*3.3.5 State ownership*

In the case of state-owned firms, the two-agency relationship exists [24]. Cuervo-Cazurra et al. [24] listed triple agency conflict in state-owned enterprises internationalization as follow:


All three principals have different objectives:


Cuervo-Cazurra et al. [24] proposed that the state-owned multinationals firms invest and enter into the countries where their project value is less than the private multinational with less agency cost. Benito et al. [30] have examined the impact of state ownership on the headquarter reallocation by the multinationals outside the home market. Integrating agency theory, resource-based view, and institutional perspectives, they argued that location decisions about the multinational headquarters are based on the efficiency and the legitimacy factors. They find that state ownership along with concentrated ownership is negatively related to the headquarters location outside the home country. They proposed that the location of the headquarters outside the home country negatively impacts the image of the home country and causes a loss in employment and R&D.

#### **3.4 Born global and agency issues**

The early-stage internationalization of the new ventures provides them growth and profitability opportunity. The governance challenges are serious in the born

global firms [22]. Zahra [22] examined the impact of public and corporate governance on the global entrepreneurial firms as the early internationalizes. These governance systems decide the success and survival of the born global in the international market. The born global firm faces issues regarding the management of intellectual property rights and free-riding by the established players. Public and corporate governance resolve cross-border conflicts. Corporate governance effectively monitors the manager's actions as well as supports the decision-making in the complex global context.

LiPuma [12] examined the performance of the IPO performance by born global. Using a sample of the technology-based international new ventures he argued that the agency risk is higher due to the difficult monitoring and the communication in the born global. Born global have high liabilities of the foreignness due to less experience in the international context. He found that the timing of IPO is later in born global firms in comparison to the domestic firms.

#### **4. Conclusion**

This study consolidates the state of academic research on using agency theory to explain the various phenomena's in the MNCs context. Based on the systematic review of the literature, 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.

#### **4.1 Future research directions**

A large number of opportunities exist in future research to examine various aspects of agency in the different contexts of MNCs. First, the impact of business group affiliation on the MNCs performance is inconclusive [28]. These studies suggest heterogeneity among the business group in different institutional contexts and require separate attention. Second, several studies emphasized the board characteristics impact on the agency issues and firm internationalization. But, the black box of what happens inside the board room is not well understood and requires attention to understand it using methods such as video recording of board room activities [17]. Third, future research needs to identify the heterogeneity among the family firms based on the composition of the family members team, knowledge resource and networks difference with family members, dynamics in the family, and intergenerational issues in the context of the emerging economies family firms. Forth, current studies have considered principal-principal conflict based on the financial goals of the various owners. Future studies need to consider the multidimensional nature of the principal-principal conflict with multiple sources of conflict other than the financial returns interest. Fifth, future studies need to go beyond the board composition and structure to resolve agency issues and need to look into the influence of the director's social and human capital on firm internationalization decisions [10]. Sixth, agency issue needs to re-examine in the born global firms in various institutional contexts. Lastly, state ownership proposes an interesting agency issue with two different principal-agent relationships and has different dynamics in comparison to the other owners.

*Agency Theory and Internationalization: A Critical Assessment of Literature DOI: http://dx.doi.org/10.5772/intechopen.99192*
