Principals and Agents, or Principals and Stewards? Australian Arms Length Agencies’ Perceptions of Arm’s Length Government Instruments
TL;DR: In this paper, the authors describe how they perceive the instruments that have been implemented by their portfolio departments to manage and control the arm's-length agencies at federal level in Australia.
Abstract: After the large-scale creation of arm’s length agencies by governments around the globe, these governments now face the dilemma of how to manage, steer or control these arm’s length agencies. Different instruments have been developed, based on either of two theoretical models: principal-agent theory or stewardship theory. Both are based on economic models of man with a principal charging an agent or a steward with a task. Principal-agent theory is based on the principal distrusting the agent to perform as agreed, leading to a need for extra monitoring and control. Stewardship theory is based on trust, and requires very different instruments to manage at arm’s length. Using the perspective of arm’s length bodies at federal level in Australia, we will describe how they perceive the instruments that have been implemented by their portfolio departments to manage and control them. Using survey data (N = 89), we will test which of the two models is used most often in this country, one of the frontrunners in agencification. Results show that arm’s length agencies are more inclined to take a stewardship position, while a mixture of instruments from the principal-agent and stewardship model is applied. This could lead to problematic relationships.
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TL;DR: Analyzes the governance structure of Benedictine monasteries to gain new insights into solving agency problems in public institutions and argues that they were able to survive for centuries because of an appropriate governance structure, relying strongly on the intrinsic motivation of the members and internal control mechanisms.
588 citations
01 Jan 1983
TL;DR: An agent differs from an employee by the fact that the activities of the agent are not monitored in detail as mentioned in this paper, and the principal does not give his agent contingency orders on how to handle each possible decision situation as he does to supervised employees.
Abstract: Publisher Summary This chapter provides an overview on principals and agents. An agency relationship between two individuals exists when the agent is authorized by the principal to make, modify, or cancel contracts with a third party in the principal's name. An agent differs from an employee by the fact that the activities of the agent are not monitored in detail. The principal does not give his agent contingency orders on how to handle each possible decision situation as he does to supervised employees. Some guidelines may be spelled out and the agent may be monitored to some extent, but the essential feature of the agency relationship is the freedom of the agent to determine activities and contracts independently. The power to act independently for the principal can be used by the agent for his own benefit. A contract makes the contractor liable for damages, but the legally determined financial compensation may not be a satisfactory alternative to specific performance. The contract could spell out the principal's desires for performance in each possible contingency.
22 citations
TL;DR: In this paper , the authors explored informal social accountability mechanisms for WASH in childcare centres in Korogocho and Viwandani informal settlements in Nairobi City County, Kenya.
Abstract: Social accountability for water, sanitation and hygiene (WASH) services is a critical component to realising child rights to WASH services by the urban poor, more so in childcare centres. Despite the existence of discrete social accountability mechanisms (SAMs) in informal settlements, informal SAMs rarely form part of strategic approaches to addressing social accountability challenges in access to WASH services in childcare centres. The main objective of the study was to explore informal social accountability mechanisms for WASH in childcare centres in Korogocho and Viwandani informal settlements in Nairobi City County, Kenya. This qualitative study was an ethnography, where we administered governance diaries to 24 participants (parents and childcare managers) for 4 months. Data generated were analysed using a framework analysis derived from a principal-stewardship framework. Parents and centre managers, who are key actors for WASH services in childcare centres in informal settlements, relied on using informal SAMs. We identified three SAMs; (i) discretionary behaviours (rewards and sanctions, interpretation of rules and guidelines and peer mentorship); (ii) norms and values; and (iii) facilitative behaviours. The SAMs were interrelated and operated in synergy for access to WASH service by children in childcare centres. The SAMs for WASH used by parents and childcare owners in childcare centres encountered the following challenges; unrealistic expectations, negligence, conflicting expectations, conflicting agenda and administrative cultures, and tensions over performance standards and monitoring. Identified strategies for strengthening the SAMs included consistency in adhering to rules and guidelines for WASH service provision, and collaboration with strong WASH actors. Data from this study suggest it is valuable to examine and understand SAMs as this then offers clear pathways to mitigate problems and enact change in the WASH service delivery for improved global agenda of SDG 4 and SDG 6. Further, there is potential for joint advocacy for improved WASH services throughout the informal settlement. While SAMs are often conceptualised as a formal process or an intervention, this study shows that existing daily informal SAMs play an important role in promoting or maintaining WASH service delivery. Therefore, WASH stakeholders need to revisit, co-develop and evaluate informal SAMs for WASH service delivery.
