Management theories have undergone significant development and evolution over time due to continuously emerging evidence from empirical studies. The concepts of management theories have been improved and expanded tremendously by vigorous and frequent research activities. Scholars and practitioners continuously test the veracity of these theories in various organizational settings to determine their applicability and influence on firm operations and performance. This is because the evidence from actual operations and performance of firms helps reinforce the theoretical conceptualizations and reveals realistic gaps in the theoretical frameworks that require more knowledge development from evidence-based research.

Strategic management has gained prominence as organizations encounter difficult, complex, and turbulent environments. Organizational leaders are said to be strategic when they plan how to align the organizational resources with organizational goals and a find way of executing their plans successfully to the benefit of all stakeholders. Therefore, managers are expected to be creative thinkers that can guide their organizations to profitability and prosperity. They are expected to understand deeply the environment surrounding their organizations, project the environmental changes likely to occur in the future, assess the risks their organizations face, and have sufficient knowledge about which alternative interventions are best suited for their organizations. Consequently, leaders and senior managerial executives in successful firms worldwide focus more on constant change and improvement than excellence, because continuously changing organizations often renew themselves to navigate their ever-changing operational environments (Sawagvudcharee and Yolles 18). In turn, investors and owners of business organizations place the mandate of running their firms in the hands of managers that are thought to be highly skilled in their trade and practice. They trust that these leaders and managers will work in the best interest of the shareholders. In this regard, managers act on behalf of the business owners, investors, and shareholders as the people that run the organizations on a daily-to-day basis expected to spur the performance and prosperity of the business enterprises.

However, the interests of the managers are increasingly being questioned amid the proliferation of managerial malpractices in large and renowned corporations thought to be the hallmarks of organizational excellence. Media widely cover managerial misconduct, with large corporates being implicated in high-profile cases and paying hefty fines for violating laws and defrauding clients. For instance, the giant German car manufacturer, Volkswagen, was accused of doctoring the emission reports of their vehicles so that they could be viewed as more environmentally friendly than their competitors. Similarly, Boeing was taken to court for causing the fatal crashes of two aircrafts belonging to Lion Air and Ethiopian airline that killed all people on board (). The company was accused of not training the pilots of airlines that had purchased and operated the new Boeing 727 Max aircraft, thus leaving them without sufficient knowledge about how to react when their planes malfunctioned or met adverse flying conditions. Consequently, flying this plane was suspended worldwide as the courts sought to unravel the misdeeds of Boeing, placing a sharp focus on the possible misconduct of the company’s senior management yet again. These events demonstrate that sometimes, managers can act for their interests while ignoring the more significant and big-picture interests of their key stakeholders. Consequently, some senior executives become a severe liability to their firms, costing them huge finances in losses and fines, and damaging their reputations, while the leadership profits individually from their malpractices. This unscrupulous behavior in the higher echelon organization leaders and executives has raised moral concerns about managerial practices. This has invited a reconsideration of the assumptions made in the agency theory.

The agency theory has been used widely to explain the relationship between managers and shareholders and between directors and executive managers of firms. When applying this theory, the managers are viewed as agents, while the shareholders, who own the firm, are considered the principals. Similarly, boards of directors are considered principals, while the chief executive officer is the agent acting on the principal’s behalf. According to the theory, the agents are expected to be experts in organizational management because of their well-developed professional capabilities, which the principals lack. They are expected to mobilize all available resources and align them to the corporate vision, mission, and values to make the firm profitable, successful, and sustainable. However, the conceptualization of the agency theory has been questioned, particularly when the interests of agents conflict with those of the principals. The widely-established belief that agents always function in the interest of their principals is being overturned by the evidence emerging from firms globally. Consequently, the quality of the principal-agent relationship is viewed as critical for explaining the good performance of companies using the agency theory. Therefore, it is no longer widely held that agents always promote organizational change and growth or contribute positively to the operations and performance of organizations.

