Application of Agency Theory on Top Management Team Towards Organisational Thinking.
Within pure water companies this quantitative research study examined how agency theory affects Top Management Teams (TMTs) specifically by analysing agency conflict and intervention behaviour. A structured questionnaire was given to 125 employees and SPSS version 23.0 analysed the collected data. The research method adopted for this study was quantitative and it used primary data from the questionnaire. The study investigated the agency conflict and intervention using descriptive statistics, ANOVA and regression analysis to analyse the relationship between the two variables. The results show a strong positive correlation (r = 0.850) among agency conflict predictors of earnings retention, moral hazards, effort level, risk aversion and time horizon; a moderate positive correlation (r = 0.462) among agency intervention predictors of internal audit system, managerial compensation, concentrated ownership, threat of dismissal, effective monitoring, ownership structure and managerial shareholding. The findings of this study provide empirical evidence to support the application of agency theory to explain the behaviour of TMTs, and the results highlight the importance of mitigating agency conflict and the use of effective interventions mechanisms. The findings of this study also have implications for strategic decisions regarding the composition, compensation, and monitoring of TMTs that can lead to improved organizational performance. It was suggested that future research should incorporate qualitative approaches to gain a deeper understanding of the implications of agency theory.
Keywords: Agency Theory, organizational thinking, Top Management Team, Application.
