Study on incentive and supervision mechanisms of technological innovation in megaprojects based on the principal-agent theory

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Jiawei Liu ◽  
Guanghong Ma
Keyword(s):  
Risk Assessment ◽  
Information Asymmetry ◽  
Technological Innovation ◽  
Effective Means ◽  
Unit Cost ◽  
Principal Agent ◽  
Principal Agent Theory ◽  
Content Type ◽  
Agent Theory ◽  
Incentive Intensity

PurposeThe high uncertainty of technological innovation in megaprojects brings great challenges to the R&D institution and also acts as a trigger for moral hazard. The incentive and supervision are effective means to improve the performance of innovation. The purpose of this paper is to propose appropriate incentive and supervision mechanisms to reduce information asymmetry and improve the efficiency of incentives. Suggestions on technological innovation are put forward to megaprojects management.Design/methodology/approachAccording to the principal-agent theory, the research develops incentive models under three states, i.e. information symmetry, information asymmetry and information asymmetry based on supervision mechanism. The Bayesian theory is employed to prove the effectiveness of the novel supervision method based on risk assessment.FindingsThe results indicate that under the information asymmetry, the incentive intensity is positively correlated with the social benefits coefficient, and negatively correlated with the patent benefits coefficient. The R&D effort and the owner's incentive intensity decline with the increase of information asymmetry. The supervision of risks can effectively reduce the degree of information asymmetry, and the higher the uncertainty of innovations, the more significant the effect of supervision is. As the supervision intensity increases, the incentive intensity, the R&D effort and the innovation output will increase. In addition, the R&D institutions with high innovation capability, low unit cost of R&D and low risk-aversion are more willing to make efforts to innovate.Originality/valueThis study fills the research gap on incentive and supervision of technological innovation in megaprojects. The externality of innovation benefits is considered in the model. The traditional incentive model is extended through the introduction of supervision. Furthermore, a novel supervision method based on risk assessment is proposed. The results validate the importance of risk management in technological innovation and provide a new insight for project management.

Compensation-related institutional investor activism – a literature review and integrated analysis of sustainability aspects

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Patrick Velte ◽  
Jörn Obermann
Keyword(s):  
Literature Review ◽  
Institutional Investors ◽  
Institutional Investor ◽  
Future Research ◽  
Integrated Analysis ◽  
Principal Agent ◽  
Management Compensation ◽  
Principal Agent Theory ◽  
Content Type ◽  
Agent Theory

Purpose This paper aims to analyse whether and how different types of institutional investors influence shareholder proposal initiations, say-on-pay (SOP) votes and management compensation from a sustainability perspective. Design/methodology/approach Based on the principal-agent theory, the authors conduct a structured literature review and evaluate 40 empirical-quantitative studies on that topic. Findings The traditional assumption of homogeneity within institutional investors, which is in line with the principal–agent theory, has to be questioned. Only special types of investors (e.g. with long-term and non-financial orientations and active institutions) run an intensive monitoring strategy, and thus initiate shareholder proposals, discipline managers by higher SOP dissents and prevent excessive management compensation. Research limitations/implications A detailed analysis of institutional investor types is needed in future empirical analyses. In view of the current debate on climate change policy, future research could analyse in more detail the impact of institutional investor types on proxy voting, SOP and (sustainable) management compensation. Practical implications With regard to the increased shareholder activism and regulations on SOP and management compensation since the 2007/2008 financial crisis, firms should be aware of the monitoring role of institutional investors and should analyse their specific ownership nature (time- and content-driven and as well as range of activity). Originality/value To the best of authors’ knowledge, this is the first literature review with a clear focus on institutional investor range and nature, shareholder proposal initiation, SOP and management compensation (reporting) from a sustainability viewpoint. The authors explain the main variables that have been included in research, stress the limitations of this work and offer useful recommendations for future research studies.

scholarly journals What theories underpin performance-based financing? A scoping review

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Elisabeth Paul ◽  
Oriane Bodson ◽  
Valéry Ridde
Keyword(s):  
Scoping Review ◽  
Healthcare Providers ◽  
Health Sector ◽  
Principal Agent ◽  
Middle Income ◽  
Principal Agent Theory ◽  
Content Type ◽  
Middle Income Countries ◽  
Agent Theory ◽  
Performance Based Financing

