Agency Theory, Institutional Sensitivity, and Inductive Reasoning: Towards a Legal Perspective

Making agency theory institutionally sensitive is a reasonable suggestion, as far as normal science stands. However, we argue that such a move has already been taking place, that it cannot address important problems with agency theory, and that the time is ripe for a critical re‐examination of this...

Full description

Saved in:
Bibliographic Details
Published in:Journal of management studies 2012-01, Vol.49 (1), p.223-239
Main Authors: Heracleous, Loizos, Lan, Luh Luh
Format: Article
Language:English
Subjects:
abduction
Agency
Agency theory
board of directors
Boards of directors
Conceptualization
Corporate governance
Governance
induction
Institutions
Legal norms
legal perspective
Reasoning
Social organization
Social theory
Studies
Citations: Items that this one cites
Items that cite this one
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:Making agency theory institutionally sensitive is a reasonable suggestion, as far as normal science stands. However, we argue that such a move has already been taking place, that it cannot address important problems with agency theory, and that the time is ripe for a critical re‐examination of this theory. We suggest that inductive studies can not only be more sensitive to institutional features than deductive studies, but they can also offer deeper understanding of governance practices in specific contexts, as well as the potential for analytical or moderatum generalizations. Drawing from legal theory, we offer an alternative conception of the principal, and of the role and status of the board of directors. We contend that this reformulated agency theory has a greater potential of being institutionally sensitive because it recognizes various stakeholders as team members, rather than just adding specific institutional features as variables to the dominant conception of agency theory.
ISSN:0022-2380
1467-6486
DOI:10.1111/j.1467-6486.2011.01009.x