In nearly all large, multifunction organizations, some significant portion of management activity entails overseeing work done for one's own organization by other organizations.
This external work may take many different forms, including, for example, outsourced information technology, transportation
services, new construction, or almost anything that helps the focal organization produce its goods and services. Since the 1970s a body of theory and research (e.g., Spence and Zeckhauser 1971; Jensen and Meckling 1976; Ross 1973) has developed to examine these relationships, termed principal-agent rela tionships, focusing particularly on the reasons why such transactions are so often inefficient and the approaches to making them more efficient. Questions