PurposeThe study aims to explore the theoretical bases justifying the use of performance-based financing (PBF) in the health sector in low- and middle-income countries (LMICs).Design/methodology/approachThe authors conducted a scoping review of the literature on PBF so as to identify the theories utilized to underpin it and analyzed its theoretical justifications.FindingsSixty-four studies met the inclusion criteria. Economic theories were predominant, with the principal-agent theory being the most commonly-used theory, explicitly referred to by two-thirds of included studies. Psychological theories were also common, with a wide array of motivation theories. Other disciplines in the form of management or organizational science, political and social science and systems approaches also contributed. However, some of the theories referred to contradicted each other. Many of the studies included only casually alluded to one or more theories, and very few used these theories to justify or support PBF. No theory emerged as a dominant, consistent and credible justification of PBF, perhaps except for the principal-agent theory, which was often inappropriately applied in the included studies, and when it included additional assumptions reflecting the contexts of the health sector in LMICs, might actually warn against adopting PBF.Practical implicationsOverall, this review has not been able to identify a comprehensive, credible, consistent, theoretical justification for using PBF rather than alternative approaches to health system reforms and healthcare providers' motivation in LMICs.Originality/valueThe theoretical justifications of PBF in the health sector in LMICs are under-documented. This review is the first of this kind and should encourage further debate and theoretical exploration of the justifications of PBF.

CIO reporting structure and firm strategic orientation – a content analysis approach

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Erastus Karanja ◽  
Donna Grant ◽  
Jigish S. Zaveri
Keyword(s):  
Content Analysis ◽  
Educational Background ◽  
Principal Agent ◽  
Press Releases ◽  
Data Set ◽  
Principal Agent Theory ◽  
Content Type ◽  
Agent Theory ◽  
Strategic Orientations ◽  
Reporting Relationships

Purpose Grounded in the principal-agent theory, this study aims to develop and test hypotheses too, investigate how the firm’s strategic orientations, namely, innovation, growth, differentiation and cost leadership impact the chief information officer (CIO) reporting relationship and structure. Design/methodology/approach The study uses content analysis to analyze a data set of press releases collected from the LexisNexis Academic wire index. The press releases were issued by firms when they hired CIOs between 2003 and 2007, yielding 128 firms, which had specific information about the CIO reporting relationship and structure. Findings The results reveal that firms seeking an innovation, growth or differentiation strategy have their CIOs reporting to the chief executive officer. Research limitations/implications The current study is motivated by the desire to replicate and extend the works of previous researchers who have assessed various CIO issues. Replication takes several forms such as the use of similar or different data sets, different research environments or reinvestigating research concepts through a different theoretical lens. This study makes use of a multi-firm data set spanning five years and the principal-agent theory as the theoretical framework to explore the CIO reporting relationship and structure. Although this study focuses on the hiring trends and the strategic orientations of the firms, future studies should explore other characteristics associated with the CIOs that might have an impact on the reporting relationship such as the years of experience, age, educational background of CIOs and information technology budgets. Practical implications The existing literature has not settled the debate as to whom the CIO should be reporting to and understanding the reporting relationships is important because, in many firms, the organizational structures and the reporting relationships are indicative of the power dynamics and how the organizational resources are controlled and shared. Originality/value Replication studies are important because they confirm, reinforce, extend and provide reliability to the paradigms and knowledge in the discipline, as well as offer reliability of the results upon which scientific progress is based.

scholarly journals Seller Reviews and Consumers' Perceptions of Trust, Risks, and Uncertainty

2019 ◽  
Vol 10 (4) ◽  
pp. 1-20
Author(s):  
Jing Yang ◽  
Rathindra Sarathy ◽  
Tao Wu
Keyword(s):  
Text Mining ◽  
Information Asymmetry ◽  
Principal Agent ◽  
Hidden Information ◽  
Principal Agent Theory ◽  
Agent Theory ◽  
Unique Approach ◽  
Hidden Action ◽  
Quasi Experiment

Based on the principal-agent theory, the authors posit that seller-related uncertainty is derived from buyer (the principal) fears of hidden information (information asymmetry) and hidden action (seller opportunism) on the part of sellers (the agents). The study evaluates the effects of the three antecedents of trust in the seller reviews context with a quasi-experiment. The authors enhance the validity of the research manipulation through a unique approach of creating reviews through a text mining process of actual seller reviews. This allows control over the content of reviews while retaining their realism. The findings validate that the principal-agent theory provides a good fit for understanding seller-related uncertainty in e-commerce transactions. Second, buyers appear to be more concerned about seller opportunism than with information asymmetry. Third, while assessments of integrity and competence of the vendor, assessed through reviews, play a role, benevolence does not.

scholarly journals Incentive Contract in Supply Chain with Asymmetric Information

2014 ◽  
Vol 2014 ◽  
pp. 1-6 ◽  
Author(s):  
Yingsheng Su ◽  
Hongmei Guo ◽  
Xianyu Wang
Keyword(s):  
Supply Chain ◽  
Asymmetric Information ◽  
Information Asymmetry ◽  
Principal Agent ◽  
Incentive Contract ◽  
Principal Agent Theory ◽  
Agent Theory ◽  
Hide Information ◽  
Technology Level ◽  
Theory Of Regulation

The supply chain always appears inefficient because of the different targets of members and information asymmetry, especially when upstream enterprises not only hide information about their effort levels, but also hide information about their technology level. The paper uses principal-agent theory and the theory of regulation to design the contract to realize the maximization of principal's profit on the condition that the contract satisfies the participant and incentive conditions of agent. As a result, it is obvious that the contract achieves the goal of control. In addition, it also can be concluded that the amount of rent that the manufacturer can obtain is up to the value of his information and the condition of his resource.

