Conflict and Confluence: The Multidimensionality of Opportunism in Principal–Agent Relationships

Conflict and Confluence: The Multidimensionality of Opportunism in Principal–Agent Relationships Conventional agency theory typically focuses on a unidirectional problem, in which an agent behaves opportunistically against the interests of a principal. Yet, this conceptualization is too limited to fully describe all aspects of principal–agent relationships. This article presents a more comprehensive framework explaining a potential three-directional problem—that is, (i) agents behave opportunistically against the interests of principals, (ii) principals behave opportunistically against the interests of agents, and (iii) relationships between agents and principals representing confluence of interests affect the interests of third-party stakeholders. The article provides evidence of these problems, describes their unique characteristics, and outlines implications for society. It concludes with a discussion focusing on the implications of the proposed framework for purported governance solutions, the ongoing debate between shareholder and stakeholder views of the firm, and business practices. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Business Ethics Springer Journals

Conflict and Confluence: The Multidimensionality of Opportunism in Principal–Agent Relationships

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Publisher
Springer Netherlands
Copyright
Copyright © 2015 by Springer Science+Business Media Dordrecht
Subject
Philosophy; Ethics; Business and Management, general; Management; Business Ethics; Quality of Life Research
ISSN
0167-4544
eISSN
1573-0697
D.O.I.
10.1007/s10551-015-2887-7
Publisher site
See Article on Publisher Site

Abstract

Conventional agency theory typically focuses on a unidirectional problem, in which an agent behaves opportunistically against the interests of a principal. Yet, this conceptualization is too limited to fully describe all aspects of principal–agent relationships. This article presents a more comprehensive framework explaining a potential three-directional problem—that is, (i) agents behave opportunistically against the interests of principals, (ii) principals behave opportunistically against the interests of agents, and (iii) relationships between agents and principals representing confluence of interests affect the interests of third-party stakeholders. The article provides evidence of these problems, describes their unique characteristics, and outlines implications for society. It concludes with a discussion focusing on the implications of the proposed framework for purported governance solutions, the ongoing debate between shareholder and stakeholder views of the firm, and business practices.

Journal

Journal of Business EthicsSpringer Journals

Published: Oct 19, 2015

References

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