Integrating knowledge workers and the organization: the role of IT

Agency theory is primarily concerned with the relationship between the principal (employer/purchaser) and the agent (employee/contractor) in the issue of goal-aligned behavior. Jensen and Meckling and others were not referring to a knowledge worker agent in their conceptualization of the principal/agent relationship. The significance of having a knowledge worker agent is that the decision rights are no longer located with the principal but with the agent. This in turn has a tremendous bearing on goal alignment and agency problems. We propose that information systems/information technology (IS/IT), in particular enterprise wide systems, can alleviate these agency problems. We illustrate this through a case example from health care, an industry with a high proportion of knowledge worker agents.