Alternative Solutions to the Agency Conflict in the Firm

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    Abstract

    Agency theory is concerned about the conflict of interests in the employer-employee relations. But the theory is framed purely from the perspective of the principal (i.e., the owners or stockholders of the firm), without taking into consideration of the perspective of the agent (e.g., managers or employees), the conventional mechanism, i.e., monitoring and bonding, though useful, are not always effective and efficient for motivating employees. In this paper, we propose two alternative solutions to the agency conflict problem, i.e., aspiration facilitation and aspiration internalization, that adopts a promotion mindset in contrast to the prevention mindset in the agency theory and the conventional mechanisms. We argue, to facilitate and internalize some (if not all) aspirations of their employees, the firms will not only gain talents-based competitive advantages but become truly humanistic organizations for the ultimate purpose of life is the realization of human aspirations.
    Original languageEnglish
    Publication date2012
    Publication statusPublished - 2012
    EventSMS Special Conference China: Competing and Cooperating in and for China - Hotel Dong Fang, Guangzhou, China
    Duration: 14 Dec 201216 Dec 2012
    http://china.strategicmanagement.net/

    Conference

    ConferenceSMS Special Conference China
    LocationHotel Dong Fang
    CountryChina
    CityGuangzhou
    Period14/12/201216/12/2012
    Internet address

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