Abstract
The agency theory principal-agent (P-A) corporate governance model introduced by Jensen and Meckling (1976) is considered by many to be synonymous with governance theory. The model assumes that because the ownership structure at publicly traded corporations provides incentives for managers (agents) to act in a self-interested and opportunistic manner, owners (principals) have incentives to invest in formal governance mechanisms. In so doing, the model reduces social relationships within firms to simple dyad relationships between economically rational and motivated actors. In Lubatkin, Lane, Collin, and Very (2004), we argued that the model’s undersocialized characterization not only makes it incapable of capturing the complexities of real-world organizations, but also makes it fundamentally incompatible with management theory.