Sustainability Agency Theory: A New Agency Framework for Social Enterprises

Yang Yang (), Simon Gao and Henry Zhen Huang
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Yang Yang: Business School, Edinburgh Napier University, Edinburgh EH11 1DJ, UK
Simon Gao: Business School, Edinburgh Napier University, Edinburgh EH11 1DJ, UK
Henry Zhen Huang: Business School, Edinburgh Napier University, Edinburgh EH11 1DJ, UK

Sustainability, 2025, vol. 17, issue 11, 1-20

Abstract: The purpose of this article is to extend agency theory (AT) by applying it to social enterprises (SEs), which exhibit a dual focus on both corporate social responsibility (CSR) and profit-driven operations. This duality, often referred to as the double-bottom-line attribute, complicates the agency relationship within SEs and has led to conceptual unclear in previous studies. This study also explains why traditional AT and reciprocal theory are not applicable to the analysis of complex agency relationships in SEs. In response, this article builds upon traditional AT to propose a developmental framework that redefines the roles of principal and agent in SE contexts. This research proposes a new theory, Sustainability Agency Theory (SAT), which aims to more clearly define the dynamic agency relationships within SEs. The article further distinguishes SAT from other AT-based extensions, such as the reciprocal theory. By offering a theoretical extension to SEs, this study contributes a novel perspective to the literature on agency relationships in hybrid organizations. Furthermore, this article expands SAT through seven distinct dimensions, laying a strong foundation for future theoretical developments related to SAT.

Keywords: agency theory; social enterprises; corporate social responsibility; sustainability agency theory; reciprocal theory (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2025
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