We examine how the central government's management of subnational governments' agency influences the smartness of the latter's industrial specialization choices. Based on smart industrial specialization theory and agency theory, we hypothesize how two central government tools governing subnational governments' agency – facilitating their organizational efficacy and promoting their officials to higher ranks – explain recent industrial specialization choices by China's 31 provincial governments. We find that provincial governments with greater organizational efficacy, measured by access to better-resourced local state-owned enterprises in focal industries, make smarter specialization policies. In addition, we show that provincial governments with greater numbers of officials previously promoted to the central government make, contrary to conventional wisdom, potentially less smart specialization policies. Our research extends smart specialization theory by explaining that central government tools governing subnational agency problems can have knock-on effects making subnational governments' industrial specialization choices smart or unsmart.

Supply chain security presents numerous challenges to governments interested in defending against terrorist threats. While most approaches stress technological solutions, scholars and policy-makers tend to overlook economics, labour market issues, and industrial relations. Applying agency theory from behavioural economics, this article analyses threats to the US supply chain and opportunities for efficient solutions. Using data from a sophisticated web-based survey of owner-operator cost-of-operations, it shows that drayage drivers are among the lowest paid truck drivers and workers in the US. We provide evidence that low pay is associated with both safety and security risk. Low-wage labour and subcontracting present challenges to US and foreign supply-chain security because the market attracts workers who have few other employment options. In this environment, principals and agents currently make inefficient and inequitable contracts because markets do not reflect the complete costs associated with low-probability/high-impact events like cargo theft and transport security.

As governments move from being both a funder and provider of human services to a purchaser of services in private sector markets or quasi-markets, ensuring that providers do what they are supposed to do becomes more difficult. Agency theory and stewardship theory have been suggested as ways of overcoming this problem. This article argues that both are inadequate, particularly because they conceptualise the relationship as bilateral (government funding department and service provider), ignoring the role of clients in achieving organisational objectives. Co-production that recognises the role played by clients in the production of employment outcomes can provide a more useful way of thinking about relationships among key actors involved in the provision of employment services.

Independent directors (IDs) in listed Japanese companies have gradually increased with the transplant of the Western model of the monitoring board. In practice, however, IDs act more like the mediating hierarch in team production theory than the agent of the shareholders, albeit with a number of differences from Blair and Stout’s seminal model. Japanese IDs mediate formally and informally, resolving vertical disputes between groups of executives as they contest control of the company. Given the norm of lifetime employment, such vertical disputes are common in Japanese companies and are economically significant, since failure to resolve them can result in destruction of firm-specific human capital. The article explores the scope for mediating hierarchy in Japanese law and corporate governance practice, then develops three case-studies which highlight the role played by IDs. Their practice is shaped by and supports social norms that emphasize the importance of continuity in team production.

Previous corporate governance research has paid little attention to the role of chief executive officer (CEO) labor markets in controlling CEO behaviors because the CEO labor market has been considered inefficient. With the increasing mobility of top executives across firms, however, the potential of CEO labor markets to serve as an external disciplining force has been growing. In this study, we argue that CEOs will be more pressured to engage in desirable behaviors as the CEO labor market becomes more efficient. Using a longitudinal sample of S&P 1500 firms in high-technology industries in United States from 2011 to 2019, we found that CEOs tend to increase R&D investment as CEO labor market supply increases. We also found that the tendency is greater when external CEO succession is more frequent in the market. Our results demonstrate that CEO labor markets have the potential to function as an effective external governance mechanism.

In the aftermath of the 2006 and 2014 Thai coups, observers declared the resurrection of the bureaucratic polity. Bureaucrats, though, remained influential even during the period of 1992–2006, when elected politicians were thought to command the Thai state. Bureaucratic involvement in politics poses a challenge for dominant political science theories of politician–bureaucrat relationships, which draw heavily from principal–agent frameworks. I apply agency theory to Thailand, testing three different hypotheses derived from the theory. Examining legislative productivity and control over bureaucratic career trajectories, I find that elected politicians increasingly acted as principals of the Thai state from 1992 through 2006, and to a lesser degree from 2008 to 2013. Thai bureaucrats, though, have frequently engaged in the political sphere, blunting political oversight and expanding their independence vis-à-vis politicians. This suggests that the principal–agent model overlooks the range of resources that bureaucracies can bring to bear in developing countries, granting them greater autonomy than anticipated. As such, theories of the politician–bureaucrat relationship in developing states need to better account for the mechanisms through which bureaucrats exercise policy discretion and political influence.

In a context of institutionalized regulation and academic framing determined by agency theory, we note paradoxes in board governance literature and practice. These paradoxes concern boards’ conflicting roles of monitoring/control, and innovation/strategy-making. We explore directors’ mind-sets about governance on which their resolution of paradoxes and their decisions and actions will be based. We do this by applying discourse analysis to the transcripts of 60 semistructured interviews conducted with New Zealand directors who described and evaluated their experience of board governance. We identify and discuss their various discourses, which we label discourses of conformance, of deliberation, of enterprise and of bounded innovation. We note the homogeneity of discourses across different organization types, the dominance of conformance, the nonresolution of paradoxes, and the likely effects in inhibiting board strategy-making and contribution to innovation. We recommend attention by boards to their mind-sets and processes, and the development of generativity.