1.2 The research problem

Most studies on strategic management theories have been conducted in western countries, where research activities are more fervent compared to other regions globally. In this regard, the existing knowledge of strategic management theories has been conceptualized in the western culture and settings, and cannot be generalized to non-western circumstances. However, emerging economies are growing fast and formalizing their management approaches. Leaders and managers in firms in these economies are increasingly knowledgeable about the good practices that have been used successfully in developed economies. They are also using this knowledge in their firms, either in their original forms or their customized versions, to suit the conditions of their locations and circumstances. However, there is an evidential scarcity of how these theories are understood and applied by the leaders and managers of firms in emerging economies.

The United Arab Emirates is undergoing a rapid diversification of its economy to mitigate the imminent effects of relying excessively upon finite oil and gas resources. The country’s rulers have realized that creating wealth from oil and gas will dwindle as the resources become depleted. The overarching concern perturbing these leaders is that once the oil and gas reservoirs dry out, the country will not have any other wealth-generating resource, considering that their country is primarily a desert. Consequently, the leaders have acted proactively by promoting the emergence of non-oil economic operations to continue generating national wealth. They have created a conducive environment for establishing non-oil-related industries, such as banking, real estate, international trade logistics, advanced information and communications technologies, healthcare, manufacturing, and many others. In turn, local and international investors have responded to this initiative by establishing various firms in the country with the assistance of the Emirati government. The success of these firms varies widely and has not been sufficiently linked to strategic management theories through empirical evidence.

From another perspective, the Emiratis are an increasingly educated society. Many Emiratis seek academic and professional education in the western world with their government’s assistance through scholarships. Many others finance their education in western countries with private funds. However, after graduating, these professionals return home immediately or after working in those countries for a while. They bring the foreign-acquired knowledge and use it in the local firms. Although this is the general expectation, evidence on the ground may differ. It is possible that these professionals abandon their managerial lessons and revert to traditional emirate approaches to organizational management. It is also possible that they modify the foreign-acquired knowledge to suit the emirate environment and circumstances. However, there lacks empirical evidence about which theories these leaders and managers use, or how they apply them in running their forms. Besides, there is a scarcity of evidence indicating that the strategic management theories influence the operations and performance of firms domiciled in the United Arab Emirates.

1.3 The scope of the study

This study is confined to understanding the influence of the agency theory on the processes and outcomes of firms in the United Arab Emirates. Although it will engage in a theoretical discussion of the implications of the agency theory in United Arab Emirates’ firms, it will focus more on the empirical evidence gathered from management practitioners in firms located in this country. In addition, this study will not focus on any individual industry in the United Arab Emirates; rather it will seek to provide a general insight into and overview of the application of the agency theory among leaders and managers of firms from different firms drawn from the diverse industries in the country.

1.4 Justification of the study

Agency theory is controversial and invites serious concerns among management scholars and practitioners. The standing of the agency theory as an organizational theory and applicability in diverse organizational settings need to be verified. This process is premised on the notion that theory needs to be translated into practice to verify its efficaciousness in real settings. The agency theory is premised on the belief that the principal’s and agent’s interests should be matched for the value of a firm to be maximized. This requires that managers as agents align the organizational resources to fit the organization’s strategic direction and goals. In the process of aligning organizational resources and capabilities, firms develop and grow. Subsequently, the agency theory is closely tied to organizational development, which focuses on improving existing organizational processes and creating new ones to maximize the capacity, potential, and efficaciousness of an organization and its members. While the nexus between the agency theory and organizational development can be explained theoretically, its empirical evidence is inconclusive because it has not been proven conclusively that applying the agency theory aids positive organizational development and growth. In this regard, this study is justified in exploring the nexus between the agency theory and organizational development in settings that have been underrepresented in research initiatives.

