There are two extreme opinions on the agency theory. First opinion argues that agency theory is revolutionary and has a powerful foundation, but the other argues that the theory addresses no clear problem, is narrow, lacks testable implications, and e...
There are two extreme opinions on the agency theory. First opinion argues that agency theory is revolutionary and has a powerful foundation, but the other argues that the theory addresses no clear problem, is narrow, lacks testable implications, and even dangerous. After review it was found that a more valid perspective lies in the middle, ie. agency theory provides a unique, realistic, and empirically testable perspective on problems of cooperative effort. Especially agency theory can be moved to the first opinion when coupled with complementary theoretical perspectives. The intent of this paper is to clarify some of the confusion surrounding agency theory and to lead organizational scholars to use agency theory in their study of the broad range of principal-agent issues facing firms.