Agency theory has been criticized for being too narrow and restrictive to particular contexts (Wright et al., 2001; Phan and Yoshikawa, 2000). These restrictions call into question the ability of agency theory to explain diverse situations such as inn ...
Agency theory has been criticized for being too narrow and restrictive to particular contexts (Wright et al., 2001; Phan and Yoshikawa, 2000). These restrictions call into question the ability of agency theory to explain diverse situations such as innovation-based corporate entrepreneurship and different national settings. We believe, however, that agency theoretical principals provide a useful lens for exploring these contexts. Yet rather than assume there will be agency risks, and that monitoring and incentive practices are therefore necessary, we may view monitoring and incentive practices as explaining lower agency risks. But in order to do this, agency theory would need to account for the particular nature of monitoring. Guidance-based monitoring may act as a better preventive than practices aimed at observation and assessment, as extended agency perspectives emphasize (Hendry, 2002). These practices could be built into an innovation program at the outset. In addition, incentives need to account for both the downsides and upsides of entrepreneurial activities. Removing disincentives may be a necessary first step in motivating an entrepreneur to achieve management's goals.
Future research could extend our insights on monitoring and incentives. As our data suggests, the Korean organization combines high guidance with high involvement, while entrepreneurs in the U.S. tend to value independence coupled with advice when needed. In addition, while the Korean organization provides high upside rewards, with less concern about the downsides, the U.S.-based companies tended to be more concerned with reducing the downside, seemingly convinced the intrinsic and intangible upsides are sufficient. Additional studies could examine further the role of advisors to entrepreneurs, and the balance of removing disincentives versus providing incentives in entrepreneurship across organizations and national cultures.
We recognize several limitations in our study that provide additional opportunities for future research. While we have examined twelve U.S.-based companies across a diversity of industries, we only examined one Korean company. We intend to extend our research to additional Korean-based corporations, to distinguish between company practices and national culture. Future research could extend this study to other Asian countries, and to countries beyond the U.S. and Asia.
In addition, we focused on agency theory for this study. Additional theories should be employed to broaden the lens through which we examine corporations embedded in different cultures. Stewardship theory, for example, represents a more recent effort to explain relationships where agents have motives aligned with principals, and who meet their personal needs by pursuing organizational objectives (Davis, Shoorman, and Donaldson, 1997). This, and other perspectives, can help us better understand the phenomenon of corporate entrepreneurship across national cultures and inform managers involved in this difficult but rewarding activity.