Agency problems in diverse contexts: A global perspective

Luis Gomez-Mejia, Robert M. Wiseman, Bernadine Johnson Dykes

Research output: Contribution to journalReview article

51 Citations (Scopus)

Abstract

Bruce, Buck and Main (2005) offer two criticisms of agency theory as a valid model of executive behaviour. First, they suggest that because researchers have failed to find a strong empirical link between executive pay and firm performance, and since this research generally rests on models derived from agency theory, then we must question the theory. Second, they suggest that agency theory is under-socialized and therefore lacks generalizability to settings where social solutions would seem to eliminate the agency problem. In our response we make three points. First, agency theory rests on an assumption of self-interest that does not necessarily reflect opportunism. Second, agency theory does not make any reference to payperformance sensitivity, and the failure of this research can be attributable to a variety of problems with the research. Third, we agree that agency theory does not explicitly recognize contextual factors, but suggest that this abstraction from context, gives agency theory greater generalizability. Finally, we review the UK and German contexts discussed by Bruce, Buck and Main to show that socialized solutions do not prevent the occurrence of agency problems.

Original languageEnglish (US)
Pages (from-to)1507-1517
Number of pages11
JournalJournal of Management Studies
Volume42
Issue number7
DOIs
StatePublished - Nov 2005

Fingerprint

Agency theory
Agency problems
Generalizability
Pay-performance sensitivity
Opportunism
Firm performance
Executive pay
Contextual factors
Criticism

ASJC Scopus subject areas

  • Business and International Management
  • Management of Technology and Innovation
  • Strategy and Management

Cite this

Agency problems in diverse contexts : A global perspective. / Gomez-Mejia, Luis; Wiseman, Robert M.; Johnson Dykes, Bernadine.

In: Journal of Management Studies, Vol. 42, No. 7, 11.2005, p. 1507-1517.

Research output: Contribution to journalReview article

Gomez-Mejia, Luis ; Wiseman, Robert M. ; Johnson Dykes, Bernadine. / Agency problems in diverse contexts : A global perspective. In: Journal of Management Studies. 2005 ; Vol. 42, No. 7. pp. 1507-1517.
@article{dee596ebd639450da567649f9eaf105b,
title = "Agency problems in diverse contexts: A global perspective",
abstract = "Bruce, Buck and Main (2005) offer two criticisms of agency theory as a valid model of executive behaviour. First, they suggest that because researchers have failed to find a strong empirical link between executive pay and firm performance, and since this research generally rests on models derived from agency theory, then we must question the theory. Second, they suggest that agency theory is under-socialized and therefore lacks generalizability to settings where social solutions would seem to eliminate the agency problem. In our response we make three points. First, agency theory rests on an assumption of self-interest that does not necessarily reflect opportunism. Second, agency theory does not make any reference to payperformance sensitivity, and the failure of this research can be attributable to a variety of problems with the research. Third, we agree that agency theory does not explicitly recognize contextual factors, but suggest that this abstraction from context, gives agency theory greater generalizability. Finally, we review the UK and German contexts discussed by Bruce, Buck and Main to show that socialized solutions do not prevent the occurrence of agency problems.",
author = "Luis Gomez-Mejia and Wiseman, {Robert M.} and {Johnson Dykes}, Bernadine",
year = "2005",
month = "11",
doi = "10.1111/j.1467-6486.2005.00554.x",
language = "English (US)",
volume = "42",
pages = "1507--1517",
journal = "Journal of Management Studies",
issn = "0022-2380",
publisher = "Wiley-Blackwell",
number = "7",

}

TY - JOUR

T1 - Agency problems in diverse contexts

T2 - A global perspective

AU - Gomez-Mejia, Luis

AU - Wiseman, Robert M.

AU - Johnson Dykes, Bernadine

PY - 2005/11

Y1 - 2005/11

N2 - Bruce, Buck and Main (2005) offer two criticisms of agency theory as a valid model of executive behaviour. First, they suggest that because researchers have failed to find a strong empirical link between executive pay and firm performance, and since this research generally rests on models derived from agency theory, then we must question the theory. Second, they suggest that agency theory is under-socialized and therefore lacks generalizability to settings where social solutions would seem to eliminate the agency problem. In our response we make three points. First, agency theory rests on an assumption of self-interest that does not necessarily reflect opportunism. Second, agency theory does not make any reference to payperformance sensitivity, and the failure of this research can be attributable to a variety of problems with the research. Third, we agree that agency theory does not explicitly recognize contextual factors, but suggest that this abstraction from context, gives agency theory greater generalizability. Finally, we review the UK and German contexts discussed by Bruce, Buck and Main to show that socialized solutions do not prevent the occurrence of agency problems.

AB - Bruce, Buck and Main (2005) offer two criticisms of agency theory as a valid model of executive behaviour. First, they suggest that because researchers have failed to find a strong empirical link between executive pay and firm performance, and since this research generally rests on models derived from agency theory, then we must question the theory. Second, they suggest that agency theory is under-socialized and therefore lacks generalizability to settings where social solutions would seem to eliminate the agency problem. In our response we make three points. First, agency theory rests on an assumption of self-interest that does not necessarily reflect opportunism. Second, agency theory does not make any reference to payperformance sensitivity, and the failure of this research can be attributable to a variety of problems with the research. Third, we agree that agency theory does not explicitly recognize contextual factors, but suggest that this abstraction from context, gives agency theory greater generalizability. Finally, we review the UK and German contexts discussed by Bruce, Buck and Main to show that socialized solutions do not prevent the occurrence of agency problems.

UR - http://www.scopus.com/inward/record.url?scp=27844602813&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=27844602813&partnerID=8YFLogxK

U2 - 10.1111/j.1467-6486.2005.00554.x

DO - 10.1111/j.1467-6486.2005.00554.x

M3 - Review article

AN - SCOPUS:27844602813

VL - 42

SP - 1507

EP - 1517

JO - Journal of Management Studies

JF - Journal of Management Studies

SN - 0022-2380

IS - 7

ER -