Information Asymmetry in Management Research: Past Accomplishments and Future Opportunities

Abstract

Information asymmetry is a condition wherein one party in a relationship has more or better information than another. The information asymmetry concept is widely diffused throughout management research, and its existence is a core assumption within leading theories on organizations. Despite information asymmetry’s central role, however, there have been no systematic reviews of the management literature using the concept. As a result, there is no established level of knowledge of information asymmetry as a management concept, nor is there a unified basis for directing future research leveraging the concept. In response, we review 223 relevant articles from leading management journals and develop a framework for organizing and assessing information asymmetry research. We consolidate understanding of information asymmetry’s meaning, conceptual applications, roles in different theoretical models, antecedents, and how focal actors’ self-interests influence the selection of mechanisms for managing it. Further, we highlight opportunities for extensions to core management theories and specify research prospects within several management subfields. Overall, the framework can help guide researchers as they work to advance understanding of one of the management field’s most ubiquitous concepts.

Towards a Democratic New Normal? Investor Reactions to Interim‐Regime Dominance during Violent Events

“…Information asymmetries, defined as situations wherein a party lacks information on another party’s traits or intentions, constitute a cornerstone of management research on decision‐making (Bergh et al, ). Such asymmetries may exist between various actors, of which those between investors and managers have received most research attention (Bergh et al, ). By virtue of their insider status and active engagement in corporate decision‐making, managers generally possess superior information on their firms’ traits and capabilities, and are thus entrusted by shareholders to take decisions that maximize the latter’s wealth.…”

“…Even though managers may make public statements that supposedly reflect their intentions, such statements cannot be taken at face value because they may be nothing more than ‘cheap talk’ meant to appease investors (Almazan et al, ) or distract attention from actual practice (Westphal and Zajac, ). Managers seeking to protect their position are prone to keep any opportunistic intentions they may have to themselves, meaning that corporate insiders such as directors and external experts such as financial analysts are also unlikely to be useful sources of information on managers’ intentions (Bergh et al, ).…”

Dynamic Incentive Mechanism Design for Recycling Construction and Demolition Waste under Dual Information Asymmetry

“…The information asymmetry concept is widely diffused throughout management research, and many scholars [19][20][21] have studied information asymmetry from various aspects. The theory of mechanism design provides solutions to contract design problems with asymmetric information and it has been successfully applied in a variety of supply chain management in which the agent possesses private information and the principal attempts to elicit it by offering a menu of contracts.…”

Business Model Transformation – Challenges for the Management of the Health Care Entity

“…In addition, innovations may also concern the extension of health care for the elderly, as well as the modification of the business model in the field of regenerative medicine (Banda et al, 2018). Another problem for taking managerial decisions is information asymmetry as the lack of perfect information (Bergh et al 2019). The initiative to change business models in health care is also a financial issue.…”