Solving the agency problem via a networked supplier social media platform

Abstract

This paper considers the use of incentives and signals by a dominant player to solve an agency problem across a network using a social media platform. An information sharing model underpinned by reward incentives and information visibility, to drive competitive information sharing across homogenous suppliers, is proposed, and builds on early work in the area. The study was exploratory in nature and involved conducting 57 interviews and 3 workshops over a 4-month period across a UK insurance supply chain. The data revealed that when appropriate incentives are combined with information visibility, the Principal can effectively align the suppliers interests with their own desire for supply chain wide information sharing. The research contributes to extant literature on agency theory by extending the Principal Agent (PA) issue arising in a dyadic contractual relationship, to solving agency issues across a network.