Some business ethicists view agency theory as a cautionary tale—a proof that it is impossible to carry out successful economic interactions in the absence of ethical behaviour. The cautionary-tale view presents a nuanced normative characterisation of agency, but its unilateral focus betrays a limited understanding of the structure of social interaction. This article moves beyond unilateralism by presenting a descriptive and normative argument for a bilateral cautionary-tale view. Specifically, we discuss hat swaps and role dualism in asymmetric-information principal-agent relationships and argue that the norm of reciprocity can function as a moral solution to agency risks in adverse-selection and moral-hazard problems. Our bilateral cautionary-tale formulation extends the normative boundaries of agency theory, while leaving the fundamental economic assumptions of agency theory intact.

The purpose of this study is examine how agency theory and stewardship theory lead to different firm-level outcomes on an array of different outcomes. Based on these differences, we argue for the development of an agent–steward measurement scale, which will help researchers classify chief executive officers (CEOs) along an agent–steward continuum. This, in turn, will spur research to predict and test CEO behaviors and firm-level outcomes. Agency theory suggests CEOs take advantage of their powerful positions to maximize their personal economic utility, whereas stewardship theory suggests CEOs are motivated through intrinsic awards and will balance their interests with those of other stakeholders. We use these theories to examine possible differences in CEO behaviors. This is important because different CEO behaviors might lead to differing impacts on important firm-level outcomes. This paper reviews the relevant agency and stewardship literatures, then offers propositions regarding CEO behaviors from agent and steward perspectives.

This paper reports on an exploratory investigation into the concept of managerial wisdom. Six senior managers from diverse and large organisations in New Zealand were interviewed about their conception of managerial wisdom. The findings show that senior managers have a practical and positive conception of wisdom consisting of four factors: experience and knowledge, emotional intelligence, mentorship, and deliberation and consultation. The findings show that concepts of ‘spirituality’, ‘religiosity’, and, perhaps somewhat surprisingly, ‘ethics’, are all absent from the participants’ descriptions of wise managers. A tentative definition of managerial wisdom is proposed based on these findings as well as an explanation for the absence of ethics. As interest in wisdom and management continues to grow, this exploratory empirical research serves as a base for further research on the understanding and place of wisdom in management.

The relationship between exporters and independent foreign channel intermediaries (FCIs) is complex. The present paper analyses and discusses the potential types of opportunistic behaviour that might be engaged in by foreign agents or distributors (FCIs) using an agency theory approach. A classification framework of opportunistic behaviour is developed and a detailed qualitative examination of the content of five agency-distributor agreements between Australian exporters and their FCIs. A five-category classification scheme for opportunistic behaviour was found that included (1) product, (2) price, (3) information, (4) logistical, and (5) legal opportunism. The implications of each type of opportunism for an exporter are discussed using examples obtained from ways to control opportunistic behaviour are discussed.

To examine the bribing behavior of firms, we developed a cross-level moderation model using agency theory at the firm level and anomie theory at the societal level to investigate the relationship between manager control of firms and firm bribery activity. The results of this cross-cultural analysis using a sample of 1,799 firms from 38 nations showed that at the firm level, manager-controlled firms (MCFs) have a higher propensity to bribe than shareholder-controlled firms. At the country level, bribery is higher in MCFs (relative to shareholder-controlled firms) in societies with a low level of institutional collectivism, a high level of uncertainty avoidance, economic change, and income inequality. Contrary to the hypothesis, the relationship between bribery and manager control is stronger rather than weaker in societies with press freedom. Implications for future research and practices are discussed.

This study attempts to further the development of family business theory by providing a more detailed understanding of the differences between family and non-family firms' profitability, growth, exporting and networking behaviour. Utilising data from 2190 Australian SMEs, the study compares the Australian experience of differences between family and non-family firms with those found among Belgium firms. The Australian results are consistent with the growth and some of the networking behaviour found among Belgium firms, but not with their profitability and exporting behaviour. The study's findings support the contentions that the differences between family and non-family firms may be less than many earlier studies have indicated and that industry differences and cross-national differences in corporate governance environments may lead to variances in these differences. It also demonstrates that the underlying theoretical rationale for a number of predicted differences between family and non-family firms appears flawed. These findings indicate that new empirical studies that control for context are urgently needed to ensure the scholarly literature on family businesses is not being built on false assumptions. They also indicate that studies designed to explain differences in the family/non-family business relationship between industries and nations may lead to advances in family business theory.

This study analyses whether or not the effect of board independence on a firm's strategic performance is moderated by family involvement in ownership and control. Moderation of the board's size and the independent director ratio are tested under quadratic specifications. The effect of CEO duality with family involvement on long-term sales growth is also measured. The empirical analysis is conducted in the Southern European context using a sample of publicly traded firms that have concentrated ownership structures. The main findings indicate that when nonlinearities are considered, family involvement moderates the relationship between the independent director ratio and firm performance. The optimal proportion of independent directors is lower in family businesses than in non-family ones. However, the results fail to support nonlinearities for board size. We find positive linear relationships between both board size and CEO duality with firm performance, which are not moderated by family involvement.

This paper seeks to explain key characteristics of the New Zealand life insurance industry, in particular the important role played by overseas-controlled mutual companies, and the dearth of regulation relative to other countries. It proposes that the dominance of mutual companies reflects the historical development of the New Zealand life insurance market. It also examines how agency theory may help to explain how the market has come to be dominated by mutual companies, and suggests that the unregulated nature of the life insurance industry may reflect the New Zealand government's historical role of direct intervention in the market through the Government Life Office. Further light on this issue is shed by the economic theory of regulation. This theory suggests that cartelisation and reinsurance may help to explain the existence of the unregulated insurance market in New Zealand. The paper concludes that many socio-economic and historical reasons may account for the distinctive features of the New Zealand life insurance industry. The possibilities are presented in this paper as a stimulus for further insurance markets-based research.