Ethics and Social Responsibility

Our author describes agency relationships when one party delegates decision making responsibility to a second party for compensation. (Hitt, 2011-2009) Types of agency relationships are described to be: consultants and clients; insured and insurers; managers and their employee; and top level managers and the firm owners. “One of the most common legal relationships in business is that of the agency. With many high-tech companies marketing, selling and licensing their products through third party channels of distribution, such as distributors, resellers, and company and independent sales representatives, the contractual arrangement between these various entities must be clear and detailed.” (Joseph Valof, Copyright © 1998) Since businesses became so complex, it has been necessary to create agency relationships. For example, in the Exchange, where I work, the Board of Directors, BOD oversees the strategy goals and objectives. Our company has reporting mechanism frequently to update on many important issues. This BOD insures that we meet our mission statement. There would never be an opportunity for a top executive to have a relationship ONLY with the “owner” and themselves. Our divisions, although operating autonomously, results are compared monthly in a meeting as they explain their score card results. In the summary of our text book, the authors’ state, “there are three internal governance mechanisms in the modern corporation to include (1) ownership concentration, (2) the board of directors, and (3) executive compensation. The market for corporate control is the single external governance mechanism influencing managers’ decisions and the outcomes resulting from them.” (Hitt, 2011-2009) Working with an agency and an owner can cause confusion at times when there is a difference of opinion on priority and also strategies. We sometimes can see this in sports leadership. The owner pays a coach to run the team but often times he/she will interject their...