Revising Machine from Within: Toward Mid-Range Theory of Agency in Inter-Organizational Relations

Abstract

The pursuit of strategic or operational synergies between organizations frequently leads to the formation of an inter- organizational relationship (IOR) with a mutual interest. Despite an inherent pursuit of cooperation, such IORs are subject to agency problems caused by goal incongruence and information asymmetry between the independent organizations. In this study, we take the first steps towards a mid-range theory of agency in IORs. We begin with a review of IOR agency literature in the four fields of general management, marketing, operations management and economics. We identify similarities (e.g., an explicit focus on information asymmetry) and differences (e.g., assumptions about self-interest and opportunism) between the four disciplines. Then, we categorize the governance mechanisms identified in extant literature and create a framework of inter-organizational agency relationships explaining reasons for the differential deployment of governance mechanisms leading to four archetypical IOR forms.