AN AGENCY THEORY ANALYSIS OF INFORMATION

Agency theory offers a potential explanation for the low success rate of information technology (IT) projects. The theory suggests that appropriate monitoring and the use of incentives and rewards increases the likelihood of project success. A survey instrument was developed from previously used items and new items developed from structured interviews. Four hundred thirty project managers completed a Web-based survey. After analysis for reliability and validity, the data were used to test eight hypotheses related to IT project success. The study contributes to the understanding of IT project management by showing that contract type, monitoring, goal conflict, shirking, and privately-held information are multi-dimensional constructs and provides instruments for their measurement. It validates existing instruments for measuring task programmability and project success. It suggests that more outcome-based contracts, more monitoring, less shirking, and less misrepresentation of privately-held information lead to project success. Finally, it contradicts expectations that more goal conflict and more task programmability lead to more outcome-based contracts and that more outcome-based contracts lead to less monitoring