How can the internal governance of civil society organizations be conceptualized more adequately by accounting for the dual and simultaneous requirements of controlling and coaching in board behavior? Empirically, we seem to agree that effective governance of a civil society organization is crucial to its sustained viability. Conceptually, however, we observe a lack of consensus on how to best understand CSO governance. By critically juxtaposing two major theoretical lenses to conceptualize governance, namely, agency and stewardship theory, we identify a number of challenges when dealing with board–management relations that deserve our attention. While agency theory privileges controlling behavior, stewardship theory emphasizes the coaching behavior of boards. The purpose of this article is to offer a concept of governance that is informed by a paradox perspective advancing a subtler, more adequate conceptualization of board governance that accounts for these often conflicting demands on CSO governance. Drawing on illustrations from a longitudinal interpretive case study, we exemplify our propositions empirically. The article concludes with discussing the implications of our argument for CSO governance research and practice.

The institutional complexity of social enterprises (SEs) often hinders their access to financing from conventional investors. To align the interests of SEs and their investors, innovative investment instruments of social finance are emerging. However, there is evidence of a mismatch between the financial needs of SEs and the instruments offered by social finance entities (SFEs). The analysis of 34 SEs and 6 SFEs through the lens of agency theory shows that some barriers are caused by contradictory agent—steward models of behaviour, whereas others are deficiencies of the SE sector in general. The study demonstrates that the SE financing gap is a complex problem that requires multifaceted solutions.

This study proposes a revised agency theory for the nonprofit sector, distinguishes between the extent of agency and the extent of monitoring, and compares the magnitudes of the two impacts. Using panel data for 1998–2003, the paper tests whether monitoring by principal-stakeholders such as donors, clients, the government, and the board reduces the opportunity for executive misconduct such as extravagant spending on compensation and perquisites. Given the theory, the findings show that two effects influence CEO salaries. First, while nonprofit endowments provide a fiscal cushion in tough financial situations, by offering “organizational slack” they also increase the CEO’s opportunity to steal or raise her compensation (i.e., agency effect). Second, donors utilize monitoring mechanisms such as auditing or direct observations, which limit the opportunity for misconduct and reduce executive pay (i.e., monitoring effect). In the final analysis, the monitoring effect is greater than the agency effect, which implies that even if agency problems are present, the monitoring that donors provide offsets them.

We study the relation between stability of the nonprofit organization’s environment and its board structure and the impact of this relation on organizational performance from the perspectives of both Agency Theory and Resource Dependence (Boundary Spanning) Theory. The impact of board characteristics on organizational performance is contextual. Specifically, we predict and show for a sample of U.S. nonprofits that board mechanisms related to monitoring are more likely to be effective for stable organizations, whereas board mechanisms related to boundary spanning are more effective for less stable organizations. We find that the two theories are complementary and address different aspects of nonprofit performance, but the results are statistically stronger and more often consistent with resource dependence than with agency theory. Overall, this study supports Miller-Millesen’s (Nonprofit and Voluntary Sector Quarterly, 32: 521–547 2003) contention that, because the nonprofit environment is often more complex and heterogeneous than the for-profit world, no one theory describes all tasks of nonprofit boards.

Organizational transparency has become a prominent concern for the nonprofit sector as it expands globally. Transparency is important to organizational accountability, which may be indicated by how nonprofits allocate their resources. In this study, we examine the relationship between nonprofits’ transparency and their resource allocation to programs, administration, and fundraising. Our study focuses on China, where a nascent nonprofit sector is playing increasingly significant roles in social development while facing public trust challenges. Based on Agency Theory and Resource Dependence Theory, we propose two hypothesized frameworks that link transparency to resource allocation, and use the 2013–2015 China Grassroots Organizations’ Transparency Survey data (n = 370) to test this relationship. Our results suggest that nonprofits with higher transparency allocate more resources to programs rather than administration, a possible result of the current public scrutiny of nonprofit accountability in China. Our findings provide implications for nonprofit practitioners and future research about the significance of organizational transparency, particularly in emerging nonprofit sectors.

