TITLE:
SCM Implementation Decisions of Principal-Agent under Asymmetric Information
AUTHORS:
Lina Wang, Stephan Poelmans, Koen Milis
KEYWORDS:
SCM Implementation Problems, Asymmetric Information, Implementation Control Cost, Evaluation Level, Principal-Agent Theory
JOURNAL NAME:
Open Journal of Applied Sciences,
Vol.9 No.4,
April
17,
2019
ABSTRACT: The optimization investment policy decision of
SCM-Supply Chain Management-implementation has been analysed under symmetric
and asymmetric information conditions. For both conditions, SCM implementation
options’ decision optimizing models have been developed. In these models, both
clients and vendors try to pursue their own benefits. Based upon the
principal-agent theory, the models show to what extent a principal (a client)
needs to pay more to an agent (a vendor) in a context of asymmetric
information. For the client, it is important to understand the extra costs to be
able to adopt effective strategies to stimulate a vendor to
perform an optimal implementation of a SCM system. The results of a simulation experiment regarding
SCM implementation options illustrate and verify the theoretical findings and confirm the general notion that the less informed party is obliged to pay
information rent to the better-informed party.