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For decades, the economic theory of the firm referred to as agency theory has dominated business research and education in the United States. Although agency theory has been influential in accounting, finance, and managerial economics, it lacks informal and nonfinancial controls. Douglas E. Stevens resolves to enhance this theory through the incorporation of social norms. Drawing on historical context related to the firm, the theory of the firm, and social norm theory related to the firm, he demonstrates the importance of social norms in the formation and development of free-market capitalism and the firm. He also describes the latest theoretical, experimental, and archival evidence to exhibit the growing body of research that incorporates social norms into the theory of the firm. These foundations enable Stevens to create a comprehensive roadmap of agency theory that will have strong implications for practice and public policy.
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