I am just wondering how can we use the agency theory in business to explain the advantages that ICT can have on business processes in enterprises, which can impact its economy interms of cost saving and competitiviness?
If you are referring to the agency relationship between management and shareholders, ICT can have many impacts both advantageous and disadvantageous. For instance a positive impact through website and information dissemination and email where the interval between what management knows and what shareholders know can be reduced or otherwise controlled by management. ICT can also have a negative impact in social media where information can be disseminated by those other than management, such as disgruntled employees or customers (illustrative link attached).
http://www.forbes.com/sites/cherylsnappconner/2012/07/23/the-power-of-the-disgruntled-employee/
thank you Chris for the input, so it is in the direction of time saving, can it be too in the direction of cost saving, in that it reduces number of middle managers. Can ICT replaces middle managers.
One way to approach this would be to define what ICT actually is. In human computer interaction (HCI) we study how people interact ‘with’ computing products, information communication technology (ICT) is subtly different, it investigates how people interact ‘through’ them. Under the communication model, the computer is simply a channel that allows humans to interact with each other. For example, managers in different locations may use computer tools, such as instant messaging and electronic whiteboards, to collaborate with one another. In this scenario, the computer facilitates the communication. I am not familiar with agency theory but in an attempt to answer your question, if agency theory at any point uses computers to facilitate communication, it can be linked to ICT.
Yes if we are focusing on the positive impact of ICT on management/owner agency, then ICT can potentially achieve cost savings, and also possibly reduce the risk of conveying inaccurate information from management to owners. But we may also balance that against the negative costs and risks of ICT, which would be the converse of the previous sentence. ICT can magnify the human errors of management and in this way increase the agency problem. To illustrate that I attach another short paper which shows how management can obfuscate their own efforts when implementing new ICT projects.
Article Learning the lessons of failure: a role for Internal Audit i...
If you are looking for the benefits related to ICT investments you should use the benefits management approach. This approach helps to identify, structuring, monitoring and achieve the benefits identified on business cases.
Reading : Ward, J. and Daniel, E. (2006) Benefits Management, Delivering Value from IS and IT Investments. John Wiley & Sons, Chichester, UK.
As you know ICT acts as an interface through which other departments, organs of an enterprise are linked together with other third party stakeholders. Take for example an Enterprise Resource Planning Environment, this needs ICT as it links the owners of the the enterprise in other words the shareholders to the management and other third party stakeholders like banks. In this scenario there is unlimited advantages we can derive from ERP. It is a cost and time saving measure where one particular entity can run its branches worldwide through one centralized administrative point. Take for example Microsoft Dynamics Financials where all linkages are not such open but controlled by passwords. So not everybody can access information but only through access right thus putting internal control in place. It shortens the distance between owners, management and third party stakeholders. Another advantage is that decision making is done in a flash thorough skype et cetera. We can not explore all and exhaust advantages of this association. We will write and continue writing till end of the world which might not surface.Continue writing.
[17] IEA (2007). Mind the gap. Quantifying principal – agent problems in energy efficiency, International energy agency (IEA). Head of Communication and Information Office, 9 rue de la Fédération, 75739 Paris Cedex 15, France. © OECD/IEA, 2007 (Theory, Chapters 1–3). [Online]. Available: http://www.iea.org/publications/freepublications/publication/mind_the_gap.pdf
[26] L-P Briffaut, Contribution of neurosciences for understanding the role of trust in IT-supported collaborative design environments, International Journal of Design Sciences and Technology, Volume 18 Number 1 (2011) ISSN 1630-7267, pp.19–29. [Online]. Available: http://europia.org/IJDST/Vol18/IJDSTV18N1-Paper%20Two%20%5B2011%5D.pdf
[11] M. E. J. Newman, Power laws, Pareto distributions and Zipf’s law, Department of Physics and Center for the Study of Complex Systems, University of Michigan, Ann Arbor, MI 48109. U.S.A. (2006) [Online]. Available: http://arxiv.org/PS_cache/cond-mat/pdf/0412/0412004v3.pdf
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