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Management and Organization Theory: A Jossey-Bass Reader
book

Management and Organization Theory: A Jossey-Bass Reader

by Jeffrey A. Miles
February 2012
Beginner
480 pages
11h 16m
English
Jossey-Bass
Content preview from Management and Organization Theory: A Jossey-Bass Reader

3

Agency Theory

Since the late 1700s, theorists have discussed the problem of corporate owners hiring others as stewards of their wealth. Managers of other people’s money cannot be expected to watch over it with the same zeal as the owner, so managerial negligence will always be present in the affairs of a company (Smith, 1776/1952).

According to agency theory, an agent or agency is hired by one or more person(s), called the principal(s), under a contract and is compensated by the principal to achieve desired outcomes for the principal. Because the agent is acting on behalf of the principal, the principal gives away some decision-making authority to the agent.

Agency relationships occur in a wide variety of situations and contexts that involve ...

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Publisher Resources

ISBN: 9781118008959