Theoretical Perspective Of Principal Agent Theory

Theoretical Perspective Of Principal Agent Theory According to Random House Dictionary, theory is a coherent group of general propositions used as principles of explanation for a class of phenomena. In the formal meanings of the term, theory has the following three meanings (Frederickson and Smith, 2003): Theory in the natural sciences is the rigorous testing of predictive theorems or assumptions using observable and comparable data. The tested and verified hypotheses constitute the foundation of theories. And theories derived from this process usually serve as a highly reliable direction for behavior. Theories in the social sciences, including public administration, implies the sequence of factual material (history, events, cases, stories, measures of opinion, observations) presented in definitions, concepts, and metaphors to promote understanding. The rigorous and the intuitive observation of social behavior, patterns of communication, and culture is the basis to this theory. The last meaning of theory in public administration is the theories of what should to be. These theories compose the bridge between public administration, political science, and philosophy. The theorists aim at discovering theories that account for, explain, or describe observable trends in behavior and to evaluate the normative cues of such behavior. It is often true that public administration theorists use a mix of the second and third definition of theory. And there is no doubt that theory is the bedrock of understanding of public administration (Frederickson and Smith, 2003). If manuscripts contain no theory, their value is suspect (Whetten, 2000). Hence, an important mission of scholars and educators in the areas of management, health, education, and social work is, on the one hand to conduct researches that contribute knowledge to a scientific discipline, and to apply that knowledge to the practice of management as a profession, on the other (Simon, 1967). To do this well, we need to design our research so that it provides an intimate understanding of the practical problems facing the profession. Equally important, we need to appreciate and strengthen our skills in developing good theory so that research conducted about these problems will advance the knowledge that is relevant to both the discipline and the profession (Van DE Ven, 1989). Therefore, this paper aims at discussing what is theoretical from the perspective of principal-agent theory. It is consisted of four sections: 1) What is Principal-Agent Theory; 2) Whats the theoretical contribution of Principal-Agent Theory; 3) Limitations of Principal-Agent Theory; 4) Conclusion. Principal-Agent Theory One day Deng Xiaoping decided to take his grandson to visit Mao. Call me granduncle, Mao offered warmly. Oh, I certainly couldnt do that, Chairman Mao, the awe-struck child replied. Why dont you give him an apple? suggested Deng. No sooner had Mao done so than the boy happily chirped, Oh thank you, Granduncle. You see, said Deng, what incentives can achieve. (Capitalism, 1984) According to Arrow (1971) and Wilson (1968), during the 1960s and early 1970s, economists investigated risk sharing among individuals or groups. The risk-sharing problem, described in this literature, arises when collaborating parties have different standpoints toward risk. Principal-Agent theory expanded the risk-sharing literature to include what is called agency problem. And agency problem occurs when cooperating parties have different goals, information, and division of labor (Jensen Meckling, 1976). Specifically, principal-agent theory concentrates on the ubiquitous agency-relationship, in which one party (the principal) delegates work to another (the agent), who performs that work in behalf of the principal (Eisenhardt, 1989). And principal-agent theory seeks to portray this relationship using the metaphor of a contract (Jensen Meckling, 1976). As a consequence, the central dilemma explored by principal agent theorists is how to stimulate the employee or contractor (agent) to behave in the best interests of the principal (the employer) when the employee or contractor has an informational advantage over the principal and has different interests from the principal. From the agency perspective, most organizations are simply legal fictions which serve as a nexus for a set of contracting relationships among individuals (Jensen and Meckling, 1976). The basic premise of the theory is that if both parties to the relationship are utility maximisers, there is good reason to believe that the agent will not always act in the best interests of the principal (Jensen and Meckling, 1976). In determining the most efficient contract, principal-agent theory brings up certain hypotheses about people, organizations and information. It assumes that agents and principals will act in their self-interest to maximize their own welfare. Agents possess more information than their principals possess. As a result, it identifies two impediments to effective contractual performance: moral hazard and adverse selection. Moral hazard refers to that the agent doesnt put agreed-upon efforts to the tasks. That is, the agent is shirking. Adverse selection refers to the misrepresentation of ability by the agent (Eisenhardt, 1989). The agent may claim to have certain skills, experiences, or capabilities when he or she is hired. Adverse selection arises because the principal cannot completely verify these skills, experiences, or capabilities either at the time of recruitment or while the agent is working (Eisenhardt, 1989). Two types of problems are especially relevant. One is the agency problem which arises from the conflicting goals of the principal and the agent and from the difficulty/expense involved in verifying the agents behavior (Eisenhardt, 1989). The second is the problem of risk-sharing which arises from the different attitudes toward risk on the part of the principal and the agent. The different risk preferences between the principals and agents are likely to lead to different actions. Therefore, the theory concentrates on the contract between the principal and the agent and the ways in which the contract can be made most efficient from the point of view of the principal (V. Nilakant, 1994). Besides, the theory makes two assumptions: that goal conflict exists between principals and agents and that agents have more information than their principals, which results in an information asymmetry between them (Waterman and Meier, 1998). Goal Conflict. In the marketplace, principals and agents clearly have different goals and/or preferences (Waterman and Meier, 1998). Commonly, agents want to make as much money as possible, however principals want to pay as little as possible for services. The same as in the public sector. The government wants to produce as more public goods as possible, while the contractor agents expect to decrease the cost as much as possible. Therefore, in a contract relationship, maximum principals interest couldnt inevitably contribute to the maximum of