented agency theory” explaining and predicting relationship types and governance in supply chains. Furthermore, a future research agenda calls for more accurate measuring of agency costs, to examine residual gains alongside residual losses, to take a dual-sided perspective of agency relations and to adopt AT to examine more complex supply networks.

The review provides a menu of governance mechanisms and describes situations under which these mechanisms could be deployed to guide managers when developing their supply chain relationships.

The first review to combine and elaborate views from four major disciplines using AT as a lens to supply chain relationships. Expanding the traditional set of governance mechanisms provides academics and practitioners with a bigger “menu” of options to consider.

Lays out a framework for analysing ethics in organizations. Relying on methodological individualism, introduces five building blocks for the framework: self‐interest, individual rationality, sequential rationality, incentive compatibility, and reputation. Uncritical use of the self‐interest model may induce framing effects, blinding less cautious users to important ethical dimensions. Illustrates the richness and “ethical flavour” of an appropriately considered self‐interest model through focusing one of the individual agent’s real interests in a broad sense, through the use of the time factor in the building blocks, and through suggesting how the individual agent can interpret the value systems in her surroundings.

The purpose of this paper is to explore the range of benchmarking applications that can be used in a principal‐agent relationship setting often found in the public sector.

Collection and critical analysis of secondary data from relevant publications addressing applications of benchmarking in the public sector. Extraction of knowledge from several research projects where the authors have been involved in studying and developing benchmarking approaches for different public sector organizations. Induction of new theory about the use of benchmarking in principal‐agent relationships in the public sector, grounded through empirical evidence from case studies.

A number of new approaches to benchmarking in the public sector have been identified and described, some of which are already used in real life cases, others which need further development before being implemented. All of these can introduce benefits to both principals and agents involved in such benchmarking efforts.

The paper explores benchmarking applications that are almost exclusively relevant in a public sector setting, although some of them might be adapted to certain private sector conditions.

Whereas most work on benchmarking in the public sector tend to view only improvement‐oriented, voluntary benchmarking as relevant and useful, this paper demonstrates how many different imposed benchmarking schemes with other purposes can be useful.

Cooperative purchasing is beginning to receive renewed attention by scholars and practitioners alike in both the private and public sectors. Generally, cooperative purchasing arrangements have been reported to reduce costs, expedite transactions, and increase product knowledge. In the public sector, cooperative purchasing has been reported to reduce political risk, minimize “red-tape,” and, in some cases, avoid all reported social equity goals that are reported to increase costs. In this article, we contend that the lack of conceptual clarity has marred the literature on cooperative public sector purchasing, and as a result public sector purchasers have no theoretical guidelines to help them decide upon this purchasing mechanism. Therefore, the purpose of this article is to use agency theory to analyze, define, and establish a conceptual framework of cooperative public purchasing to help guide academics and practicing public sector purchasing professionals.

The purpose of the paper is to investigate the inter‐ and intra‐organisational relationships in the commissioning of secondary care by primary care trusts in England, using a principal‐agent framework.

The methodology is a qualitative study of three case studies. A total of 13 commissioning‐related meetings were observed. In total, 21 managers and six consultant surgeons were interviewed.

There are a number of different levels at which contractual and managerial control take place. Different strengths of control at one level can affect willingness to comply with agreements at other levels. Agreements at one level do not necessarily result in appropriate or expected action at another.

The system for commissioning in the National Health Service (NHS) has changed with the introduction of payment by results and practice‐based commissioning. However, the dynamics of the inter‐ and intra‐organisational relationships studied remain.

Incentives within organisations are as important as those between organisations. Within a chain of principal‐agent relations, it is important that a strong link in the chain does not result in the exploitation of weaknesses in other links. If government targets and frameworks are to be met through commissioning, it may be advantageous to concentrate efforts on developing incentives that align clinician with NHS trust objectives as well as NHS trust with primary care trust (PCT) and government objectives.

This paper is based on original empirical work. It uses a principal‐agent framework to understand the relationships between PCTs and NHS trusts and highlights the importance of internal NHS trust governance systems in the fulfilment of commissioning agreements.

In Sweden there is an ongoing debate on ways to enhance accountability and transparency in order to avoid future scandals both in private companies and local government. Until now the debate has had clear political overtones, and there are no generally accepted methods for analysis of this issue. The purpose of the article is to survey and analyze the chain of accountability to be reviewed by the auditors and through the use of principal‐agent (PA) theory to identify the problems that may arise in holding persons accountable.

The paper shows how PA theory can be used to structure and analyse the intricate situation in Swedish local government. The model is particularly suitable in complex systems of accountability. Therefore, the paper explores two cases where the outcomes were discharge from liability. Based on the two case studies, the paper extends the empirical investigation to a list of 63 qualified audit reports in local government for 2002 and 2003.

PA theory facilitated the understanding and structuring of the complex accountability situation and helped to identify important weaknesses in the system. The analysis underscored that neither better accounting nor better auditing systems alone will resolve the dilemma in improving accountability. The link between auditors and elected officials and civil servants needs to be investigated and clarified. Among other things, this means that the focus of today's debate should shift toward the lack of clear responsibilities within local governments.

This paper explores an area of research where few studies have previously been conducted – therefore, the paper is to some extent exploratory. In the future the number of empirical examples could be increased, and the different problems in the system of accountability in local government could be discussed in more detail.

This research paper is based on an empirical investigation – as far as we know no such study has previously been performed in Sweden The principle of public access to information in Sweden provides unique opportunities for openly studying the work of auditors in the system.

The research shows that PA theory may be used to structure complex issues of accountability. In addition, the study recommends a new focus for the debate on accountability.

This paper attempts to study the impact of changing incentive strategies on enterprises' energy saving effort level and to construct an effective principal‐agent mechanism to achieve Pareto improvement of energy‐saving control.

Starting from the benefit relations between government and enterprises as well as their game strategies in energy conservation management, the impact of changing incentive strategies on enterprises' energy saving effort level and the asymmetric information situation of the players are studied taking into consideration the angle of strategies evolving in local government. Also, an effective principal‐agent mechanism to achieve Pareto improvement of energy‐saving control is constructed.

The results are convincing: interests of both the principal and agent had consistency under the principal‐agent mechanism, and the principal‐agent model was a mechanism with rich efficiency that could substantially arouse the enthusiasm of enterprises in energy saving. The comprehensive supervision of local governments over enterprises could effectually eliminate ill effects on energy‐saving management caused by information asymmetry under certain circumstances.

It is good for locating the balance of interest of game players by building a government energy saving mechanism based on principal‐agent theory. Through solving a game stable strategy, it is beneficial to seize a key point of regulation and control policies.

The paper succeeds in analyzing decision behaviours of government and enterprises through the basic idea of cooperative game theory so as to make actions of enterprises at all levels agree to government determined solving of energy issues.