Organizations as Principals and Agents

However, some situations are more complex and nuanced than the earlier example. Imagine a scenario in which a mining company provides funding to a research institution to investigate the ecological effects of mining activities. Conflicts of interest can arise not only among individuals but also between organizations on both sides, principal and agent. In this case, while the research institution gains from the financial backing, their responsibilities are not as clear as in the previous example, since their foremost duty is to uphold scientific independence and integrity. Even though the mining corporation may appear to be the principal, they should not assume that the research institution will prioritize the corporation's interests. In situations like this, which often arise when research and academia intersect, particularly in the mining industry, identifying solutions can be more challenging. The organization could develop a strategy that avoids conflicts of interest – for example, through setting up a general research fund to which companies contribute without directly funding individual research projects. This approach would help maintain scientific autonomy while still enabling industry backing for research.