Cooperation, Coopetition and Innovation

4Agency Theory and Strategic Alliances

4.1. Introduction

As we have analyzed in Chapter 3, the concept of agency relies on a contractual approach of organizations and is closely associated with the theory of property rights, in the sense that their structure plays a key role in both individual decisions and the contractual relations of a market economy.

So far, agency theory scholars have sought to determine how the different organizational forms contribute to minimize contract costs within organizations. These theorists focus on the firm and illustrate how contracts may generate cooperation between asymmetric partners. They particularly insist on the importance of incentive mechanisms.

In the past, the agency theory used to focus on a company’s internal relations; however, as [DEM 89b] pointed out, it would be interesting to consider whether this conceptual framework can be extended to the interpretation of other contractual growth forms and, more precisely, to inter-firm alliances. We will explore this question in this chapter.

4.2. Cooperation and conflict in agency theory

Agency theory acknowledges the separation between owners and managers within a company and reveals a possible form of relationship binding a principal to an agent. This type of relationship is known as an “agency relationship”, a “mandate relationship” (or a “sponsorship relationship”). In case of appearance of differences between the interests of principals and agents, such a relationship would give ...