Principal-Agent Relationship in Small-Scale Gold Mining

Abstract

This work is the result of research on small-scale gold mining in Tatelu village, Northern Minahasa District, North Sulawesi Province, Indonesia. The objective of the study was to find out how the principal-agent relationship between the funders and miners in traditional gold mining and to show the difference in the principle-agent relationships in the mine with those theorized in economics. The results show that social networking is very important in the process of finding and recruiting miners because through the social network the donors get information about the quality of miners. The results also indicate that both the funders and the miners do not always pursue their own interests to the maximum so that no party is harmed. There is commitment and reciprocity from both sides to support each other. This can happen because mine work may pose a risk to the safety of miners and the failure to obtain enough gold to pay the miners and provide benefits to the funder. The research used qualitative research method and conducted in September-October 2017.

Keywords: Principal-Agent, Reciprocity-Commitment, Small-Scale Gold Mining, Social Network


Article Review Status: Published

Pages: 29-39 (Download PDF)

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