The neoclassical theory of the firm concentrates on the price and output decisions of a single decision-maker in response to market conditions. More recent contributions, on the other hand, have introduced hierarchical aspects within the firm (cf. e.g. Alchian and Demsetz 1972, Fama and Jensen 1983). According to this second view, contracts between principals and agents govern the division of responsibility. This in turn suggests the need for the principal to control the performance of the agent. This sort of situation in fact occurs in most contexts in society today. Even a long-term activity such as research has been made increasingly subject to various evaluation procedures of this kind:
In an era of increasing costs of scientific research and stronger demands for selectivity in which directions will be funded, evaluations serve a multiple purpose: they legitimize activities, provide a tool to select targets and help to identify problems that hinder the effectiveness of the system. Even if the evaluations do not produce sizeable impacts, they supply a useful tool that is difficult to replace.