The approaches to governance employed by various societies have become increasingly similar, following a pattern of reforms that move away from the control mode to the supervisory mode. To this end, direct central involvement is being replaced by a model that relies on more sophisticated forms of funding, monitoring, and performance review. This case study research adopts in-depth semi-structured interviews with 31 top- and mid-level administrators and academics at two premier universities and senior members of the ministry and its affiliated organizations. Through the lens of agency theory, it explores stakeholders' perceptions of university-government relations and how the government maintains its support, control and influence through a system of checks and balances. The findings reveal a salient role of the government as a policy driver. In addition, the coalitions of universities, the state, and society have exerted a significant impact on policy development and implementation in Taiwan. Empirically, this study has illustrated how a cultural force hidden in agency theory influences higher education governance in Taiwan. Thus, it sets an implication and further theorizes an application of this widely-used and western-based framework to understand the state-university relationship in East Asia.