Comparative insights into the governance problems of agency theory: the influence of institutional environment on the basic human tenets

Hannah S. Lee () and David A. Griffith ()
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Hannah S. Lee: Michigan State University
David A. Griffith: Michigan State University

AMS Review, 2012, vol. 2, issue 1, No 3, 19-33

Abstract: Abstract Agency theory is used to explain many firm marketing activities. However, its assumptions are founded in characteristics of North American actors, particularly in the United States. As such, it is not surprising that work employing agency theory in other national contexts often fails to find support. Taking a comparative institutional approach, this article theorizes how the human assumptions and prescriptions of agency theory differ across countries by utilizing the three pillars (i.e., regulative, normative, and cognitive) set forth by institutional theory. In particular, attenuations of the human assumptions of self-interest, risk-aversion, and bounded rationality of agents are theorized to influence goal alignment, risk sharing, and information processing in the agency relationship and in turn, effect prescriptions of governance and contracting given by the traditional agency model. A series of research propositions are developed to provide insight into the contractual implications in the principal-agent relationship across different institutional contexts. The theoretical attenuations presented provide guidance for marketing academics and practitioners engaged in cross-national agency relationships.

Keywords: Agency theory; Institutional theory; Institutional environment; Principal-agent (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (3)

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DOI: 10.1007/s13162-012-0024-7

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