The Opportunistic Principal

Abstract

SUMMARY This article sheds light on a surprisingly persistent gap in economic theory: Economists have extensively studied agency relationships between principals and agents, but economic analysis has traditionally been preoccupied with problems created by agents rather than principals. Principal‐agent theory traditionally neglects opportunism on part of the principals. As a result, economic theory fails to fully explain gaps in economic performance. Even worse, the for decades biased concept of opportunism has shaped generations of students in economics and business and thus has contributed to deficient managerial and economic outcomes. Under the presumption that not only agents but also principals demonstrate opportunistic behavior, the economic definition of opportunism as established by Oliver Williamson is further developed. This contribution extends the concept of opportunism to principals. The principal’s illegitimate interference with the autonomy of the agent is discussed which shows that whilst agent opportunism largely rests on information asymmetry, principal opportunism feeds itself off power asymmetries. In an interdisciplinary effort and building on recent research in the area of bullying and mobbing, the economic rationale of principal opportunism is explained with the help of a simple game‐theoretic model. On this basis, it is demonstrated how a more balanced perception of principal agent relationships can contribute to an updated theory of the firm.

Pengaruh Kesulitan Keuangan Terhadap Manajemen Laba dengan Internal Audit sebagai Variabel Pemoderasi

“…Agency theory digunakan untuk menjelaskan konflik yang timbul karena adanya pemisahan antara pemilik dan pihak manajer selaku agen yang menjalankan kegiatan operasi perusahaan (Panda dan Leepsa, 2017). Konflik tersebut terjadi karena dalam mengelola operasi perusahaan, agen seringkali mendapatkan informasi yang lebih banyak dibandingkan prinsipal sehingga menyebabkan terjadinya ketimpangan informasi (asymmetric information) dan keadaan ini menjadi faktor pemicu perilaku oportunistik oleh agen (Wagner, 2019), seperti manipulasi informasi laba. Konflik juga dapat menyebabkan adanya perbedaan kepentingan (conflict of interest) antara manajemen dan pemilik yang berakibat pada timbulnya biaya keagenan yang menjadi tanggungan bagi kedua belah pihak yang terdiri dari beban pengawasan, ikatan, dan kerugian residual.…”

A New Contemporary Profession as Game Boosters: The Behavioural Emergence of Intellectual Opportunism

“…Third, this research utilises intellectual opportunism as the conceptual continuance for economic opportunities. The authors define intellectual opportunism as people's intelligence implemented to get special favours that are genuinely intended [12][13][14]. However, we argue that these people can come likely from selfishness, self-interest, or altruism.…”

“…In other words, it indicates that the profession of game boosters is a career that lacks integrity or intellectual shallowness [2,38,43,46]. Likewise, this research states that their lack of knowledge causes them to choose a game booster, furtherly making them more selfish [14,27,29,47]. Finally, it reminds society that it should eliminate the emergence of intellectual opportunism so people do not become unprincipled and create illegitimate cultures inducting young people's behavioural cognition.…”

“…Intellectual opportunism describes human abilities and their brilliant and competent capacities, which they furtherly use to capture opportunities. From another perspective, humans actualise their intellectual skills to analyse, take advantage of, and seize opportunities to make themselves economically valuable [14,36,53]. For example, gamers, who are usually highly intelligent, could identify every opportunity to create economic value by undertaking activities that have some business value [14,45,48].…”

Making Public Infrastructure Work: Multi-seat Majoritarian Elections as a new Institutional Approach

“…Indeed, recent research suggests that public sector employees have higher rates of absence from work than private sector employees(Prümer and Schnabel, 2019). 2 At the same time, diffusing responsibility between public and private agents increases information costs for citizens and may make politicians more opportunistic agents(Wagner, 2019).…”