Opportunistic Behavior in Research Organizations

Abstract

Traditional agency theory assumes that agents’ opportunism is largely a function of heightened information asymmetry. This paper redirects attention to an opposite condition in which opportunistic behavior persists despite substantial information symmetry. Using a random sample of 105 U.S. research universities (principals) and 73,603 scientists (agents), we show how some scientists violate their employment contract when they privately appropriate rent from discoveries they made while working for their institutions. We find that opportunistic behavior increases with more valuable discoveries and heightened entrepreneurial activities on university campuses. Highly autonomous technology licensing offices (TLOs) and royalty sharing with departments are associated with reduced opportunistic behavior. Taken together, our study—and a stylized mathematical model—suggest that agency theory should expand to address conditions in which principals choose to tolerate agents’ opportunistic behavior despite the authority to sanction their agents.