Agency Theory Overview

Information asymmetry

Condition in which at least some relevant information is known to some but not all parties involved. Information asymmetry causes markets to become inefficient, since all the market participants do not have access to the information they need for their decision making processes.

Opportunism (Williamson)

The opportunisme Refers to the suggestion (widely associated with transaction cost analysis) that a decision-maker may unconditionally seek his/her self-interests, and that such behaviour cannot necessarily be predicted. This proposition extends the simple self-interest seeking assumption to include "self-interest seeking with guile" thereby making allowance for strategic behaviour[44]. [examples: strategic manipulation of information or misrepresentation of intentions; false or empty, e.g. self-disbelieved, threats or promises, Goffman, 1969] has profound implications for choosing between alternative contractual relationships. Opportunistic behaviour contrasts with stewardship behaviour which involves a trust relation in which the word of a party can be taken as his bond[45].

Trust

Trust is a relationship of reliance. Trust does not need to involve belief in the good character, vices, or morals of the other party. Persons engaged in a criminal activity usually trust each other to some extent. Also trust does not need to include an action that you and the other party are mutually engaged in. Trust is a prediction of reliance on an action, based on what a party knows about the other party. Trust is a statement about what is otherwise unknown -- for example, because it is far away, cannot be verified, or is in the future.

Managerialism

Under neoliberalism there is also a generalised governmental concern to promote efficiency in what were previously non-governmental spheres - e.g., in self constitution - and that includes redefining the cultural as the economic. During recent decades, these developments have been associated with the introduction of managerialism as a new mode of governance under the restructured public sectors of many Western societies. The restructuring has involved the reform of education in which there has been a significant shift away from an emphasis on administration and policy to an emphasis on management. This form of managerialism is known as New Public Management (NPM) and has been very influential in the United Kingdom, Australia, Canada, and New Zealand. It has been used both as the legitimating basis and instrumental means for redesigning state educational bureaucracies, educational institutions and even the public policy process.

Under NPM, there is an elabouration of explicit standards and measures of performance in quantitative terms that set specific targets for personnel, an emphasis on economic rewards and sanctions, and a reconstruction of accountability relationships. It promotes a reduction in scope for ministerial discretion in the administration of government agencies, it separates the funding agencies from providers of services as well as separating advisory, delivery, and regulatory functions. NPM introduces accrual accounting, capital charging and a distinction between the state’s ownership and purchasing interests. There has been a decentralisation of management control towards what is often referred to as the doctrine of self-management. In the interests of so-called productive efficiency then, the provision of educational services has been made contestable; and, in the interests of so-called allocative efficiency, state education has been marketised and privatised.

Date: 2016-03-03; view: 720