7 citations
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TL;DR: It is argued that certain duties of patients counterbalance an otherwise unfair captivity of doctors as helpers and that vulnerability does not exclude obligation.
Abstract: There has been a shift from the general presumption that “doctor knows best” to a heightened respect for patient autonomy. Medical ethics remains one-sided, however. It tends (incorrectly) to interpret patient autonomy as mere participation in decisions, rather than a willingness to take the consequences. In this respect, medical ethics remains largely paternalistic, requiring doctors to protect patients from the consequences of their decisions. This is reflected in a one-sided account of duties in medical ethics. Medical ethics may exempt patients from obligations because they are the weaker or more vulnerable party in the doctor-patient relationship. We argue that vulnerability does not exclude obligation. We also look at others ways in which patients’ responsibilities flow from general ethics: for instance, from responsibilities to others and to the self, from duties of citizens, and from the responsibilities of those who solicit advice. Finally, we argue that certain duties of patients counterbalance an otherwise unfair captivity of doctors as helpers.
17,373 citations
TL;DR: In this paper, the authors discuss the doctrinal content of the group of ideas known as "New Public Management" (NPM), the intellectual provenance of those ideas, explanations for their apparent persuasiveness in the 1980 s; and criticisms which have been made of the new doctrines.
Abstract: This article discusses: the doctrinal content of the group of ideas known as ‘new public management’(NPM); the intellectual provenance of those ideas; explanations for their apparent persuasiveness in the 1980 s; and criticisms which have been made of the new doctrines. Particular attention is paid to the claim that NPM offers an all-purpose key to better provision of public services. This article argues that NFM has been most commonly criticized in terms of a claimed contradiction between ‘equity’ and ‘efficiency’ values, but that any critique which is to survive NPM's claim to ‘infinite reprogrammability’ must be couched in terms of possible conflicts between administrative values. The conclusion is that the ESRC'S Management in Government’ research initiative has been more valuable in helping to identify rather than to definitively answer, the key conceptual questions raised by NPM.
7,919 citations
"Principals and Agents, or Principal..." refers background in this paper
...One of the reforms that became known under the heading of New Public Management is the structural disaggregation of units of the government bureaucracy, for example ministerial directorates, turning them into semiautonomous bodies or arm’s length agencies (Hood, 1991)....
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TL;DR: This article proposed a model based upon the subordinate's psychological attributes and the organization's situational characteristics to reconcile the differences between these assumptions by proposing a model that reconciles the differences among these assumptions.
Abstract: Recent thinking about top management has been influenced by alternative models of man.1 Economic approaches to governance such as agency theory tend to assume some form of homo-economicus, which depict subordinates as individualistic, opportunistic, and self-serving. Alternatively, sociological and psychological approaches to governance such as stewardship theory depict subordinates as collectivists, pro-organizational, and trustworthy. Through this research, we attempt to reconcile the differences between these assumptions by proposing a model based upon the subordinate's psychological attributes and the organization's situational characteristics.
4,288 citations
"Principals and Agents, or Principal..." refers background or result in this paper
...Furthermore, following the claim by Davis et al. (1997) the mixing of instruments would be expected to lead to dysfunctional relationships....
