Sunday, 1 August 2010

Agency theory vs trust

A nice little snippet from John Kay's Obliquity:
There is nothing wrong with using 'I trust him' or 'I don't trust him' as a basis for decision. Finding individuals you can trust, or establishing trusting relationships with them, is the most effective - often the only effective - means of achieving the delegation that is necessary to accomplish objectives and goals in large organisations. Successful decentralisation relies of the transmission of high-level objectives, not just intermediate goals and basic actions, to the agents who will implement them. This is a world apart from principal-agent models that treat social organisations as mechanical systems in which agents respond to stimuli that incentive structures impose.

No comments: