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Archives of Business Research – Vol. 13, No. 03
Publication Date: March 25, 2025
DOI:10.14738/abr.1303.18487.
Awodun, M., & Adam, L. (2025). The Agency-Governance-Disruptions Model for Operational Efficiency, Profitability and Value
Delivery: An Application to Private and Public Enterprises in Nigeria. Archives of Business Research, 13(03). 171-190.
Services for Science and Education – United Kingdom
The Agency-Governance-Disruptions Model for Operational
Efficiency, Profitability and Value Delivery: An Application to
Private and Public Enterprises in Nigeria
Muritala Awodun
Centre for Enterprise and Human Capital Development
Crown-Hill University (now Ojaja University),
Eiyenkorin, Kwara State, Nigeria
Lukman Adam
Department of Economics, Faculty of Social Sciences
Kwara State University, Malete, Kwara State, Nigeria
ABSTRACT
In relating the agency theory to corporate governance and technological
disruptions in organizations, this paper examines this tripod through the creation
of an agency-governance-disruptions model. The paper relates the model to
operational efficiency, profitability and value delivery in selected private and
public enterprises in Nigeria. The outcome reveals that the tripod of agency- governance-disruptions, as presented through the model, significantly impacts on
operational efficiency, profitability and value delivery of organizations in Nigeria.
This is based on applying the model to selected private and public universities in
Nigeria, with the findings revealing that the agency-governance-disruptions model
has a very significant impact on the efficiency, revenue generation/profitability and
value delivery of the private universities, while for public universities, on the other
hand, the effects are not so significant.
Keywords: agency theory, corporate governance, technological disruptions, operational
efficiency, profitability, value delivery
INTRODUCTION
There are three main concepts involved in the derivation of our agency-governance-disruptions
model, and each of these concepts are worthy of description and understanding. This paper
presents each of the concepts with the intention of aggregating thoughts about them and taking
a position on why they are relevant in our model. The integration of these three concepts in
formulating our model is subsequently justified, and the relevance of each, in affecting the
fortunes of an organization, is measured through a look at operational efficiency, revenue
generation/profitability and value delivery. How our model affects different types of
organizations is extracted by applying the model to some selected private and public
universities in Nigeria.
The concept of agency theory as presented by Berle and Means (1932), Fama and Jensen
(1983a, 1983b); and Jensen and Meckling (1976) is directed at a particular type of organizing
problem, called agency problem (Eisenhardt, 1989). Agency theory models the relationship
between a principal and an agent, and considers the optimal contract form for the ubiquitous
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Archives of Business Research (ABR) Vol. 13, Issue 03, March-2025
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relationship where a principal, delegates work to an agent (Eisenhardt, 1989; Awodun, 2007,
2018). Agency theory is built on the notion that separation of ownership and control potentially
leads to self-interested behaviors by the agent. In agency theory, both the principal (i.e.,
shareholders, who are the owners of the enterprise) and the agent (i.e., managers of the
enterprise) are depicted as utility maximizers (Jensen and Meckling, 1976; Fama and Jensen
1983a). The agent’s utility function includes power, security, status, and wealth, while the
principal’s utility function is to maximize the market value of their shares, an ultimately, their
wealth (Awodun, 2018).
Corporate governance, on the other hand, is the process that guides the relationship between
the company and the stakeholders through the determination and control of the strategic
direction and performance of the company (Awodun, 2018). It is the system through which
organizations are directed and controlled towards achieving the purpose of their
establishment. This structure specifies the distribution of rights and responsibilities among the
various corporate participants, including board members, executives, shareholders and other
stakeholders, spelling out the rules and procedures for making decisions on corporate affairs
(Luo, 2005a). Corporate governance also provides the structure through which the company
sets objectives, the strategy for attaining those objectives and the guidelines for monitoring
performance (Awodun, 2007).
Governance contributes to the firm’s legitimacy and the credibility of its decisions and
reporting. In the context of private enterprises, corporate governance is the system that not
only monitors the relationship between executives and stakeholders (including shareholders),
but also directs its various business units and pinpoints the distribution of power, rights and
responsibilities among critical participants in the corporate-level decision-making process that
affects the general corporate affairs (Awodun, 2018). For the public enterprises, however,
corporate governance monitors the relationship between the managers of such enterprises and
the various stakeholders, including the executive arm of government, the legislative arm of
government and the citizens (in terms of value delivery).
Technological disruptions are seen as the convergence between new business models, new
technologies, and new combinations of existing approaches to create a competitive advantage,
such that one business is positioned to take market share away from other businesses through
better and improved performance. It affects both private and public enterprises differently, for
reasons of structural ownership, management and operational differences, and not for any
reason of technical divergence.
Technological disruption represents an increase in the use of machine-driven automation of
operational processes and workflows that were previously undertaken, or at the very least,
overseen, by humans. The introduction of technology, enables greater operational efficiency
and opens up opportunities to create new revenue streams, improve productivity, increase
profitability and ultimately, value delivery.
Disruption is all about adaptation to the alternative of using technology to replace what human
is doing, and is often discussed through the lens of outmaneuvering an incumbent, or
challenging the status quo. It is good to note that many private enterprises are successfully