Search results

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.

Extant research documents the importance of lean thinking for organizations, however, as prior research has largely focused on hard lean practices, but little is known about the effects or the significance of soft lean practices. This research attempts to address this issue by examining how soft lean practices enhance organizational lean readiness, and in turn increase the success of lean implementation.

This research adopts a single case study design in a small-medium enterprise livestock feed manufacturing organization, and investigates the period from late 2011 through the end of 2019 covering two attempts at lean implementation – an initial failed attempt followed by a successful introduction of lean within the case organization. The research analyzes interviews with 29 managers and employees from all organizational levels and departments within the case organization. Secondary data including organizational documents and performance measures and metrics were also incorporated into the research design.

Drawing on agency theory, the authors advance a principal-agent interaction perspective to conceptualize organizational lean readiness – specifically, the authors consider the “state or condition” of four agency factors (goal conflict, information asymmetry, risk aversion and length of relationship), and explore if these four agency factors can be utilized as proxies for organizational readiness for lean implementation. The authors identify the formation of a shared vision and identity within the organization as an effective mechanism through which soft lean practices enhance organizational lean readiness. Finally, the analysis offers an understanding of how the long-term success of lean implementation is improved by the introduction of soft lean practices as a prerequisite to create organizational readiness for the implementation of hard lean practices.

The study is unique in the sense that it empirically links agency theory and the role of soft lean practices in developing organizational lean readiness in a small-medium enterprise context by defining the ideal state of four agency factors as proxies for organizational readiness.

The moral hazard problem which obstructs external equity financing of farm businesses is studied using the principal‐agent framework. We assume that the supplier of external equity capital (the principal) cannot directly observe the farmer’s (agent’s) effort, but can observe the random outcome of the effort. We solve for the optimal farm income‐sharing rule that includes an extra share to the agent. The extra share is dependent on the random outcome and is provided to induce optimal effort from the agent. Results show a farmer’s effort is inversely related to the level of risk aversion and the riskiness of the project. Thus, an investor must share more income when a farmer is more risk averse or a project is more risky.

An international management movement known as New Public Management (NPM) emerged during the 1970s and 1980s. It relies on the normative use of economic market models, transaction cost theory, and public choice theories to deliver public services. While the manifestations of this new approach have taken many different avenues across the world, in the United States the primary manifestations have been found in the “Reinventing Government” movement (Gore, 1993), and the “Competitive Sourcing” plan of the Bush Administration (Office Management and Budget, 2002, 2003). A central component of NPM practices in the United States is the use of “outsourcing” of government service delivery to private or non-profit organizations.

This paper aims to discuss and explore the unique agency issues in Islamic banks which give rise to different agency conflicts exist in Islamic banks as compared to conventional banks. In addition, this paper critically examines agency theory in Islamic banking perspective by incorporating Islamic ethical considerations in the principal–agent setting.

This is a conceptual paper, and the discussions revolve around the review of literature of which important sources have been cited in a way that demonstrates a reasonable understanding of the topic. It attempts to create a discourse around the inclusion of Islamic ethical system in understanding the governance structure of Islamic banks.

This paper concludes that Islamic ethical system embedded in the Islamic banks business activities shapes Islamic banks into organisations that place higher ethical considerations than conventional banks. Therefore, Islamic banks are likely to have less severe agency problems relative to their conventional counterparts.

Because of the chosen research approach, the research results may lack generalisability. Therefore, researchers are encouraged to test the proposed propositions further.

As the discourse generated by the paper, it can ultimately enhance the understanding of Islamic governance structure in the perspective of agency issues.

As the discourse generated by the paper, it can ultimately enhance the understanding of Islamic governance structure in the perspective of agency issues.

The paper attempts to bring to attention the important aspect of principal–agent relationship within the Islamic banking structures and explain the role of incorporating Islamic ethical system in enhancing the understanding of the principal–agent relationship.

The purpose of this paper is to study the incentive mechanism design problem of manager under the assumption of bounded rationality in the theoretical framework of principal‐agent relationship and provide some insights into the relationship between the economic agent's rationality and incentive mechanism.

The framework of principal‐agent relationship is based on the full rationality of the agents. However, the agents cannot make optimal decisions in the uncertain and imprecise environment. To capture the essence of incentive scheme, bounded rationality is introduced in the model and the gradient dynamics is applied in modelling bounded rational learning behavior. The corresponding single‐task principal‐agent problem is solved to obtain the second‐best contracts and the effort levels. Furthermore, the results are generalized for the multi‐task principal‐agent problem.

The second‐best contract under the assumption of bounded rationality converges to the optimal contract under the assumption of full rationality over time.

Accessibility of data for empirical research is the main limitation which model will be applied.

