Roots in Economic Theory
THIS IS A DOCTORAL LEVEL COURSE, IN DOCTORATE OF BUSINESS ADMINISTRATION PRPOGRAM, THIS COURSE IS CALLED (Organizational Governance and Accountability). PLZ BE PROFESSIONAL…
EVERYWEEK, WE HAVE A MODULE, HERE IS THE SUMMARY OF THIS WEEK MODULE, SO U CAN UNDERSTAND WHAT THIS WEEK’S LESSON IS ALL ABOUT
Module 8: Model for Successful Governance
Welcome to the final module in this course! As you have learned, there are many components to Corporate Governance systems. These policies, procedures, processes, and mechanisms are what control and direct the day-to-day operations of an organization. There is no one size fit all Governance model. Factors such as the type of organization (private, public, or nonprofit), size of the organization, the country where the organization is located, past governance issues, etc., all can affect an organization’s Governance model.
Ultimately, someone has to decide on the organization’s specific governance model. In many cases, it might be just a matter of modifying the company’s existing Governance model. Responsible company representatives must look at current best practices, including benchmarking other similar type organization. In addition, the specific Governance model should also consider the current social, regulatory, and financial market environments.
Considering the organization you currently work in or previously worked for, determine the theory best suited for the organization.
Based upon the theory you selected, review the background reading and external research (if applicable), and select a governance model that builds upon the underlying theory you selected.
In your discussion, provide the rationale as to why you believe both the theory and model are correlated, and why you selected the two for your governing organization of choice.
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*****************NOTE: READ THIS BELOW TO BE ABLE TO LEARN ABOUT DIFFERENT THEORIES SO THAT U CAN CHOOSE ONE AS THE PROMPT ASKING***********
There are numerous theories that describe the relationship between an organization and its various stakeholders, while carrying out the activity of the business/organization. Although 19th Century entrepreneurs laid the foundations for modern corporations, it was 20th Century corporations that took us into the era of management. Many think the 21st Century will be the century of governance. As a result of many factors such as globalization, technological innovations, mergers and acquisitions, privatization, corporate scandals, large scale financial crises, etc., corporate/organizational governance has become an important business and academic issue. Accordingly, many corporate governance theories have evolved. Some of these theories noted by Madhani (2017) include the following:
1) Agency Theory – Agency theory has its roots in economic theory. Agency theory is the relationship between the principals, such as shareholders and agents such as the company executives and managers. The agency theory shareholders expect the agents to make decisions that represent the best interest of the principal’s. However, if the agent is motivated by self interest, they may not necessarily make decisions in the best interests of the principals. An agency dilemma exists in circumstances where agents are motivated to act in their own best interests, which are contrary to those of their principals.
2) Stewardship Theory – Stewardship theory has its roots from psychology and sociology. Stewardship theory is a theory that managers, left on their own, will act as responsible stewards of the assets they control. Stewardship theorists assume that given a choice between self-serving behavior and pro-organizational behavior, a steward will protect and maximize shareholders wealth through firm performance. This theory suggests that stewards are satisfied and motivated by organizational success.
3) Stakeholder Theory – The stakeholder theory has its roots in organizational management and business ethics. This theory addresses moral and ethical values in the management of a business or other organization.
4) Other theories include: a) Resource Dependence Theory. b) Transaction Cost Theory, c) Political Theory, d) Sociological Theory, and more.For more information on roots in economic theory check on this:https://en.wikipedia.org/wiki/History_of_economic_thought
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