1.5 Significance of the study

This study is significant because it addresses an area that has received little research attention. The empirical evidence linking the agency theory to organizational development is scarce, particularly in non-western settings. Therefore, this study will contribute to the existing knowledge evidencing the familiarity and application of strategic management theories in organizational processes and performance. In particular, the findings from this study are expected to augment those from previous studies in this area. They are also expected to provide more insights into the management practices in non-western settings, such as those in the United Arab Emirates.

1.6 Research question, aim, objectives, and hypotheses

This study seeks to answer the questions

Are the leaders and managers of firms in the United Arab Emirates familiar with strategic management theories?
Do leaders and managers of firms in the United Arab Emirates employ strategic management theories to run their firms
Does applying strategic management theories influence the operations and performance of firms in the United Arab Emirates?

To answer these questions, this study explores and describes the conceptualization, perceptions, and applications of strategic management theories by leaders and managers in firms in the United Arab Emirates. This aim is informed by the lack of empirical evidence about how managers in the United Arab Emirates employ strategic management theories and whether their application has influenced the operations and performance of firms based in the country.

Subsequently, this study’s objectives are:

To explain the strategic management theories
To determine the familiarity of the strategic management theories among leaders and managers of firms in the United Arab Emirates
To unearth the perceptions of the strategic management theories among leaders and managers of firms in the United Arab Emirates
To determine whether leaders and managers of firms in the United Arab Emirates use strategic management theories to run their firms
To determine whether the use of strategic management theories in firms in the United Arab Emirates has influenced the operations and performance of firms in the United Arab Emirates

The hypotheses formulated for this study are:

Ho1: There is no significant familiarity with the strategic management theories among leaders and managers of firms in the United Arab Emirates.

Ho2: The leaders and managers of firms in the United Arab Emirates do not use the strategic management theories significantly.

Ho3: The application of strategic management theories does not significantly influence the operations of firms in the United Arab Emirates.

Ho4: The application of strategic management theories does not significantly influence the operations of firms in the United Arab Emirates.

1.7 Strategic management theories

Strategic management theories help explain the organizational development of different firms in various settings. Firms take different development and growth trajectories based on their unique circumstances and settings. Consequently, some strategic management theories can explain the development and growth phenomenon of firm in particularly circumstances and settings but not in others. Although the agency theory is the main theoretical focus in this study, other related theories, like the resource-based view, contingency theory, stakeholder theory, and stewardship theory will be explored to bolster the understanding of the effects of the agency theory on the management practices and influence on the organizational development of firms in the United Arab Emirates.

1.8 Conceptual framework

The conceptual framework guiding this study is outlined.

2.0 Review of the relevant research

2.1 Organizational development

Organizational development has been a dominant subject in organizational research. Mishra (788) noted that organizational development had adopted sustainability approaches transforming it to sustainable organizational development. This means that the organizational development strategies were embracing green approaches to management practice to make firms sustainable, thus guaranteeing their long-term performance and survival.

2.2 Origins, history, and development of the agency theory

The agency theory has a longstanding history that dates back before the term was officially adopted and the theoretical framework was formally supported by scientific research. For instance, Panda and Leepsa (74) conducted a review of the existing literature to explore the dominant ideas, perspectives, and the challenges related to the agency model to understand how the conflict of interest and agency costs arise. They noted that the agency theory as one of the oldest management and economics theory outlines the challenges encountered in separating business owners and managers and how these challenges can be eliminated. They noted that Adam Smith was perhaps the first scholar that identified and explained the agency problem using the agency theory. However, the description of the agency problem transformed in the 1960s and 1970s when risk-sharing became the norm of addressing the agency problem.

