SYSTEM-DEVELOPMENT EFFECTIVENESS - AN AGENCY THEORY PERSPECTIVE

Agency theory can be used to explain the effectiveness of system devel opment methods. As the cost of computing decreases and end user comput ing technology becomes feasible, end-user departments are developing t heir own application systems. Agency theory suggests that end-users wi ll desire greater autonomy over their computing in order to avoid the agency costs that arise in traditional MIS development. This study pro vides empirical support for the proposition that user development allo ws end-user departments to minimize the agency costs resulting from th e work of the MIS department. Data were collected from 162 users of 59 different applications in 30 organizations. The results indicate that user development is more effective than MIS development. Among user-d eveloped application systems, departmental applications are more effec tive than corporate applications.