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Principal-agency theory was adapted from business and economics to explain the behavior of various government actors. Yet the idea of an agent and a principal is only depicted in a limited fashion when discussed in light of the realm of business and economics. Legal studies has grappled with the idea of agency well before political science or economics. I lay out the basic principles of both agency law and Congressional principal-agent theory. I then establish the groundwork for drawing important connections between agency law and principal-agency theory. I also analyze and attempt to ameliorate differences between these two theoretical approaches.

The purpose of this paper is to provide a critical historical analysis of the business (mis)behaviors and influencing factors that discourage enduring cooperation between principals and agents, to introduce strategies that embrace the social values, economic motivation and institutional designs historically adopted to curtail dishonest acts in international business and to inform an improved principal–agent theory that reflects principal–agent reciprocity as shaped by social, political, cultural, economic, strategic and ideological forces

The critical historical research method is used to analyze Chinese compradors and the foreign companies they served in pre-1949 China.

Business practitioners can extend orthodox principal–agent theory by scrutinizing the complex interactions between local agents and foreign companies. Instead of agents pursuing their economic interests exclusively, as posited by principal–agent theory, they also may pursue principal-shared interests (as suggested by stewardship theory) because of social norms and cultural values that can affect business-related choices and the social bonds built between principals and agents.

The behaviors of compradors and foreign companies in pre-1949 China suggest international business practices for shaping social bonds between principals and agents and foreign principals’ creative efforts to enhance shared interests with local agents.

Understanding principal–agent theory’s limitations can help international management scholars and practitioners mitigate transaction partners’ dishonest acts.

A critical historical analysis of intermediary businesspeople’s (mis)behavior in pre-1949 (1840–1949) China can inform the generalizability of principal–agent theory and contemporary business strategies for minimizing agents’ dishonest acts.

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.

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.

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.

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.

Although principal–agent theory has gained a prominent place in research, its negative image of self-serving managers is frequently criticized. Thus, the purpose of this paper is to examine how existing theories of agency and stewardship can be combined by using behavioral characteristics.

This study reviewed articles on the behavior of agents and stewards from the domains of finance, economics, management, corporate governance and organizational research. Additional theoretical and meta-analytical empirical literature from the fields of psychology and sociology was used to account for general patterns of human behavior.

The results indicate that goal congruency and the perception of fairness can serve as moderators distinguishing agency theory and stewardship theory. Goal congruency can be achieved by stipulating psychological ownership. The perception of distributive and procedural fairness is demonstrated by two major corporate governance mechanisms: performance-based compensation and board monitoring. The results are summarized in six hypotheses that allow a situational, customized corporate governance. These hypotheses can be tested in future research.

Prior work either focused on the merits of principal-agent theory or advocates the utilization of positive management theories, such as stewardship theory. However, little work has been done on bridging the gap between both constructs and develop a more extensive view of management theory.

Construction projects have become increasingly long, complex and costly with waste and inefficiencies and often fail to achieve the desired results. Integrated project delivery (IPD) is believed to change these problems. A reasonable and fair profit distribution mechanism is a critical factor for ensuring the success of the IPD projects. This study aims to investigate the strategies of all participants in the profit distribution of an IPD project with respect to the factor of the effort level.

This study describes the influence of owners and participants on profit distribution due to their respective efforts in the IPD project alliance. The influence of effort level on profit distribution is discussed based on the Holmstrom-Milgrom model of asymmetric information game theory and principal-agent theory, combined with incentive compatibility (IC) constraints and individual rationality (IR) constraints.

The results show that the optimal level of effort by each participant optimizes the profit distribution of an IPD project. At the same time, in the revenue incentive contract, the effort level of the participants is positively correlated with the profit distribution, proportional to their contribution coefficient and inversely proportional to the square of the cost of their creative activities in terms of effort. Each party of an IPD project can adopt a series of measures to improve their own effort level and choose the optimal level of effort based on the profit distribution, while satisfying their own utility maximization.

This study introduces the Holmstrom-Milgrom model in the principal-agent theory to explore the influence of the effort level on profit distribution in IPD projects. The quantitative model can contribute to establish a fair and efficient profit distribution scheme for the IPD projects.

This chapter develops a theoretical account of higher education policy creation and the relationship between universities and the state. Through this process, it demonstrates the relevance of theories from political science – including policy analysis and parliamentary/legislative studies – to higher education policy analysis. The chapter outlines the enduring relevance of political factors in shaping higher education around the world and the different ways in which political and policy analysis can be positioned within higher education research. A series of theoretical frameworks are introduced including policy networks, neo-institutionalism and principal-agent theory. These theories account for how policy is made, the behaviour of universities and policy makers, and the dynamics within the relationship between universities and the state. The chapter explains how these approaches can be adapted and applied to higher education policy research, and how frameworks from political science can inform and enrich studies of higher education.