A finished DBA-805 Topic 6 theory transfer test example, checking agency theory's assumptions in a family-controlled group where ownership is concentrated, and replacing a cultural explanation with an institutional one. Searches like "dba 805 topic 6 assignment example", "dba805 topic 6 sample" and "dba-805 topic 6 example" land here.
What a finished DBA-805 Topic 6 theory transfer test looks like
Three assumptions are pulled out of agency theory before the case is opened: ownership dispersed enough that no shareholder controls the firm, professional managers whose interests diverge from owners', and remedies such as equity pay and independent boards that bring the two back together. Each is then checked against the composite group. The founding family holds a majority of the flagship company's voting shares, directly and through a pyramid of holding companies, and a family member runs it. The owner-manager conflict barely exists. What does exist is the conflict Young, Peng and colleagues call principal-principal, visible in related-party sales from the flagship to a family-owned distributor at prices minority shareholders cannot see. Equity pay for this chief executive would reward the controlling owner twice. The test concludes that agency theory travels only with its boundary conditions attached.
How a DBA-805 Topic 6 example is structured
Assumptions come before the case, so the theory cannot be fitted to facts already in view. The first section extracts agency theory's three working assumptions from Jensen and Meckling and from the separation of ownership and control that Berle and Means described. The case section presents the group's ownership map, its board and one year of related-party transactions, all composite. Each assumption is then marked as holding, failing or transformed, with the transformed one, the conflict itself, receiving the most space. A section on the tempting alternative follows: explaining the difference through Hofstede's country scores, which the paper declines on McSweeney's grounds that national averages assume a uniform culture. La Porta and colleagues' work on investor protection supplies the institutional explanation instead. The test closes by rewriting agency theory's prescriptions for this setting, beginning with directors elected by minority shareholders.
Three assumptions extracted first
Dispersed ownership, a gap between what owners and hired managers want, and remedies that close it are stated before the case, so none can be bent to fit.
A family that owns and runs
Majority voting control through a holding pyramid and a family chief executive leave little owner-manager conflict, so the theory's central problem is largely absent here.
The conflict moves between principals
Related-party sales to a family-owned distributor show the controlling owner gaining at minority shareholders' expense, the pattern the principal-principal perspective was built to describe.
Hofstede's scores declined as explanation
National culture averages cannot explain a governance arrangement inside one group, and McSweeney's critique of their uniformity assumption is cited for why they should not.
Investor protection as the institutional cause
La Porta and colleagues' finding that ownership concentrates where legal protection for minority investors is weak explains the group's structure without any appeal to culture.
Prescriptions rewritten for this setting
Equity pay for the chief executive is dropped, and directors elected by minority shareholders plus disclosure of related-party pricing take its place.
Where marks go in DBA-805 Topic 6
This topic punishes transfer by assumption most, the paper that applies agency theory's prescriptions abroad without first asking whether owners and managers are separate people there. Labeling the family's behavior as agency costs, when the family is both principal and agent, uses the theory as vocabulary and tests nothing. A frequent shortcut explains every difference through Hofstede's dimensions, handing a national average the work a firm-level governance analysis should do, and readers of this literature will look for McSweeney's critique wherever the scores appear. Papers that reject agency theory entirely overcorrect, since its logic survives in adapted form once the conflicting principals are identified. Ignoring the related-party transactions leaves the minority-shareholder problem asserted rather than shown. Recommendations copied from the theory's home economy, equity pay above all, reveal that no assumption was checked.
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DBA-805 Topic 6 questions, answered
What is the principal-principal problem?
A term from Michael Young, Mike Peng and colleagues for the agency conflict that dominates where ownership is concentrated and minority protection is weak. Instead of dispersed owners struggling to control hired managers, a controlling shareholder can extract value at the expense of minority shareholders, for example through related-party transactions. The example reads it as agency theory adapted to a setting whose assumptions differ, rather than as a separate theory.
Why not explain the difference with Hofstede's dimensions?
Geert Hofstede's dimensions are a framework for comparing national averages, originally drawn from surveys of one multinational's employees. Brendan McSweeney's critique argues that they assume a uniform national culture and cannot bear the causal weight often placed on them. A governance arrangement inside one business group is better explained by ownership and law. The example mentions the scores only to show why it does not rely on them.
Does agency theory fail outside its home economy?
Not entirely, which is the example's point. Its core logic, that a party acting for others will pursue its own interests unless monitored or aligned, travels well. What fails to travel are the assumptions about who the parties are and the remedies built on them. Stating those assumptions as boundary conditions, in Whetten's sense, lets the theory be applied where they hold and adapted where they do not.