Definition: Intermediaries are individuals or organizations that undertake the role of mediators or linkage between two parties. Intermediaries are third parties and fill a function that is needed by two other parties to make a deal or to execute a given task.
What Does Intermediary Mean?
In general, an intermediary exists due to the operation of imperfect markets. That means that all the information is not always available to all economic agents. Or maybe the information is available but to collect it and analyze it requires too much time or money. Intermediaries can provide useful information to make a process shorter or less costly, such as a realtor that helps a company find the most suitable building for its offices.
In other cases, the intermediary assists on a deal that otherwise would be too complex to close. When a firm faces serious labor disputes, it is common to see that both parties, workers and employer, accept the help of a mediator. This intermediary is supposed to provide solutions that any of the sides are able to find thanks to his experience and objectiveness.
Example
A new company named Trolco Co. is trying to find good candidates to fill the five top executive positions. The Board of Directors wants to start operations in three months so the entire selection and hiring process can’t be too long. During the first month, the Board of Directors tried to identify enough qualified candidates by searching on the Internet but then they found that most of them were working at the moment.
The company therefore decided to hire the services of a recognized “head-hunter” firm named Intelligent Selection. This firm acts as an intermediary between active executives and companies with available positions. Intelligent Selection already had a list of potential candidates that were deeply evaluated in previous processes. After only two weeks, the Board of Directors had a list of three excellent aspirants for each vacant position. During the following month the five positions were successfully filled and the company was able to start operations on schedule.
