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This chapter sets out the theoretical framework used in this book. This consists of three complementary theoretical approaches — the Westminster Model, Historical Institutionalism, and Principal-Agent Theory — which each in their own distinct way allows each chapter to dissect and tease apart the politics of delegation in Britain. Moreover, these approaches also operate at distinct levels, which again deepen our understanding of both the theory and practice of delegation.

In an overview of the theory and historiography of the corporation, this chapter examines contributions to understanding offered by historians, neo-classical economists, evolutionary economists, and organizational sociologists. It critiques existing theories of the corporation for neglecting power and culture and for failing to understand the mutual constitution of the corporation and its environment. This discussion paves the way for a new model that recognizes the ways in which corporations are embedded in their social environment and help to constitute their environment, and how this relationship has evolved over the past 150 years. An overview of the chapters that follow is presented.

This chapter introduces a theory of democratic constraint and derives testable hypotheses. Drawing on literatures ranging from principal-agent theory to political communication and crisis bargaining, it establishes expectations about the processes that result in the public actually becoming aware of foreign policy and then responding at the ballot box. The chapter argues that democratic institutions that favor the flow of information between citizens and leaders—most notably those fostering both political opposition that can generate credible information and an independent and accessible media that can transmit it—contribute to constraint. However, there is substantial heterogeneity among democracies in the extent to which these conditions hold. The chapter concludes with a discussion of how various combinations of these institutional attributes will translate into foreign policy behavior, with a particular focus on conflict behavior.

This chapter deals with a selection of interdisciplinary factors which contribute to an understanding of the relationships within and rationales of European administrative law. The first section begins with an analysis of the concept of cycles and phases of administrative activities. Next, it considers the application and comparison of state administrative models to those of the EU. It then turns to the debate concerning the concept of ‘new public management’, which has attempted to identify areas of public administration in need of reform and to put forward alternative concepts for its structuring and direction. The second section offers reflections on two approaches: first, the application of principal-agent theory in the context of the delegation and organization of competences on the EU level; secondly concepts of regulatory competition which arise in the context of multi-level regulatory systems.

Presents a formal theoretical framework that clarifies when principals can, and cannot, use delegation to accomplish desired ends. It shows the conditions (having to do with preferences and information) under which agents will act in their principals’ interests and how political institutions can alleviate the perils of delegation. Finally, it discusses the implications of its theoretical insights on chains of political delegation.

Any attempt to understand the war-waging responsibilities of senior political and military leaders must examine two important civil-military theories: the principal-agent theory and its antecedent, the objective control theory. Both approaches analyze the interaction between senior civil and military leaders and the bureaucracies they head. This is the intersection at which waging war occurs. Both theories use a paradox to identify the core issue of the civil-military relationship in a democracy. On the one hand is a functional imperative: to provide security, which is a military force’s function, a nation’s military must be large enough and have sufficient skills, leadership, and materiel to create and sustain the capacities the nation needs to be secure relative to the threats that nation faces or believes it faces. On the other hand is a social imperative: a nation’s military cannot be so strong that it ends up destroying the very state it is designed to serve. Achieving a proper balance between the functional and the social imperatives is, for both the objective control theory and its principal-agent successor, the crux of the relationship between civil and military leaders as well as the bureaucracies that they lead.

This chapter focuses on supply-side innovations in delivering health services, and their impact. It begins with an overview of incentives in organizations, located in the conceptual framework of principal-agent theory. It then examines four major types of reform, framing them in terms of a principal agent model which interprets these reforms as measures designed to align more closely the incentives of government and providers; and reviewing the current evidence about their effectiveness. The conclusions highlight the challenges of introducing stronger incentives for health care provider performance in the context of information problems, and the implications for both broader system performance and for the evaluation of such interventions.

Uses the material from the two previous chapters to develop a new theory of public service motivation. The theory allocates a key role to the sacrifice involved in performing altruistic acts, arguing that the degree of sacrifice is positively related to the amount of altruistic acts undertaken (at least up to a point). It relates this to economic and psychological theories of intrinsic and extrinsic motivation. Goes on to discuss some of the theory's implications for policy design, examining, inter alia, principal‐agent theory, incentive contracting, non‐profit organisations and the development of ‘robust’ incentive structures. It also discusses the morality of exploiting people's willingness to undertake altruistic acts.

This chapter focuses on international organizations and bureaucracies in international relations research. In particular, it examines the relative neglect of international bureaucracies in international relations theory and discusses theoretical approaches from international relations research as well as from management studies. The chapter also discusses important differences between commercial organizations and public non-profit bureaucracies, along with the use of principal-agent theory to study international bureaucracies.

The balance between fetishizing theory as true knowledge and dismissing it as irrelevant to practice—especially management practice—is a challenge. Hence the rigor–relevance discussion. This chapter defends the view that academic theorists have something important to say about business strategy—but as guides, not prescriptions. First, the language of the economic models or ‘theories of the firm’ has to become aligned with that of the consultants’ models in Chapter 2. This happens as each model is probed to uncover where and how it fails to prescribe—so indicating the nature of the entrepreneurial judgment needed to reach closure. The approach entails a critical examination of each of the current theories of the firm

Based on the economic analysis of education, this chapter embarks on unraveling the rationale behind policymaking in education. Commodification of education (particularly in case of higher education) has led policymakers to repose faith on private-sector provisioning and the market to achieve efficiency and quality through competition both at the institutional level and the economy level. The chapter begins with a discussion on various modes of funding of education followed by a discussion on various forms of private sector participation, public–private partnership (PPP), governance reform, regulation, choice making, and quality assurance mechanism. It discusses why profit making in education has adverse implications for access and quality mainly because of an absence of a well-defined production function.

