The Governance of Telecommuters: An Agency and Transaction Cost Analysis (Company Overview‪)‬

INTRODUCTION This paper seeks to stimulate research about the managerial challenges of a constantly evolving bureaucratic workforce. Specifically, this work seeks to add to organizational theory by integrating transaction cost theory and agency theory with forecasted trends in the governance of telecommuting employees. Telecommuters, or "teleworkers", are employees that are allowed to perform organizational work from a residence, or other location, instead of reporting to a centralized office location (Siha & Monroe, 2006). While the two managerial theories have been applied in a large number of organizational settings and circumstances, there have been no prior attempts to integrate these theories to forecast the effects of uncertainty on the control of a telecommuting workforce. This paper proposes a managerial framework that incorporates transaction uncertainty (from transaction cost theory) and outcome uncertainty (from agency theory) as determinants of employee control. First, the two theories are described and then adapted to present the hierarchical governance of a telecommuting workforce. After which, propositions are developed about which managerial control mechanisms are to be used under varying degrees of transaction and outcome uncertainty, considering the gravity of the work to be produced and the level of trust in the employee.