This posting addresses the proprietary theory.
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Why would a firm want to operate under the proprietary theory? What are the advantages?
the proprietary theory: It is particularly applicable to a sole proprietorship - couldn't it be argued that all businesses are operated under the proprietary theory? shouldn't all members of management be looking out for themselves and to better the organization? In other words the owner?
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The solution discusses why a firm would want to operate under the proprietary theory, discusses the advantages of the proprietary theory, and if all members of management be looking out for themselves and to better the organization.
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A firm would want to operate under the proprietary theory for several reasons. The main reason is because by doing so, the owners maintain all control, and can basically run the company as they see fit to do so. The owners do not have to go through a Board of Directors or levels of management in order to put a policy into action, or for any other decision that is made by company owners. The owners are the same as the company, and also have full control over the profits of the company. The owners decide who gets what percentage of the profits, if there is more ...
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