While to lawyers — trained to think in terms of neatly separated legal boundaries — governance phenomena and transnational relations may feel uncomfortable, international relations (IR) theory has addressed transnational, non-State, cooperation from the outset. This chapter argues that IR scholars have to some degree overlooked the changing character of network-based informal cooperation among public actors. It seeks to fill this gap by proposing a typology of bodies involved in informal international lawmaking. The chapter further reveals some lessons to be learned from IR theory, particularly the principal-agent model, for informal international lawmaking (IN-LAW).

Building on evidence presented in Chapter 5, this chapter explains the second part of the book’s argument about institutional culture. Specifically, a climate of positive interpersonal relations among actors at international organizations helps to speed up their responses to crises. Equally, negative relations can lead to slower responses. The chapter begins by giving evidence that the majority of critical decision-making occurs outside of formal channels through bilateral informal negotiations or through multilateral social networks. It then applies Principal-Agent Theory to explain the process of ambassadors gaining trust at their respective peace and security committees and to explain the role of information asymmetries among ambassadors and their capitals. In detail, the chapter traces the process of establishing positive interpersonal relations and the critical role that trust plays in access to critical information. After information is shared, ties are strengthened and consensus can be more easily achieved. After having examined the role of interpersonal relations in organization efficiency, the chapter proceeds to discuss how social networks among groups of actors within international organizations affect speed of response. The author categorizes and explores dominant types of networks observed across organizations and concludes that both informal relations and informal networks can positively ( negatively) affect speed of response.

This chapter explores two theories central to understanding the behavior of federal prosecutors. First, principal-agent theory is introduced to frame the relationship between national political actors, or principals, in the executive and legislative branches and their agents—U.S. Attorneys (USAs). In that exploration, the chapter focuses on problems of adverse selection and the monitoring of agents by principals. Second, the chapter considers career ambition theory as it pertains to the post-service employment opportunities of USAs. That discussion focuses on the potential of USAs to ascend to higher positions in the administration or secure nomination to the federal bench, both of which require the approval of principals in the executive branch.

This chapter provides two practical applications of the legal theory of the firm elucidated in the book. One controversial issue addressed is executive compensation in corporations, which many observers believe has become disproportionate in some countries and within some firms. The chapter shows how some influential economic theories adopted simplistic “principal–-agent” prescriptions which contributed to imbalance and injustice in contemporary compensation practices (e.g. through the careless use of stock options). An institutional legal theory offers a corrective to this approach.A second controversial issue involves the political free-speech rights of corporations and other “business persons,” such as addressed in the controversial Citizens United case. The chapter argues that an institutional legal theory of the firm can deepen analysis and understanding on both sides of the debate. It also suggests possible directions for future compromise, such as mandatory disclosure requirements of the funding of political campaigns and other political activities of business firms.

International bureaucracies and their retinue of civil servants are considered important players in world politics, and yet, as exemplified by the United Nations (UN), others see them as an assembly of ineffective, inefficient, and unresponsive bureaucrats. This book explores the influence and dynamics of international bureaucracies in world politics. It draws on the core findings of the Managers of Global Change (MANUS) project, a four-year research program that investigated the type and degree of autonomous influence of international bureaucracies as well as the possible factors which account for any differences in this influence. This research has some similarities with, as well as differences from, two strands of theory on international bureaucracies: Principal-agent theory and sociological institutionalism. The book presents case studies of nine international bureaucracies, including the UN and the World Bank, and looks at two types of bureaucracies: Secretariats of international environmental treaties and environmental departments of the secretariats of intergovernmental organizations. It also reviews the state of the art in the academic disciplines of international relations and organizational and management studies.

This chapter presents the book’s theoretical argument. Building on the delegation literature and principal-agent theory, it argues that legislative principals delegate to reduce transaction costs. However, they delegate with hesitance because they fear that delegated powers may be used for unintended purposes. This dilemma between efficiency and control is partly resolved by installing monitoring mechanisms. However, since control implies influence on future decisions to be made by the agent, the principals are likely to disagree on their exact design. There is therefore a ‘multiple principals’ problem in the design and use of control regimes. In the post-Lisbon EU, the Council of Ministers and the European Parliament may choose between the delegated acts and the implementing acts control regime. Since these two regimes provide them with different control positions, they are likely to disagree on their use. This fundamental conflict is the key to understanding post-Lisbon institutional contestation of delegation.

This chapter is the heart of the risk-decoupling problem analysis. It develops four different perspectives on the problem. The starting point is a classical principal-agent approach. Additional insight comes from information cost and transaction cost theory, from corporate finance, and from the market for corporate control. These problem perspectives yield a number of conclusions that are important for the subsequent discussion of regulatory responses. It becomes clear that risk-decoupling creates costs for shareholders and outside investors alike. However, in exceptional cases, risk-decoupling may also strengthen the shareholders’ role in monitoring management. These findings will inform the subsequent development of regulatory solutions.

Benin’s forest reserves are seriously threatened by legal and illegal logging, among other activities. Since 1990, the government has adopted co-management as an institutional device to promote a sharing of power and responsibility among local community resource users and resource management agencies. This chapter develops an agency theory framework and employs it to evaluate the performance of this co-management arrangement. The analysis shows that the contract devised by the principal (the government) is seriously flawed. The arrangement should be revised based on agency theory principles. It is especially important to avoid a situation in which state intervention damages local institutions, turning common property resources into open access resources.