Principal–Agent Model in Universities, Problems and Solutions
The modern day university acts as a powerhouse of indirect economic activity that stems from the scientific discoveries, inventions, and innovations that university scientists develop. Bearing in mind that it is hard to assess the potential of novel discoveries, the university is facing the so-called principal–agent problem in the way it incentivizes the research of faculty members.
Definition of the Principal–Agent Problem
The principal–agent problem (henceforth PA problem), which is also known as the agency dilemma, concerns the difficulties in motivating one party (the agent), to act on behalf of another (the principal). In universities, the PA problem is manifested in (1) the way the university motivates faculty research and (2) in the way the university motivates disclosure of faculty inventions to the university Technology Transfer Office (TTO), which is also known as Technology Licensing Office (TLO). The role of the TTO...
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