Agency theory explains the relationship between two parties in an organization. According to the theory, one party is referred to as the agent and acts on behalf of the other party called the principal. In a family entity, the hired executive officers are the agents and are required to report to the family members who are considered to be principal (the owners of the business). In most families, managers are hired from outside either because of lack of people with the……..
The post Agency theory and family business
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