This study examines how the managerial interpretation of incentive arrangement affects corporate engagement in social areas, as reflected in corporate social performance, from two interrelated perspectives: the political influence view and the normative agency view. Building the theoretical framework on state-owned enterprise (SOE) executives' dual-career tracks perspective, we contend that economic factors (performance decline and relative pay gap) and political factors (socialist imprints and political career horizon) could divergently reshape the interpretation of incentive arrangement on corporate social performance. Using ‘Pay Ceiling Order’ as a quasi-natural experiment context, a secondary analysis, and a controlled experiment reveal that compensation restriction on top executives causes a decrease in corporate social performance. This relationship is weakened when there are stronger socialist imprints inherited by a focal firm and when the executives have a longer political prospect. In contrast, the relationship is strengthened when firms face severe performance declines and when the executives' compensation is relatively lower than peers. The findings show that compensation is an indispensable incentive joining with political and economic factors, enabling SOEs to engage in social areas. We discuss the implications of understanding top executive incentives with incentive arrangements and how the government purpose influences top executive responses to compensation incentive in ways that matter for long-term social value.

We examine how the central government's management of subnational governments' agency influences the smartness of the latter's industrial specialization choices. Based on smart industrial specialization theory and agency theory, we hypothesize how two central government tools governing subnational governments' agency – facilitating their organizational efficacy and promoting their officials to higher ranks – explain recent industrial specialization choices by China's 31 provincial governments. We find that provincial governments with greater organizational efficacy, measured by access to better-resourced local state-owned enterprises in focal industries, make smarter specialization policies. In addition, we show that provincial governments with greater numbers of officials previously promoted to the central government make, contrary to conventional wisdom, potentially less smart specialization policies. Our research extends smart specialization theory by explaining that central government tools governing subnational agency problems can have knock-on effects making subnational governments' industrial specialization choices smart or unsmart.

Supply chain security presents numerous challenges to governments interested in defending against terrorist threats. While most approaches stress technological solutions, scholars and policy-makers tend to overlook economics, labour market issues, and industrial relations. Applying agency theory from behavioural economics, this article analyses threats to the US supply chain and opportunities for efficient solutions. Using data from a sophisticated web-based survey of owner-operator cost-of-operations, it shows that drayage drivers are among the lowest paid truck drivers and workers in the US. We provide evidence that low pay is associated with both safety and security risk. Low-wage labour and subcontracting present challenges to US and foreign supply-chain security because the market attracts workers who have few other employment options. In this environment, principals and agents currently make inefficient and inequitable contracts because markets do not reflect the complete costs associated with low-probability/high-impact events like cargo theft and transport security.

As governments move from being both a funder and provider of human services to a purchaser of services in private sector markets or quasi-markets, ensuring that providers do what they are supposed to do becomes more difficult. Agency theory and stewardship theory have been suggested as ways of overcoming this problem. This article argues that both are inadequate, particularly because they conceptualise the relationship as bilateral (government funding department and service provider), ignoring the role of clients in achieving organisational objectives. Co-production that recognises the role played by clients in the production of employment outcomes can provide a more useful way of thinking about relationships among key actors involved in the provision of employment services.

Independent directors (IDs) in listed Japanese companies have gradually increased with the transplant of the Western model of the monitoring board. In practice, however, IDs act more like the mediating hierarch in team production theory than the agent of the shareholders, albeit with a number of differences from Blair and Stout’s seminal model. Japanese IDs mediate formally and informally, resolving vertical disputes between groups of executives as they contest control of the company. Given the norm of lifetime employment, such vertical disputes are common in Japanese companies and are economically significant, since failure to resolve them can result in destruction of firm-specific human capital. The article explores the scope for mediating hierarchy in Japanese law and corporate governance practice, then develops three case-studies which highlight the role played by IDs. Their practice is shaped by and supports social norms that emphasize the importance of continuity in team production.

