Integrating Principal-Agent Theory and Business Process Reengineering: An Analytical Framework for Managing Virtual Teams
Integrating Principal-Agent Theory and Business Process Reengineering: An Analytical Framework for Managing Virtual Teams

Author(s): Antoaneta Ivanova-Bares
Subject(s): Economy, Business Economy / Management
Published by: Институт за икономически изследвания при Българска академия на науките
Summary/Abstract: The accelerating digitalization of global business and the growing prevalence of Virtual International Teams (VITs) have transformed organizational design and managerial practice. This paper develops an integrated analytical framework combining Principal–Agent Theory (PAT) and Business Process Reengineering (BPR) to address the key challenges of virtual collaboration—information asymmetry, trust, motivation, and control. While PAT explains behavioral dynamics of delegation, incentives, and accountability, BPR provides structural and technological tools for process optimization and transparency. Through theoretical synthesis and comparative analysis of leading corporations such as IBM, SAP, Google, and Deloitte, the study demonstrates that integrating agency mechanisms with reengineered digital processes enables organizations to balance autonomy with accountability and flexibility with control. The proposed model conceptualizes virtual management as a dual-governance system in which trust, technology, and transparency interact to create adaptive, learning-oriented teams. The research highlights that virtual leadership must evolve from supervision to system design, emphasizing empathy, data fluency, and ethical governance. Beyond its theoretical contribution, the study offers practical guidelines for implementing incentive-compatible digital architectures that foster collaboration, innovation, and resilience in hybrid and global environments. The synthesis of PAT and BPR provides a foundation for developing a broader theory of Collaborative Digital Governance, positioning virtual teamwork as a defining feature of modern enterprises in the Fourth Industrial Revolution.

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