Agency relationships in global project business

Project-based firms (PBFs) serving global markets rely on local agents throughout the project life-cycle. In particular, agents are frequently used to support the PBFs efforts in project marketing, project implementation, and in provisioning of services to customers operating the delivered solutions. The purpose of this paper is to analyse principal-agent relationships in global project business from an agency perspective in order to provide further clarity to the their salient characteristics, and to identify mechanisms through which agency problems can be mitigated. Based on our analysis of earlier literature, it appears that PBFs’ principal-agent relationships with local actors during project front-end and operations phases are predominantly explorative in their nature whilst relationships during project implementation can be characterized as exploitative. Respectively, relationships of the former kind are governed by complex combinations of contractual and noncontractual mechanisms, while in relationships of the latter kind, rather simple contractual mechanisms are favoured by PBFs. Our findings imply that PBFs need to consider both the project life-cycle phase, as well as the characteristics and goals of individual agents, when designing mechanisms for governing their agency relationships.