Zogning (1) revisited the agency theory by tracing its development since it was first developed by Adam Smith in his famous book an enquiry into the nature and causes of the wealth of nations back in 1776. At the time, the agency theory was set when family companies were the dominant business structures at the time. The theory sought to explain the relationship between the managers and family owners of businesses, with the owners being the principals and the companies’ senior management being the agents in what was termed as the agency relationship. At the time, it was believed that the senior managers in family-owned businesses did not have the wherewithal of advancing the interests of the owners because they were not vested financially in the organizations they managed. Therefore, they were prone to negligence and profusion because their attention was towards the small organizational manners that did not honor their master’s interests (Zogning 1). However, Zogning (2) explained that the owner-manager relationship changed when family businesses declines as they became replaced with corporate entities that were large and complex, and managerial practice became a profession in which skills was acquired through professional training and managerial competence because the focus of recruiting and engaging business leaders and managers. Consequently, the ownership of business transformed from being premised in families towards being vested in shareholders. Consequently, the owner-manager relationship transformed to the shareholder-manager relationship, transforming the translation of the agency theory into practice.

Pouryousefi and Frooman (80) added the business ethicists’ perception of the agency theory as one of the agency model’s development. They suggest that the unilateral focus of the agency theory should be replaced by a multilateral one, which considers the social interaction structure. They noted that reciprocity could be the moral solution to the agency problem.

2.3 Other theories related to the agency theory and organizational development

The agency theory is a broad theory that accommodates other theoretical paradigms related to strategic organizational management.

Sawagvudcharee and Yolles (18) explained that contemporary business organizations were adopting sustainable strategic business management models to navigate their complex environments while maximizing the returns and optimizing outcomes. They argued that the strategic management paradigm of fostering sustainable organizational improvement as advanced by the input-output model, the resources-based view, and the agency model. They noted that excellent business enterprises focused on improving and changing constantly rather than striving for excellence.

2.4 Influence of the agency theory on management practices

Evidence of the impact that the principal-agent relationship has on the operations and performance of organizations is building rapidly due to the ongoing vigorous research activities globally.

Partyka (176) explain that the agency theory has been transformed the principal-agent relationship into a contractual one. They note that the application of the agency theory in supply chain management has translated the principal-agent relationship into a contractual one between sellers and buyers, and subsequently between consumers and suppliers, and managers and suppliers.

2.5 Management practices in the United Arab Emirates

United Arab Emirates is attracting business investors with business-friendly and investor-focused policies. Consequently, the rapid establishment of firms across various sectors in the country has led to an increase of people in managerial positions in the country. Although many top organizational executives have been trained in the west, they have had to translate their knowledge to suit the Emirati environment and circumstances.

3.0 Methodology

The methodological approach to be employed by this study can be best explained by the research onion framework advanced by Saunders (Melnikovas 33). According to Sanders, Lewis, and Thornhill (7) research methodology construction is a structured process that involves the delineation of the different stages. In particularly, the methodology of a study starts by explaining the its philosophical foundation before outlining the approach used to develop theory, the methodological choice, strategy, tome horizon and the techniques and procedures of data collection as illustrated in figure 1.

Figure 1. The research onion advanced by Sanders

Source: Melnikovas (33)

3.1 Philosophical foundations of the study

This study is anchored on the interpretivism paradigm of research. This paradigm envisages research as a process of understanding the subjective conceptualization of knowledge from the multiple realities existing in an observable situation. This is because from an ontological perspective, reality is social constructed and continuously evolving as the meanings created change over time. Similarly, the epistemological assumption is that knowledge is relative because it is based in the different meaning created by different people living the same phenomenon. In addition, another assumption is that knowledge is subjective because it is based on the different experiences of diverse people, thus lacking one universal definition and explanation. This is because different individuals experience realities different, which supports the notion that the knowledge and the world should be understood from the different realities it presents to different people.

In this study, the deduction approach to theory development will be employed. Specifically, the researchers will start by considering the existing theory, which in this case the agency theory and is associated strategic management theories like the resource-based view, contingency theory, stakeholder theory, and stewardship theory. The researcher has formulated research questions and hypotheses to inform about the data that needs to be collected to facilitate the confirmation or rejection of the hypotheses and eventually answering the research question.

