Restricted funding has become a notable feature of the nonprofit sector in many countries. While its organizational outcomes are widely debated, we know less about why some nonprofits face higher levels of restriction than others. This study examines organizational antecedents using agency and signaling perspectives, asking how nonprofits’ observable financial and organizational features shape their level of restricted funding. Drawing on panel data for charities in England and Wales (2007–2023), we find that higher financial reserves are associated with lower levels of restricted funding, whereas greater service-area breadth and wider beneficiary breadth are associated with higher restriction levels. Administrative cost ratios are not a significant predictor. These findings provide new insights into restricted funding dynamics and offer practical implications for nonprofits seeking to navigate funding constraints.

Why did the Pombaline monopoly companies struggle to enforce their commercial privileges in colonial Brazil despite remaining profitable? This article reconsiders the history of the General Company of Grão-Pará and Maranhão (1755–1777) and the General Company of Pernambuco and Paraíba (1760–1780) by combining principal–agent theory with the economic history of Portuguese America. Rather than attributing the companies’ difficulties primarily to the opportunistic behaviour of colonial administrators, we argue that agency problems were deeply conditioned by the pre-existing configurations of colonial markets. Drawing on extensive correspondence between the companies’ boards in Lisbon and their colonial agents, together with administrative and financial records, the article demonstrates how local credit networks, merchant intermediaries, and the organization of regional commodity markets constrained the enforcement of monopolistic policies. A comparison between Maranhão’s cotton economy and Pernambuco’s sugar economy reveals that distinct market structures generated similar obstacles to monopoly, encouraging debt evasion, private trade, and conflicts over credit while simultaneously allowing the companies to remain profitable. By shifting the analytical focus from individual misconduct to the institutional and economic environments in which company agents operated, the article offers a new interpretation of the limits of monopoly in the eighteenth-century Portuguese Empire and contributes to broader debates on chartered companies, agency theory, and the functioning of early modern colonial economies.

Michael Jensen’s late-career work on integrity is often interpreted as a departure from agency theory or as an attempt to introduce ethical considerations into a positive framework. This paper argues instead that integrity can be reconstructed as an extension internal to agency theory itself. Drawing on the Jensen and Meckling decomposition of agency costs, integrity is modelled as a bonding cost; a self-imposed constraint that raises the private cost of opportunistic behaviour and thereby economises on monitoring and reduces residual loss. Incorporating Buchanan’s constitutional-stage logic, the analysis shows that integrity relocates rational optimisation to the choice of rules rather than to particular transactions. Integrity is further classified as an informal institution whose effectiveness depends on decentralised enforcement and institutional context. The paper concludes that integrity is neither an ethical supplement nor a scalable substitute for formal governance, but a bounded informal bonding mechanism whose effectiveness attenuates with organisational scale.

How can the internal governance of civil society organizations be conceptualized more adequately by accounting for the dual and simultaneous requirements of controlling and coaching in board behavior? Empirically, we seem to agree that effective governance of a civil society organization is crucial to its sustained viability. Conceptually, however, we observe a lack of consensus on how to best understand CSO governance. By critically juxtaposing two major theoretical lenses to conceptualize governance, namely, agency and stewardship theory, we identify a number of challenges when dealing with board–management relations that deserve our attention. While agency theory privileges controlling behavior, stewardship theory emphasizes the coaching behavior of boards. The purpose of this article is to offer a concept of governance that is informed by a paradox perspective advancing a subtler, more adequate conceptualization of board governance that accounts for these often conflicting demands on CSO governance. Drawing on illustrations from a longitudinal interpretive case study, we exemplify our propositions empirically. The article concludes with discussing the implications of our argument for CSO governance research and practice.

The institutional complexity of social enterprises (SEs) often hinders their access to financing from conventional investors. To align the interests of SEs and their investors, innovative investment instruments of social finance are emerging. However, there is evidence of a mismatch between the financial needs of SEs and the instruments offered by social finance entities (SFEs). The analysis of 34 SEs and 6 SFEs through the lens of agency theory shows that some barriers are caused by contradictory agent—steward models of behaviour, whereas others are deficiencies of the SE sector in general. The study demonstrates that the SE financing gap is a complex problem that requires multifaceted solutions.

This study proposes a revised agency theory for the nonprofit sector, distinguishes between the extent of agency and the extent of monitoring, and compares the magnitudes of the two impacts. Using panel data for 1998–2003, the paper tests whether monitoring by principal-stakeholders such as donors, clients, the government, and the board reduces the opportunity for executive misconduct such as extravagant spending on compensation and perquisites. Given the theory, the findings show that two effects influence CEO salaries. First, while nonprofit endowments provide a fiscal cushion in tough financial situations, by offering “organizational slack” they also increase the CEO’s opportunity to steal or raise her compensation (i.e., agency effect). Second, donors utilize monitoring mechanisms such as auditing or direct observations, which limit the opportunity for misconduct and reduce executive pay (i.e., monitoring effect). In the final analysis, the monitoring effect is greater than the agency effect, which implies that even if agency problems are present, the monitoring that donors provide offsets them.

