On Effective Mutual and Hierarchical Monitoring: From a Historical Perspective





Published date: 

六月, 2006


Der-Yuan Yang


The operation of a political regime or a business entity involves the principal-agent problem. Checks and balances are the theme in the political arena, while management and controlling are the routine in the business world. To ensure that the ministers or the executive officers perform the desired functions, a monitoring scheme may be helpful. The crux of the issue is the lack of trust and information on those employed. Various effective monitoring networks, occidental or oriental, ancient or modern, military or civilian, have been deployed by numerous regimes and organizations to overcome the difficulties. The monitoring proceedings start from recruiting to remunerating and evaluating the workforce. To be sure, carrot and stick must be applied to achieve desirable results, besides enhancing the probability of detecting frauds. The merits of those networks seem to lie in commensurate rewarding and punishing of the personnel. Analyzing how those monitoring networks solved the controlling issue may give us insights into the critical incentive structures embodied. Moreover, the evolutionary path of institutions and organizations could be delineated via discerning the changes of those incentives, and vice versa.