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...When Davis et al. (1997) presented stewardship theory as an alternative for principal-agent theory, they stated that the optimal situation is if both actors choose the same model for their relationship....
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...This would contradict the dichotomous nature of the models as emphasized by Davis et al. (1997, cf. Grundei, 2008) and, based on the prediction of Davis et al. (1997), could lead to dysfunctional relations....
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...Stewardship theory incorporates elements from psychology into the model (Davis et al., 1997)....
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TL;DR: The universal administrative reform movement in public management of the past two decades, as illustrated in the three articles on administrative reform in Britain, Australia and New Zealand which follow this article, has obviously been driven in large part by the requirement that governments respond to the fiscal stresses brought about by changes in the international economic system on the one hand and by the unrelenting demands for government services and regulations in national political systems on the other as mentioned in this paper.
Abstract: The universal administrative reform movement in public management of the past two decades, as illustrated in the three articles on administrative reform in Britain, Australia and New Zealand which follow this article, has obviously been driven in large part by the requirement that governments respond to the fiscal stresses brought about by changes in the international economic system on the one hand and by the unrelenting demands for government services and regulations in national political systems on the other. These stresses have led to the paramountcy of policy responses aimed at budgetary restraint and at downsizing the public services of governments, as well as - various measures to privatize government operations and to deregulate private economic enterprises. Within the context of these developments, two major sets of ideas have come to influence the design of governance and management therein. They are not unrelated to the policy responses which have come to be characterized as ”neo-conservative,” but they have a separate identity. The first set of ideas, emanating from the school of thought known as public choice theory, focuses on the need to reestablish the primacy of representative government over bureaucracy. The second set of ideas, now generally referred to as the “managerialist” school of thought, focuses on the need to reestablish the primacy of managerial principles over bureaucracy. Taken together, they have had a profound impact on the ways in which governments are structured for the purposes of administering public affairs. Although the changes which have been introduced or proposed as a result of these two sets of ideas might be regarded as a ”return to the basics” of representative government and public administration, there is an important sense in which the fundamental prescriptions of the two proceed from quite different premises about what constitutes public management. The coupling of the two thus must inevitably give rise to tensions, if not outright contradictions, in the implementation of these ideas. At the same time it is clear that these tensions and contradictions are inherent in the governance of modern administrative states (Waldo 1984). It is not illogical, therefore, that governments should attempt to pursue the
845 citations
"Principals and Agents, or Principal..." refers background in this paper
...Through the rise of New Public Management in the 1980s and 1990s Australia saw both efforts for greater assertion of political authority over administrative entities, together with devolution of management responsibilities (see Aucoin 1990, 2012; Halligan, 2000; Smullen, 2010)....
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TL;DR: Using agency and stewardship theories, the authors examined how public administrators manage contracting relationships with nonprofit organizations and found that the manner in which nonprofits are managed evolves over time from a principal-agent to a principalsteward relationship but with less variance than the theories would suggest.
Abstract: Using agency and stewardship theories, this study examines how public administrators manage contracting relationships with nonprofit organizations. Interviews were conducted with public and nonprofit managers involved in social services contract relationships at the state and county level in New York State. The use of trust, reputation, and monitoring as well as other factors influence the manner in which contract relationships are managed. The findings suggest that the manner in which nonprofits are managed evolves over time from a principal-agent to a principal-steward relationship but with less variance than the theories would suggest. This results in part from the contextual conditions that include the type ofservice, lack ofmarket competitiveness, and managementcapacity constraints. Theintergovernmental environment in which social services are implemented and delivered presents complex challenges for public managers responsible for managing contract relationships. The findings from this study document those challenges and the corresponding management practices used with nonprofit contractors.
761 citations
"Principals and Agents, or Principal..." refers background in this paper
...However, several authors have questioned whether this claim holds, both on theoretical grounds (see e.g. Pastoriza & Arino, 2011) and through limited empirical testing (see e.g. Van Slyke, 2006; Dicke, 2002)....
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