Agency Theory and Internationalization: A Critical Assessment of Literature

Abstract

This study consolidates the state of academic research using agency theory to explain the various phenomena’s in the multinational firm’s (MNCs) context. Based on the systematic review of the literature, the author finds that agency theory is used to examine the degree of internationalization, international diversification, born global internationalization, and governance issues in various modes of foreign entries. The author classifies the literature in three broad themes: corporate governance, firm ownership, and born global firms. Agency theory is also used to examine the impact of top management characteristics, board structure, ownership by domestic investors, foreign investors, business group firms, family ownership, and state ownership on the firm internationalization decisions. The study concludes with the research gaps and future research directions.