3.2 Method

Qualitative research is the methodological choice selected for this study. Qualitative research strives to deliver an in-depth understanding of a phenomenon from the lived experiences of individuals. Therefore, it unearths the perceptions about a phenomenon instead of quantifying it in numerical terms. Consequently, qualitative research produces a broad understanding of the meanings created by individuals living through a phenomenon and the perceptions they conceptualize in the process. In this study, deploying strategic management theories in firms in the United Arab Emirates is the phenomenon to be investigated. This phenomenon is lived by leaders and managers of firms in the United Arab Emirates. The lived experiences of the leaders and managers of firms in the United Arab Emirates can be explained from their conceptualization, perceptions, and applications of strategic management theories in their firms.

3.3 Research Design

A cross-sectional study design will be used to define the time horizon for this study. This means that the study will be conducted in a short term across several organizations from the different industries in the United Arab Emirates. Data will be collected at a specific point of time without repeating the process severally. This means that the data collection tools will be deployed once across the different organizations belonging to the different sectors in the United Arab Emirates.

3.4 Research strategy

This section outlines how this study will be conducted based on the aims, objectives and research questions developed by the researcher. In this case, this study uses the survey strategy to collect the diverse views of leaders and managers across the different firms drawn from various industries in the United Arab Emirates. The study also uses the exploratory and descriptive strategies to find out the extent to which leaders and manages of firms in the United Arab Emirates translate strategic management theories, and particularly the agency theory, into practice and describe their perceptions and experiences with the adoption of these theories and the effects they have to the operations and performance of their companies.

3.5 Sample and Sampling Procedure

The sample will comprise 150 participants. These participants will be drawn from various industries in the United Arab Emirates, specifically, retail, financial, construction, tourism, and manufacturing sectors.

Purposive sampling will be used. The participants will be recruited among individuals in the leadership and managerial positions in various companies in the United Arab Emirates. This is because this group of organizational membership is directly involved in steering the strategic direction of their firms by implementing by organization strategies. They are the ones that translate theory into practice in their organizations and therefore best placed to explain whether they find the agency theory useful for delivering their leadership and managerial mandate.

3.6 Data Collection Tools

Structured questionnaires and interviews will be administered. The questionnaires will contain items that have statements whose answers will be provided by five choices on a 5-point Likert scale. The questionnaires and interviews will be administered virtually to conform to the public health protocols of social distancing and avoidance of unnecessary travel, considering that the Covid-19 pandemic is ongoing. Besides, the corporate leaders and managers are busy individuals who may not find the time to leave their organization for a meeting convened by a researcher for his or her individual academic pursuits.

3.7 Data analysis

Statistical and thematic analyses will be used to analyze the data obtained from the data collection tools (questionnaires and interviews). In the statistical analysis, the data from the questionnaires will be coded and fed into a computer program (SPSS) for analysis. Descriptive analysis will be conducted to reveals the perceptions of the participants on various issues related to strategic management theory. Statistical tests such as frequencies, correlations, and significant differences between variables will be determined to explain these perceptions. For the interviews, thematic analysis will be used to unearth the overarching themes related to the various aspects of strategic management theories. The interviews will be recorded and translated into transcripts. Three independent researchers will go through the transcripts to identify the different themes that emerge. They will collate their understanding and interpretation of these themes and produce overarching themes from mutual consent.

3.8 Ethical considerations

The researcher shall maintain the highest standards of ethical research practice already established. The pertinent ethical considerations target two main issues. First is the ethical involvement of participants and treatment of the information they divulge. Second is the researcher’s approach to data analysis, interpretation, and reporting.

4.0 Potential Contribution to Literature

This study is expected to produce valuable insights into the conduct of business and running of organizations in the United Arab Emirates, which has been underrepresented in evidence-based researches. The evidence derived from this study will provide a snippet into business conduct and operations in the gulf region and consequently, inspire further research in firms across the gulf region to augment the existing evidence. Most importantly, this study will provide additional evidence of how the agency theory is influenced by the cultural influences of a Muslim and Arabic organizational setting. It will also augment the available literature of organizational development in non-western setting where most empirical studies have been conducted.

