Business Ethics Structure and Principal Agent Relationship
Business Ethics, Structure and Principal-Agent Relationship
Q1. Lack of complexity filing requirements is one of the reasons that instill business people to organize small business units before switching to corporate structures. A small firm has no much paperwork or procedural functions which incorporate teams, and thus every activity depends on a one-person decision. Unlike the corporation structure, individuals operating sole proprietorship are not obliged to file annual reports and legal documents. The decision on what structure is simple to manage rise from the advantages evidenced by small organizations.
Operating small business is advantageous and flexible, as the activity exposes a businessperson to more market ideas where he or she may wish to expand in future. However, small structures experience difficulties in raising capital since there are limited sources. Also, there is no continuity of small firms in case the owner becomes deceased or incapacitated. Probably the struggle for capital generation and business progress becomes a motivating factor for business people to decide switching to large structures (Robb, Alicia & Robinson 2). Corporate structure has many sources of financial inflow, for example, from members, loans or investors and also the business continues running even in the absence of one person. However, large business structures are complicated due to many functions and thus require solid management.
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