Abstract
In this paper, we examine agency theory’s presumptions of self-interest, opportunistic behavior, and the notion of the “economic man” (or woman). We contend that the application of agency theory’s presumptions to the firm may imply high costs, competitive disadvantage, and high firm risk. We suggest that agency theory’s presumptions may not contribute to the interests of the principal, agent, or other stakeholders. Alternatively, we discuss socioeconomic theories’ presumptions of enlightened self-interest, trustworthy behavior, and the possibility of the noneconomic person. We argue that the extension of socioeconomic theories to the firm may imply low costs, competitive advantage, and low firm risk. We contend that the socioeconomic presumptions may contribute to the interests of various stakeholders.
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