Answer to Question #233723 in Management for Diane

Question

A) Explain what principal-agent theory is and what is the main implication for public policy. B) How does NPM tackle the problems that arise from principal-agent theory? Explain one strategy/element used to tackle this issue. C) NPM is sometimes accused of neo-Taylorism? Explain why this is so (i.e. explain what aspect of Taylor’s scientific management is associated to NPM’s reforms and ‘best practices’).

Answer 1

A) Explain what principal-agent theory is and what the main implication for public policy is. The principal-agent problem is a conflict in priorities between a person or group and the representative authorized to act on their behalf. An agent may act in a way that is contrary to the best interests of the principal. The principal-agent problem is as varied as the possible roles of principal and agent.

 B) How does NPM tackle the problems that arise from principal-agent theory? NPM tackle the problems that arise from principal-agent theory by aligning the interests of both parties. As the agent that works on behalf of the principal may have different incentives, it is important to bring these in line as much as possible.

 C) NPM is sometimes accused of neo-Taylorism? Explain why this is so (i.e. explain what aspect of Taylor’s scientific management is associated to NPM’s reforms and ‘best practices’). Scientific management, also often known as Taylorism, is a management theory first advocated by Federick W. Taylor. It uses scientific methods to analyze the most efficient production process in order to increase productivity.