The Root Cause of the Principal-Agent Problem Between Senior Executives

question 7

Multiple Choice

The root cause of the principal-agent problem between senior executives and lower-level employees can be explained by the

• A) informational advantage of the lower-level employees.
• B) higher number of lower-level employees than senior executives.
• C) knowledge of employees regarding day-to-day tasks.
• D) operational expertise of lower-level employees in concentrated areas of a particular field.

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Definitions:

Paul Lawrence

An identifiable individual but without a specific definition without context, likely refers to a person of note in a specific field.

Organisational System

A structured arrangement of processes, resources, and people designed to achieve the objectives of an organization in an efficient manner.

Subsystem

A component of a larger system that performs a specific role or function within the overall operation, contributing to the system's efficiency and effectiveness.

Work Unit

A functional division or team within an organization that focuses on specific tasks or objectives, often denoted by departmental or project-based assignments.