O. Williamson’s Model of Managerial Discretion

  • A. Koutsoyiannis


Williamson1 argues that managers have discretion in pursuing policies which maximise their own utility rather than attempting the maximisation of profits which maximises the utility of owner-shareholders. Profit acts as a constraint to this managerial behaviour, in that the financial market and the shareholders require a minimum profit to be paid out in the form of dividends, otherwise the job security of managers is endangered.


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O. Williamson’s Model of Managerial Discretion

  1. 1.
    Encarnacion, J., ‘Constraints and the Firm’s Utility Function’, Review of Economic Studies (1964) pp. 113–20.Google Scholar
  2. 2.
    Ferguson, C. E., ‘The Theory of Multidimensional Utility Analysis in Relation to Multiple-Goal-Business Behaviour: A Synthesis’, Southern Economic Journal (1965) pp. 169–75.Google Scholar
  3. 3.
    Simon, H. A., ‘New Developments in the Theory of the Firm’, American Economic Review, Papers and Proceedings (1962) pp. 1–15.Google Scholar
  4. 4.
    Williamson, O. E., ‘Managerial Discretion and Business Behaviour’, American Economic Review (1963).Google Scholar
  5. 5.
    Williamson, O. E., The Economics of Discretionary Behaviour (Prentice-Hall, 1964 ).Google Scholar
  6. 6.
    Williamson, O. E., Corporate Control and Business Behaviour (Prentice-Hall, 1970 ).Google Scholar

Copyright information

© A. Koutsoyiannis 1979

Authors and Affiliations

  • A. Koutsoyiannis
    • 1
  1. 1.University of OttawaCanada

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