5.0 Tentative Research Timeline

The study will be conducted for a period of 6 months. The scheduled timelines are outlined in figure 1, which is Gantt chart illustrating the various research-related activities.

Activity	Months
1	2	3	4	5	6
Proposal approval
Participant recruitment
Questionnaire administration
Interviews
Questionnaire coding and analysis
Interview coding and analysis
Literature review
Report writing

6.0 Conclusion

This study intends to explore and describe the understanding and the application of the agency theory and its related strategic management theories by leaders and managers in various companies in the United Arab Emirates.

Works cited

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Haruna, T. Mohammed, Mustapha N. Mustapha&, and Musa Ibrahim. “Employee rewards and organizational performance: A review of literature.” Journal of Business and Organizational Development, vol. 11, no. 1, 2019, pp. 22-40.

Hayat, Aamir, Muhammad Azeem, Raheel Nawaz, Dr Asad Afzal Humayon, and Dr Munir Ahmed. “Mediating effect of human capital on organizational culture, teamwork, organizational development and organizational commitment.” Journal of Social Sciences and Humanity Studies, vol. 5, no. 3, 2019, pp. 1-9.

Hoskisson, Robert E., Eni Gambeta, Colby D. Green, and Toby X. Li. “Is my firm-specific investment protected? Overcoming the stakeholder investment dilemma in the resource-based view.” Academy of Management Review vol. 43, no. 2, 2018, pp. 284-306.

Maestrini, Vieri, Davide Luzzini, Federico Caniato, and Stefano Ronchi. “Effects of monitoring and incentives on supplier performance: An agency theory perspective.” International Journal of Production Economics, vol. 203, 2018, pp. 322-332.

Melnikovas, Aleksandras. “Towards an explicit research methodology: Adapting research onion model for futures studies.” Journal of Futures Studies, vol. 23, no. 2, 2018, pp. 29-44.

Mishra, Pavitra. “Green human resource management: A framework for sustainable organizational development in an emerging economy.” International Journal of Organizational Analysis, vol. 25, no. 5, 2017, pp. 762-788.

Panda, Brahmadev, and N. M. Leepsa. “Agency theory: Review of theory and evidence on problems and perspectives.” Indian Journal of Corporate Governance, vol. 10, no. 1, 2017, pp. 74-95.

Partyka, Raul Beal. “Supply chain management: an integrative review from the agency theory perspective.” Revista de Gestão, vol. 29, no. 2, 2022, pp. 175-198.

Pearce, A. D., and D. J. Pons. “Defining lean change—Framing lean implementation in organizational development.” International Journal of Business and Management, vol. 12, no. 4, 2017, pp. 10-22.

Poletti-Hughes, Jannine, and Guadalupe C. Briano-Turrent. “Gender diversity on the board of directors and corporate risk: A behavioural agency theory perspective.” International Review of Financial Analysis, vol. 62, 2019, pp. 80-90.

Pouryousefi, Sareh, and Jeff Frooman. “The problem of unilateralism in agency theory: towards a bilateral formulation.” Business Ethics Quarterly, vol. 27, no. 2, 2017, pp. 163-182.

Saunders, M., P. Lewis, and A. Thornhill. Research Methods for Business Students. Pearson Education Limited, 2016.

Sawagvudcharee, Ousanee, and Maurice Yolles. “Conceptual development on strategic management for organizational improvement.” Journal of Social Sciences, Humanities, and Arts, vol. 17, no. 3, 2017, pp. 17-26.

Zogning, Félix. “Agency theory: A critical review.” European Journal of Business and Management, vol. 9, no. 2, 2017, pp. 1-8.

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