Towards a social theory of agency

Robert M. Wiseman, Gloria Cuevas-Rodríguez, Luis R. Gomez-Mejia

Research output: Contribution to journalArticle

105 Scopus citations

Abstract

We challenge critics of agency theory who suggest that agency theory's value does not extend outside a narrow context dominated by egocentric agents seeking only to maximize wealth at the expense of the principal. Instead, we argue that agency theory's flexibility allows for its application to a variety of non-traditional settings where the key elements of agency theory, such as self-interest, information asymmetry, and the mechanisms used to control agency costs can vary beyond the narrow assumptions implied in traditional agency-based research. We suggest that extending agency theory to diverse settings using a deductive approach can be accomplished by formally recognizing and incorporating the institutional context surrounding principal-agent (P-A) relations into agency-based models. Thus, criticisms that agency theory fails to acknowledge the social context in which P-A relations occur provides not a barrier but an opportunity for extending our understanding of P-A relations to a variety of diverse contexts.

Original languageEnglish (US)
Pages (from-to)202-222
Number of pages21
JournalJournal of Management Studies
Volume49
Issue number1
DOIs
StatePublished - Jan 1 2012
Externally publishedYes

Keywords

  • Agency theory
  • Corporate governance
  • Principal-agent relations
  • Social context

ASJC Scopus subject areas

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

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