Agency Relationships and Monitoring in Electronic Commerce

David C. Croson and Michael G. Jacobides
International Journal of Electronic Commerce
Volume 1, Number 3, Spring 1997, pp. 65-82.

Abstract: The expansion of electronic commerce may be expected to lead to an increase in the volume of agency relationships, such as outsourcing or business partnerships. Using agency theory, this paper concentrates on using information technology to monitor the investment committed to these relationships. Agency value (rather than agency cost) is proposed as the appropriate criterion for this monitoring. A taxonomy of monitoring effects on agency relationship is proposed and the benefits of pursuing each of the possible policies in electronic commerce are studied. Key Words and Phrases: agency theory, electronic monitoring, electronic partnerships, information policies.