Previous corporate governance research has paid little attention to the role of chief executive officer (CEO) labor markets in controlling CEO behaviors because the CEO labor market has been considered inefficient. With the increasing mobility of top executives across firms, however, the potential of CEO labor markets to serve as an external disciplining force has been growing. In this study, we argue that CEOs will be more pressured to engage in desirable behaviors as the CEO labor market becomes more efficient. Using a longitudinal sample of S&P 1500 firms in high-technology industries in United States from 2011 to 2019, we found that CEOs tend to increase R&D investment as CEO labor market supply increases. We also found that the tendency is greater when external CEO succession is more frequent in the market. Our results demonstrate that CEO labor markets have the potential to function as an effective external governance mechanism.

In the aftermath of the 2006 and 2014 Thai coups,observers declared the resurrection of thebureaucratic polity. Bureaucrats, though, remainedinfluential even during the period of 1992–2006,when elected politicians were thought to command theThai state. Bureaucratic involvement in politicsposes a challenge for dominant political sciencetheories of politician–bureaucrat relationships,which draw heavily from principal–agent frameworks.I apply agency theory to Thailand, testing threedifferent hypotheses derived from the theory.Examining legislative productivity and control overbureaucratic career trajectories, I find thatelected politicians increasingly acted as principalsof the Thai state from 1992 through 2006, and to alesser degree from 2008 to 2013. Thai bureaucrats,though, have frequently engaged in the politicalsphere, blunting political oversight and expandingtheir independence vis-à-vis politicians. Thissuggests that the principal–agent model overlooksthe range of resources that bureaucracies can bringto bear in developing countries, granting themgreater autonomy than anticipated. As such, theoriesof the politician–bureaucrat relationship indeveloping states need to better account for themechanisms through which bureaucrats exercise policydiscretion and political influence.

In a context of institutionalized regulation and academic framing determined by agency theory, we note paradoxes in board governance literature and practice. These paradoxes concern boards’ conflicting roles of monitoring/control, and innovation/strategy-making. We explore directors’ mind-sets about governance on which their resolution of paradoxes and their decisions and actions will be based. We do this by applying discourse analysis to the transcripts of 60 semistructured interviews conducted with New Zealand directors who described and evaluated their experience of board governance. We identify and discuss their various discourses, which we label discourses of conformance, of deliberation, of enterprise and of bounded innovation. We note the homogeneity of discourses across different organization types, the dominance of conformance, the nonresolution of paradoxes, and the likely effects in inhibiting board strategy-making and contribution to innovation. We recommend attention by boards to their mind-sets and processes, and the development of generativity.

Some business ethicists view agency theory as a cautionary tale—a proof that it is impossible to carry out successful economic interactions in the absence of ethical behaviour. The cautionary-tale view presents a nuanced normative characterisation of agency, but its unilateral focus betrays a limited understanding of the structure of social interaction. This article moves beyond unilateralism by presenting a descriptive and normative argument for a bilateral cautionary-tale view. Specifically, we discuss hat swaps and role dualism in asymmetric-information principal-agent relationships and argue that the norm of reciprocity can function as a moral solution to agency risks in adverse-selection and moral-hazard problems. Our bilateral cautionary-tale formulation extends the normative boundaries of agency theory, while leaving the fundamental economic assumptions of agency theory intact.

The purpose of this study is examine how agency theory and stewardship theory lead to different firm-level outcomes on an array of different outcomes. Based on these differences, we argue for the development of an agent–steward measurement scale, which will help researchers classify chief executive officers (CEOs) along an agent–steward continuum. This, in turn, will spur research to predict and test CEO behaviors and firm-level outcomes. Agency theory suggests CEOs take advantage of their powerful positions to maximize their personal economic utility, whereas stewardship theory suggests CEOs are motivated through intrinsic awards and will balance their interests with those of other stakeholders. We use these theories to examine possible differences in CEO behaviors. This is important because different CEO behaviors might lead to differing impacts on important firm-level outcomes. This paper reviews the relevant agency and stewardship literatures, then offers propositions regarding CEO behaviors from agent and steward perspectives.