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Agency Problems

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The Palgrave Encyclopedia of Strategic Management

Abstract

Agency problems arise from incomplete and asymmetric information as principals attempt to motivate agents to act in their interest. Incomplete and asymmetric information, conflicting incentives and imperfect monitoring can result in outcomes undesirable for the principal. The key to mitigating such problems is in the efficient design of incentive systems, broadly defined. Agency problems in business relationships are pervasive both within and between organizations and arise in relationships between employers and employees, shareholders and managers, and buyers and suppliers.

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Author information

Authors and Affiliations

  1. One Brookings Drive, Olin Business School, Campus Box 1133, St Louis, MO, 63130, USA

    Todd Zenger & Timothy Gubler

Authors
  1. Todd Zenger
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  2. Timothy Gubler
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Corresponding author

Correspondence to Todd Zenger .

Editor information

Editors and Affiliations

  1. Stanford University , Stanford, California, USA

    Mie Augier

  2. Tusher Ctr Intellectual Capital, University of California Tusher Ctr Intellectual Capital, Berkeley, California, USA

    David J. Teece

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© 2016 The Author(s)

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Zenger, T., Gubler, T. (2016). Agency Problems. In: Augier, M., Teece, D. (eds) The Palgrave Encyclopedia of Strategic Management. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-94848-2_531-1

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  • DOI: https://doi.org/10.1057/978-1-349-94848-2_531-1

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  • Publisher Name: Palgrave Macmillan, London

  • Online ISBN: 978-1-349-94848-2

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