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We had anticipated that proponents of agency theory might be critical of our recent article on the basis that our characterization of principalsteward relationships is unrealistic, naive, and nonexistent in current business organizations. The Dialogue comment by Albanese, Dacin, and Harris, however, recognizes the validity and the prevalence of principalsteward relationships and seeks to include them under the agency umbrella. We are gratified by the recognition that these types of relationships do exist and are important to understanding behavior in organizations, but we find it inconceivable that such relationships can fit within the bounds of agency theory as we understand it.
The principal criticism articulated by Albanese et al. is that we misrepresented agency theory, specifically with respect to the divergence of interests between agents and principals. Although we recognize that there are some differences among proponents and versions of agency theory, we based our characterization on the originators and major scholars in this area (e.g., Jensen & Meckling, 1976), and there appears to be no disagreement on this point. If the interests of agents and principals are not in conflict-that is, if the theory does...