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Credit Theft in Startups: What LMX and Agency Theory Reveal

In fast-growing young companies, an overloaded CEO and loose processes create fertile ground for the misappropriation of intellectual value. · September 15, 2026 · 9 min read

A structural dysfunction, not just an individual one

In startups and fast-growing SMEs, the management model often relies on hybrid, informal delegation. Senior leadership focuses on financial trade-offs, high-level business development, or fundraising, while day-to-day operational management is handed to middle managers.

This setup creates a systemic vulnerability: the invisibility of the actual output produced by the people doing the work. When analysis, a strategic deck, or a project framework is produced at the operational level and then filtered through a middle layer before reaching leadership, the risk of abusive appropriation - credit stealing - becomes critical.

LMX theory: why some employees become invisible

Leader-Member Exchange theory (Dansereau, Graen & Haga, 1975) shows that leaders don't maintain a uniform relationship with every employee: they develop differentiated dyadic relationships, often splitting the team into two groups.

In-Group

A high-trust relationship: frequent informal exchanges, direct access to the leader, perceived autonomy. Usually occupied by the middle manager.

Out-Group

A transactional, formalized relationship: communication runs through intermediaries. Often the position left to the person doing the actual work.

The middle manager, as an In-Group member, has a direct communication channel with leadership. They can use it to present deliverables as the product of their own steering - "we built...", "I'm putting the presentation together with..." - reducing the Out-Group contributor to an invisible resource.

Agency theory: information asymmetry as the mechanism

Agency theory (Jensen & Meckling, 1976) models the relationship between a Principal, who delegates, and an Agent, who executes. Information asymmetry is its central flaw:

Information asymmetry = Information held (Agent) − Information perceived (Principal)

Two concrete mechanisms follow. Strategic information retention: the agent filters document flow or withholds logistical access (meeting invitations, video call links) to prevent the operational contributor from interacting directly with the Principal. And moral hazard: since leadership cannot verify in real time the true origin of each document, the agent claims the intellectual wins to consolidate their internal standing.

Three tactics of invisibilization

TacticMechanismImpact on the contributorImpact on the organization
Direct credit stealingThe raw work is reused as-is in emails or presentations signed by the manager.Loss of self-efficacy, isolation, demotivation.An incompetent profile gets promoted; decisions rest on false expertise.
Access gatekeepingIntentional omission from invitations to strategic meetings.Disconnection from the project's broader stakes.Loss of direct alignment between the person who designed the work and the client or leadership.
Zones of uncertainty (Crozier & Friedberg, 1977)Refusal to share input data, citing incompleteness.Operational paralysis, extra research overhead.Duplicated effort, lower overall productivity.

Three traceability levers to protect yourself

  1. Mark every deliverable indelibly. Export strategic documents in a non-editable format, with an explicit author credit on the cover page and in the footer.
  2. Systematically formalize by joint email. Send the finished deliverable with leadership in copy, using factual, dated wording.
  3. Keep a consolidated alignment record. Regularly match delivered work against the original role objectives, so you have factual proof of authorship.

These three levers share one thing in common: they rely on traceability. That's structurally what a shared workspace provides when every task keeps a record of who created it, edited it, and delivered it, with a timestamped history visible to the whole team - not just the middle layer. A project management tool built for transparency mechanically shrinks the zones of uncertainty these dynamics exploit.

Sources

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