Principal Agent Theory and Artificial Information Asymmetry

Politics ◽  
2009 ◽  
Vol 29 (2) ◽  
pp. 137-144 ◽  
Author(s):  
Stephan Poth ◽  
Torsten J. Selck
Keyword(s):  
Information Asymmetry ◽  
Principal Agent ◽  
Principal Agent Theory ◽  
Agent Theory

scholarly journals Research on Preventing Moral Hazard of Construction Project Based on Information Asymmetries

2014 ◽  
Vol 8 (1) ◽  
pp. 468-475 ◽  
Author(s):  
Pengcheng Xiang ◽  
Jinan Wang
Keyword(s):  
Moral Hazard ◽  
Information Asymmetry ◽  
Adverse Selection ◽  
Optimization Model ◽  
Construction Project ◽  
Principal Agent ◽  
Information Asymmetries ◽  
Major Objective ◽  
Principal Agent Theory ◽  
Agent Theory

There exists the problem of information asymmetry among the participants in construction project who form economic partnerships one another. Information asymmetries among the participants in construction project places a premium on adverse selection and moral hazard. The major objective of this article is to implement the mechanisms of incentive and monitoring under the framework of principal-agent theory in analysis of moral hazard of construction project and to explore how to prevent it. The optimization model of incentive and monitoring under the circumstance of asymmetric information will be founded on the basis of the analysis of the effect of incentive and monitoring mechanisms in the principal- agent relationship. It indicates that reliability of information can be increased when bringing incentive and monitoring mechanisms into reward contract, which can prevent moral hazard of construction project.

Mutualistic symbiosis?

2020 ◽  
Vol 43 (8) ◽  
pp. 989-1011
Author(s):  
Jörn Obermann ◽  
Patrick Velte ◽  
Jannik Gerwanski ◽  
Othar Kordsachia
Keyword(s):  
Corporate Governance ◽  
Psychological Ownership ◽  
Empirical Literature ◽  
Future Research ◽  
Principal Agent ◽  
Stewardship Theory ◽  
Principal Agent Theory ◽  
Content Type ◽  
Mutualistic Symbiosis ◽  
Agent Theory

Purpose Although principal–agent theory has gained a prominent place in research, its negative image of self-serving managers is frequently criticized. Thus, the purpose of this paper is to examine how existing theories of agency and stewardship can be combined by using behavioral characteristics. Design/methodology/approach This study reviewed articles on the behavior of agents and stewards from the domains of finance, economics, management, corporate governance and organizational research. Additional theoretical and meta-analytical empirical literature from the fields of psychology and sociology was used to account for general patterns of human behavior. Findings The results indicate that goal congruency and the perception of fairness can serve as moderators distinguishing agency theory and stewardship theory. Goal congruency can be achieved by stipulating psychological ownership. The perception of distributive and procedural fairness is demonstrated by two major corporate governance mechanisms: performance-based compensation and board monitoring. The results are summarized in six hypotheses that allow a situational, customized corporate governance. These hypotheses can be tested in future research. Originality/value Prior work either focused on the merits of principal-agent theory or advocates the utilization of positive management theories, such as stewardship theory. However, little work has been done on bridging the gap between both constructs and develop a more extensive view of management theory.

scholarly journals Study on Third-Party supervision of Major Ecological Ecological Projects Auditing Based on Principal-agent Theory

2019 ◽  
Vol 79 ◽  
pp. 03009
Author(s):  
Liang Zhao ◽  
Chuiyong Zheng
Keyword(s):  
Information Asymmetry ◽  
Audit Quality ◽  
Third Party ◽  
Principal Agent ◽  
Principal Agent Theory ◽  
Agent Model ◽  
Agent Theory ◽  
Incentive Policy ◽  
Principal Agent Model ◽  
The Government

Without considering the existence of third-party audit supervision and considering the existence of third-party audit supervision, the principal-agent model of major engineering audits between government and audit organizations was constructed. The analytical solutions under various hypothetical conditions were analyzed for the government. The optimal incentive policy for major engineering audits provides the basis. The analysis results prove that, the introduction of third-party units for audit supervision can effectively stimulate audit behavior, reduce information asymmetry, and create higher engineering quality and audit quality in the process of major engineering audit.

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