An Agency Theory Perspective on Managing Innovation-based Corporate Entrepreneurship: Applying Insights from the U.S. to a Korean Multinational Firm

We examine agency relationships between managers and project team leaders in corporate entrepreneurship activities in twelve U.S.-based corporations and one Korean-based firm. Our multicase analysis suggests that agency risks are lower in the Korean company due to close, frequent interactions between principals and agents, and low fear of failure. While agency theory would predict this should lead to lower need for monitoring and incentives, we found high levels of both in the Korean firm. These results suggest that interests may align when there is high guidance-based monitoring and incentives that are accompanied by low consequences of failure.