Opportunism in headhunter-client relations: An agency theory perspective

Recruitment is one of the most important human resource functions for organizational success and survival. While organizations increasingly use headhunters to recruit employees, little research has focused on client-headhunter relations. This paper draws on agency theory and interviews with 130 contingency-based headhunters and corporate clients to examine clients' opportunistic behaviors and how headhunters sought to mitigate these opportunistic behaviors. Our analysis shows that clients used several headhunters in search assignments, negotiated and refused to pay placement fees, contacted candidates directly, changed search criteria and terminated search assignments, and used headhunters to poach employees from their competitors. Our analysis also shows that headhunters used various social interaction and contract-based approaches to mitigate these behaviors, which affected recruitment-related outcomes. This paper contributes to the literature by providing the first agency theory-based study on clients' opportunist behaviors, bringing principals into agency theory-based research, and showing that clients' opportunism affects recruitment-related outcomes.