The paper "Management Theories and the Financial Crisis of 2008" is a good example of a literature review on management. The financial crisis of 2007 and 2008, given the various explanations of housing bubbles and debt derivatives that made a number of financial institutions to lend money to creditors who could not pay back, has some foundations on the underpinnings of agency theory and to some extent, bad management theories and faulty business strategies. To begin with, opponents of agency theory look at the entirety of the theory as a conflict of interest arising between the agent and principals (Berlin 2002).
This conflict of interest is also instigated by bad management theories thus making agents not to act in the best interest of the principals. While Ghoshal (2005) integrates agency theory and the 2008 financial crisis in what her terms as ‘ the corporate scandals in the United States’ (p. 75), the theory comes into play when agents fail to act in a manner that suits the expectation of the principals. The aftermath of such confusion is that investment banks are now making attempts to recoup funds but the economy where values of products have depreciated makes such move difficult.
In as much as agency theory, the 2008 financial crises and bad management theories are concerned, there are some moralities involved but plausible contexts such can be put is that there are technical problems that require technical review. This is the point of departure for this essay; critically analyzing the link between the agency theory, the 2008 Global Recession, and Ghoshal's article. The thesis statement is essential for management and organizations, especially where cases of insufficient regulations, fragmented ownerships, distortive incentive frameworks, and bad management theories are in continued practice. At least scholars agree that there is a connection between bad management theories, the financial crisis of 2008, and the agency theory (Feldman and Orlikowski, 2011; Jarzabkowski and Feldman 2010; Ghoshal, 2005).
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