We study the relation between stability of the nonprofit organization’s environment and its board structure and the impact of this relation on organizational performance from the perspectives of both Agency Theory and Resource Dependence (Boundary Spanning) Theory. The impact of board characteristics on organizational performance is contextual. Specifically, we predict and show for a sample of U.S. nonprofits that board mechanisms related to monitoring are more likely to be effective for stable organizations, whereas board mechanisms related to boundary spanning are more effective for less stable organizations. We find that the two theories are complementary and address different aspects of nonprofit performance, but the results are statistically stronger and more often consistent with resource dependence than with agency theory. Overall, this study supports Miller-Millesen’s (Nonprofit and Voluntary Sector Quarterly, 32: 521–547 2003) contention that, because the nonprofit environment is often more complex and heterogeneous than the for-profit world, no one theory describes all tasks of nonprofit boards.

Organizational transparency has become a prominent concern for the nonprofit sector as it expands globally. Transparency is important to organizational accountability, which may be indicated by how nonprofits allocate their resources. In this study, we examine the relationship between nonprofits’ transparency and their resource allocation to programs, administration, and fundraising. Our study focuses on China, where a nascent nonprofit sector is playing increasingly significant roles in social development while facing public trust challenges. Based on Agency Theory and Resource Dependence Theory, we propose two hypothesized frameworks that link transparency to resource allocation, and use the 2013–2015 China Grassroots Organizations’ Transparency Survey data (n = 370) to test this relationship. Our results suggest that nonprofits with higher transparency allocate more resources to programs rather than administration, a possible result of the current public scrutiny of nonprofit accountability in China. Our findings provide implications for nonprofit practitioners and future research about the significance of organizational transparency, particularly in emerging nonprofit sectors.

This study examines how the managerial interpretation of incentive arrangement affects corporate engagement in social areas, as reflected in corporate social performance, from two interrelated perspectives: the political influence view and the normative agency view. Building the theoretical framework on state-owned enterprise (SOE) executives' dual-career tracks perspective, we contend that economic factors (performance decline and relative pay gap) and political factors (socialist imprints and political career horizon) could divergently reshape the interpretation of incentive arrangement on corporate social performance. Using ‘Pay Ceiling Order’ as a quasi-natural experiment context, a secondary analysis, and a controlled experiment reveal that compensation restriction on top executives causes a decrease in corporate social performance. This relationship is weakened when there are stronger socialist imprints inherited by a focal firm and when the executives have a longer political prospect. In contrast, the relationship is strengthened when firms face severe performance declines and when the executives' compensation is relatively lower than peers. The findings show that compensation is an indispensable incentive joining with political and economic factors, enabling SOEs to engage in social areas. We discuss the implications of understanding top executive incentives with incentive arrangements and how the government purpose influences top executive responses to compensation incentive in ways that matter for long-term social value.

We examine how the central government's management of subnational governments' agency influences the smartness of the latter's industrial specialization choices. Based on smart industrial specialization theory and agency theory, we hypothesize how two central government tools governing subnational governments' agency – facilitating their organizational efficacy and promoting their officials to higher ranks – explain recent industrial specialization choices by China's 31 provincial governments. We find that provincial governments with greater organizational efficacy, measured by access to better-resourced local state-owned enterprises in focal industries, make smarter specialization policies. In addition, we show that provincial governments with greater numbers of officials previously promoted to the central government make, contrary to conventional wisdom, potentially less smart specialization policies. Our research extends smart specialization theory by explaining that central government tools governing subnational agency problems can have knock-on effects making subnational governments' industrial specialization choices smart or unsmart.

Supply chain security presents numerous challenges to governments interested in defending against terrorist threats. While most approaches stress technological solutions, scholars and policy-makers tend to overlook economics, labour market issues, and industrial relations. Applying agency theory from behavioural economics, this article analyses threats to the US supply chain and opportunities for efficient solutions. Using data from a sophisticated web-based survey of owner-operator cost-of-operations, it shows that drayage drivers are among the lowest paid truck drivers and workers in the US. We provide evidence that low pay is associated with both safety and security risk. Low-wage labour and subcontracting present challenges to US and foreign supply-chain security because the market attracts workers who have few other employment options. In this environment, principals and agents currently make inefficient and inequitable contracts because markets do not reflect the complete costs associated with low-probability/high-impact events like cargo theft and transport security.

As governments move from being both a funder and provider of human services to a purchaser of services in private sector markets or quasi-markets, ensuring that providers do what they are supposed to do becomes more difficult. Agency theory and stewardship theory have been suggested as ways of overcoming this problem. This article argues that both are inadequate, particularly because they conceptualise the relationship as bilateral (government funding department and service provider), ignoring the role of clients in achieving organisational objectives. Co-production that recognises the role played by clients in the production of employment outcomes can provide a more useful way of thinking about relationships among key actors involved in the provision of employment services.