Multiple principals agency problems in Sino-Singapore joint venture.

• Main Authors: Chua, Ghim Seah., Lim, Soo Leng., Woo, Esah.
• Other Authors: Nanyang Business School
• Format: Final Year Project
• Language: English
• Published: 2013
• Subjects: DRNTU::Business::Accounting
• Online Access: http://hdl.handle.net/10356/51896
• Institution: Nanyang Technological University

Current literature on joint venture apply the agency theory based on a single principal and agent relationship. The agent is said to be serving the interest of the principal but his own interest may deter him from performing to the satisfaction of the principal. However, this study attempts to examine the multiple principals-agency problem whereby the agent had to serve more than one principal’s interests. It is thus our interest whose interest the agent would choose to serve. The reason why one chooses to have an agent is to make sure that the agent act in their interests. In the case of a typical two parents joint venture, both participating companies would send representatives to the joint venture such that their objectives in investing in the joint venture are met. After choosing their agents, the principals would design special reward system that encourages the agent to act to their satisfaction. However, our study would be based on the initial stage of the choosing of the agents which we deemed would have an effect on the performance ofjoint ventures. Our study is based on the Sino-Singaporejoint venture in China. Based on our knowledge of the Singapore and China culture and business environment, we had identified other factors of concern in the choosing of the agents. Besides the experience of the agent, the Singapore parent company might consider the nationality of the agent and his duration of stay in the parent firm. Furthermore, the parent company might want to send more agents in the hope that this would increase the possibility that their objectives are met. After a thorough review of existing literatures, our group derived a few of our own hypotheses, which were subsequently supported by our analyses of data collected from formal interviews and surveys.