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Performance in Principal-Agent Dyads: The Causes and Consequences of Perceived Asymmetry of Commitment to the Relationship

Author

Listed:
  • William T. Ross, Jr.

    (School of Business and Management, Temple University, Philadelphia, Pennsylvania 19122)

  • Erin Anderson

    (INSEAD, Fountainebleau, France 77305)

  • Barton Weitz

    (The University of Florida, Gainesville, Florida 32611)

Abstract

We focus on the principal-agent relationship in a distribution channel. In a services context (insurance), we examine how two facets of performance, from the point of view of both the principal and the agent, are influenced by the perceiver's belief that it is more committed to the relationship than is the other party. Using primary data from 255 insurance agent-insurance provider dyads, we show that each side's assessment of how much it benefits from the dyad is related in a potentially dysfunctional manner to its perception of asymmetric commitment. Perceivers rate their performance outcomes from the dyad (i.e., harmony and profit) highest when they believe they are less committed than their counterpart. Conversely, they rate their own performance outcomes lowest when they believe they are more committed than the other party. We explain this finding in terms of suspected opportunism and offer a partial test of this explanation compared with explanations from theories of equity and power/dependence. Further, we demonstrate that each party's perception of asymmetric commitment partially reflects actual asymmetry, as measured by confidential data collected from both sides. Perceived asymmetric commitment is also shown to be related to levels of communication and dependence in the dyad. Managerial implications for reducing perceived asymmetric commitment and improving the performance outcomes of each dyad member are discussed.

Suggested Citation

  • William T. Ross, Jr. & Erin Anderson & Barton Weitz, 1997. "Performance in Principal-Agent Dyads: The Causes and Consequences of Perceived Asymmetry of Commitment to the Relationship," Management Science, INFORMS, vol. 43(5), pages 680-704, May.
    • Handle: RePEc:inm:ormnsc:v:43:y:1997:i:5:p:680-704
    DOI: 10.1287/mnsc.43.5.680
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    Cited by:

    1. Youngtak M. Kim & John R. Busenbark & Seung-Hwan Jeong & Son K. Lam, 2022. "The performance impact of marketing dualities: a response surface approach to resolving empirical challenges," Journal of the Academy of Marketing Science, Springer, vol. 50(5), pages 915-940, September.
    2. Che-Jen Su, 2005. "Do Promises Really Win Compliances in Purchasing Decision-Making?," Management and Labour Studies, XLRI Jamshedpur, School of Business Management & Human Resources, vol. 30(4), pages 301-314, November.
    3. Son, Byung-Gak & Kocabasoglu-Hillmer, Canan & Roden, Sinéad, 2016. "A dyadic perspective on retailer–supplier relationships through the lens of social capital," International Journal of Production Economics, Elsevier, vol. 178(C), pages 120-131.
    4. Rohit Deshpandé & Amir Grinstein & Elie Ofek, 2012. "Strategic orientations in a competitive context: The role of strategic orientation differentiation," Marketing Letters, Springer, vol. 23(3), pages 629-643, September.
    5. Jiří Šindelář & Petr Budinský, 2018. "Agent-zákazník problém v distribuci finančních produktů [Agent-Principal Problem in Financial Distribution]," Politická ekonomie, Prague University of Economics and Business, vol. 2018(4), pages 491-507.
    6. 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.
    7. Fang Jia & Zhilin Yang, 2021. "Perceptual difference of dependence and trust in marketing channel: reconsideration of dependence measurement," Asian Business & Management, Palgrave Macmillan, vol. 20(1), pages 78-104, February.
    8. Dalsace, Frédéric & Jap, Sandy, 2017. "The friend or foe fallacy: Why your best customers may not need your friendship," Business Horizons, Elsevier, vol. 60(4), pages 483-493.
    9. 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.
    10. Pascale Bueno Merino, 2006. "Le contrôle de l’intermédiaire local dans l’accord de portage commercial:analyse du rôle et des antécédents de la confiance," Revue Finance Contrôle Stratégie, revues.org, vol. 9(1), pages 97-134, March.
    11. 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.
    12. Kamran Eshghi & Sourav Ray, 2021. "Conflict and performance in channels: a meta-analysis," Journal of the Academy of Marketing Science, Springer, vol. 49(2), pages 327-349, March.
    13. Gatignon, Aline & Gatignon, Hubert, 2010. "Erin Anderson and the Path Breaking Work of TCE in New Areas of Business Research: Transaction Costs in Action," Journal of Retailing, Elsevier, vol. 86(3), pages 232-247.
    14. Joachim Vosgerau & Erin Anderson & William T. Ross, Jr., 2008. "Can Inaccurate Perceptions in Business-to-Business (B2B) Relationships Be Beneficial?," Marketing Science, INFORMS, vol. 27(2), pages 205-224, 03-04.
    15. Zeng, Ming, 2003. "Managing the cooperative dilemma of joint ventures: the role of structural factors," Journal of International Management, Elsevier, vol. 9(2), pages 95-113.

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