Information technology, especially the use of networks, can help firms lower the cost of market participation, making it worthwhile for firms to contract with external suppliers instead of using internal sources. Similarly, technology, by reducing the costs of acquiring and analyzing information, permits organizations to reduce costs because it becomes easier for managers to oversee a greater number of employees. According to agency theory, .

According to agency theory, a principal's and an agent's interests do not always coincide.

Explanation:

An agency relationship is formed when "agents" (workers) are hired by a principal (owner) to carry out work for him.

However, rather than a homogeneous, profit-maximizing organization, the business is seen as a "nexus of contracts" among self-interested individuals.

Therefore, according to agency theory, a principal's and an agent's interests do not always coincide.

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