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

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  • Hannah S. Lee

    (Michigan State University)

  • David A. Griffith

    (Michigan State University)

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.

Suggested Citation

  • Hannah S. Lee & David A. Griffith, 2012. "Comparative insights into the governance problems of agency theory: the influence of institutional environment on the basic human tenets," AMS Review, Springer;Academy of Marketing Science, vol. 2(1), pages 19-33, March.
    • Handle: RePEc:spr:amsrev:v:2:y:2012:i:1:d:10.1007_s13162-012-0024-7
    DOI: 10.1007/s13162-012-0024-7
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    Cited by:

    1. Steven Dahlquist & David Griffith, 2015. "A framework for the formation of governance portfolios in international interfirm marketing collaborations," Business & Information Systems Engineering: The International Journal of WIRTSCHAFTSINFORMATIK, Springer;Gesellschaft für Informatik e.V. (GI), vol. 5(1), pages 45-59, June.
    2. Steven H. Dahlquist & David A. Griffith, 2015. "A framework for the formation of governance portfolios in international interfirm marketing collaborations," AMS Review, Springer;Academy of Marketing Science, vol. 5(1), pages 45-59, June.

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