This chapter challenges the shareholder focus of the mainstream use of agency theory, and explores the possibility of redefining agency theory. The aim is to investigate the potential of internalizing environmental externalities of products, although much will be relevant also to social and...

In this chapter I undertake a critical analysis of mainstream agency theory, which views corporate boards and by extension senior management as ‘agents’ for shareholders as ‘principals’. With failed assumptions and forgotten caveats, this mainstream theory has informed and reinforced the...