A useful reference for managerial decisions.

The new approach of bounded rationality modeling and simulation. This paper is aimed at the owners, enterprisers, managers, and workers.

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.

On the example of professional football in Germany, this paper analyses the conflict about the punishment of fan misbehaviour within an agency-theoretical framework to cast light on the reasons for the ineffectiveness of the sentences and to show possible solutions.

In a pre-study, more than 1,300 hand-collected past sentences against clubs by the German and European sports courts were analysed to demonstrate the ineffectiveness of the penalties so far. Additionally, in the main study, 26 expert interviews with German representatives of the football association, courts, clubs, sponsors, police and active fan scenes allow a deep insight into the relationships of the involved parties.

The paper suggests that the sentences do not sufficiently consider several agency problems. Due to moral hazard, they exert hardly any influence on fan behaviour and only a small one on the clubs. While the lighting of pyrotechnics is by far the most punished type of misbehaviour, most of the interviewees cite the impossibility of preventing it. Despite the sentences, some clubs make non-public agreements with their fans about still tolerable misconduct or do not pass the penalties on to the polluters as intended by the association. The findings highlight the importance of communication for less misbehaviour.

For the first time, the agency theory and the economic theory of optimal punishment are brought together with insights from interviews with the involved parties. The authors discover a two-stage principal-agent problem and get new insights into stakeholders' hidden motivations and attitudes. The results should encourage a debate on the current penalties and possible solutions to the recurring problem of pyrotechnics.

Theories develop over time and are influenced by both events and people. Looking primarily at the applications between contracting principal-agent relationships, the purpose of this paper is to explore how agency theory emerged from a number of economic and social developments. In doing so, the authors explain how this once dominant theory comes up short regarding varying realms of entrepreneurship as well as with multiple modern business phenomena.

The authors first present a brief overview of agency theory. Second, the authors identify major events and people and address how they impacted the development of agency theory. Third, the authors provide insights on agency theory across three contexts (strategic entrepreneurship, social entrepreneurship, and family business). Implications, limitations, and future research directions are then offered.

The authors provide a deeper understanding of agency theory, thus broadening its underpinnings and enabling readers to more readily understand why agency theory is limited in its explanation of certain and modern business phenomena. The authors find that some of the seminal influences to agency theory are quite dated which has limited its explanatory power in terms of the modern day business and with more recent disciplines such as entrepreneurship.

The authors are limited by their choices of major events that influenced agency theory at the expense of not being able to include everything that may have impacted the theory over time. These limitations, however, are offset by the research implications. As the authors highlight the underpinning of agency theory, the authors subsequently provide scholars and practitioners with five primary boundary conditions, each of which are in need of attention for agency theory to maintain relevant explanatory power.

A deeper understanding of agency theory can be gained by looking at its underpinnings. By presenting numerous principal-agent conflicts and demonstrating areas in which it has fallen short (i.e. entrepreneurship and more recent business phenomenon), we shed light on the obstacles agency theory must overcome in order to maintain its position as a prominent theory.

Objectives – Purchasing has been promoted as a key policy instrument to improve health system performance. Despite its widespread adoption, there is little empirical evidence on how it works, the challenges surrounding its implementation, its impact, and the preconditions for it to function effectively, particularly in low- and middle-income settings. The objective of this chapter is to analyze critically the extent to which purchasing could be, and has been used strategically in China and to identify modifications that are needed for purchasing to be effective in assuring that the government's new funding for health care will result in efficient and effective health services.

Methods – We present a conceptual framework for purchasing, which identifies three critical principal–agent relationships in purchasing. We draw on evidence from secondary data, results of other research studies, interviews, and the impact evaluation of a social experiment in rural China that explicitly used purchasing to improve quality and efficiency. This information is used to examine purchasing relationships in urban social health insurance (SHI), the rural medical insurance scheme, and purchasing of public health services.

Findings – To date, use of strategic purchasing is limited in China. Both the urban and the rural health insurance schemes act as passive third-party payers, failing to take advantage of the opportunities to strengthen incentives to improve quality and efficiency. This may be because as government agencies, the extent to which the Ministries of Health and Labor and Social Security can act independently from provider interests, or act in the best interest of the population, is unclear. Other important challenges include ensuring adequate representation of the population's views and preferences and making better use of the leverage provided by purchasing to create appropriate provider incentives, through better integration of financing and improved coordination among purchasers.

Implications for policy – In designing purchasing arrangements, attention needs to be paid to all three principal–agent relationships. Successful purchasing appears to require mechanisms to mobilize and represent community preferences and more strategic contracting with providers. More research is needed to strengthen the evidence on which purchasing arrangements work, which do not work, and under what conditions different purchasing configurations can work most effectively.