This doctoral dissertation investigates the relationship between the principal and an agent by applying agency theory that is primarily focused on the relationship between owners and managers in the company. In the recent scientific literature, agency relationship has also been viewed as a relationship between partners in the distribution chain. Agency costs incurred in the contractual relationship of the partners in the distribution chain are mostly viewed from the customer's point of view, while in this doctoral dissertation they will be mostly observed from the producer's perspective, as the contracting party in the wine industry. The purpose of conducting this research is to consolidate and deepen the understanding of contemporary economic relations between market actors and to explore the determinants of the relation formation between the two contracting parties in the distribution chain (wine producers and distributors) as to determine whether wine producers have mechanisms at their disposal that might have influence on a distributor’s behaviour and the level of agency costs. Based on the theoretical foundation collected from professional and scientific sources, the research model has been conceptualized, research hypotheses formulated and operationalized. The first phase of the research was to conduct a pilot survey to test the hypotheses, with a survey of 27 wine producers. Following the pilot study, a structured interview was conducted on a sample of 124 wine producers. In order to gain an in-depth insight into the distributors’ viewpoints, structured interviews have been conducted with three reputable Croatian distributors, who distribute wines throughout Croatia and make up 20% of the market, the Sales Director of a hotel chain and a board member of the Croatian retail chain. After calculating the descriptive statistics parameters and presenting the correlation analysis between the variables of the research model, a regression analysis has been performed. The hypotheses were tested with the regression analysis of the impact of the production range, production volume, distribution channel, reputation, personal networking (social capital) and educated employer on the level of agency costs, as well as the impact of agency costs on the development of Croatian winemakers' business. Hypotheses, the product range influence at the level of agency costs and personal v networking influence at the level of agency costs, were discarded after correlation analysis was conducted. The second hypothesis, according to which the production volume influences the level of agency costs, was partially accepted while all other hypotheses were confirmed at the level of statistical significance of 5%. After estimating the single regressions and testing the statistical significance of the estimated coefficients, a multiple linear regression model was formed, estimated by the OLS method and tested both within Adriatic and Continental regions. The model was also tested for heteroskedasticity and multicollinearity. The results of the research confirm the following: there is an agency relationship between wine producers and distributors in the Republic of Croatia; the amount of agency costs varies by region, i.e. other circumstances affect the amount of agency cost acceptable to individual wine producer; within regions there are differences in factors (company characteristics) that affect agency costs; and the amount of agency costs has an impact on the development of the business of Croatian wine producers.