agents interests. It could even reversely worsen agents advantages, such as less compensation or profit. As a consequence, how to encourage agents to accomplish principals goals at a minimum cost has become a great challenge. Information Asymmetry. As we already have noted, the information asymmetry is a critical assumption of the principal-agent model. The information asymmetry is simply the claim that agents possess more information than their principals possess. (Waterman and Meier, 1998) When the distribution of information between principal and agent is asymmetric, the classic principal-agent problem arises. The problem brought up here is how to avoid information asymmetry so that principals know to what extent the agents have achieved the principals goals, what agents are doing, and what are not done. With these information, principals could better monitor the contract relation and working process to improve organizational performance. In addition to the assumption that partial goal conflict is inherent in any principal-agent relationship, principal-agent theory also presumes that information about the agent is a commodity that can be purchased. (V. Nilakant, 1994) Table 1 presents an overview of principal-agent theory, including key idea, unit of analysis, human assumptions, organizational assumptions, information assumptions, and contracting problems. Table 1 Principal-Agent Theory Overview Key Idea Principal-agent relationships should reflect efficient organization of information and risk-bearing costs Unit of Analysis Contract between principal and agent Human Assumptions Self-interest Bounded rationality Risk aversion Organizational Assumptions Partial goal conflict among participants Efficiency as the effectiveness criterion Information asymmetry between principal and agent Information Assumptions Information as a purchasable commodity Contracting Problems Agency (moral hazard and adverse selection) Risk sharing Problem Domain Relationships in which the principal and agent have partly differing goals and risk preferences (e.g., compensation, regulation, leadership, impression management, whistle-blowing, vertical integration, transfer pricing) Source: Eisenhardt, Kathleen M. (1989). Agency Theory: An Assessment and Review. The Academy of Management Review, Vol. 14, No. 1, p.59 Theoretical Contribution of Principal-Agent Theory Principal-Agent theory has been contributing a lot to organization theory and incentive theory. Principal-Agent theory has been the basis for an extensive set of studies relating bureaucracy to elected officials. It also has been extended to presidents decisions to use force and to the Supreme Court and its relationship to lower courts. (Waterman and Meier, 1998) Before discussing the theoretical contribution of principal-agent theory, Id like to talk about what is a good theory. Above all, a good theory is the theory appropriately used. All theories are false. They are, after all, just words and symbols on pieces of paper, about the reality they purport to describe; they are not that reality. So they simplify it. This means we must choose our theories according to how useful they are, not how true they are. (Mintzberg, 2005) Obviously, principal-agent theory is not omnipotent to explain or solve all problems in an organization. It is true only when it is appropriately used. Furthermore, a good theory is practical precisely. A theory to be useful, should accurately describe or depict a real world event or phenomenon. (Frederickson and Smith, 2003) The first section has demonstrated that principal-agent theory fits this requirement. Scholars devoted to this theory have explicitly described what principal-agent is and what it could explain in the real world. Finally, a good theory is insightful and predictive. Theory is insightful when it surprises, when it allows us to see profoundly, imaginatively, unconventionally into phenomena we thought we understoodà ¢Ã¢â€š ¬Ã‚ ¦theory is of no use unless it initially surprises-that is, changes perceptions. (Mintzberg, 2005) From this perspective, principal-Agent theory may not dramatically change perceptions, but it really brings in some new thinking about organizations and incentives. Firstly, Principal-Agent theory reestablishes the importance of incentives and self-interest in organizational thinking. It reminds us that much of organizational life, whether we like it or not, is based on self-interest. (Eisenhardt, 1989) Both principal and agent are usually assumed to be attempting to maximize their own utilities. Agents would not voluntarily produce desires of principal and it is difficult or expensive for the principal to investigate what the agent is actually doing. Hence, it is significant for principals to provide incentives to agents which lead to an alignment of goals between principal and agent, in order to assure that the agents act for principals aims. That is to maximize principals interests rather than impair principals efficiency through agents over possession of information. Secondly, Principal-Agent theory also makes important contributions to organizational thinking, the most important of which is the treatment of information. (Eisenhardt, 1989). In principal-agent theory, information is considered as merchandise: it has a cost, and it can be exchanged and purchased. The implication is that organizations can invest in information systems in order to control agent opportunism, an illustration of which is the executive compensation. And one of the important factors such compensation requires is information systems. It is assumed that richer information systems control managerial opportunism and, therefore, lead to less performance-contingent pay. Board of directors is considered as one particular relevant information system to monitor executive behaviors. When boards provide richer information, compensation is less likely to be based on firm performance. Also, when boards provide richer information, top executives are more likely to engage in behaviors t hat are consistent with stockholders interest. (Eisenhardt, 1989) Besides, to break agents superiority status on information is of great significance to keep balance between principals and agents and to improve agents performance. Moreover, profit sharing has been widely used as an attempt to give employees more opportunities to involve into and to get pleasurable emotion from the organization and to make employees feel they are part of the organization; to increase employees sense of commitment to organization; to increase sense of co-operation between management and subordinates; and to ensure employees benefit from organization profitability. In the public sector, administrators should frequently involve into policy-making process. Participatory management could be an efficient approach to get an alignment of goals of the management and subordinates and to motive employees performance consciousness. In addition, Principal-Agent theory could be used to elucidate hierarchical control of organizations as well (Moe, 1984). Difficulty in monitoring the actions of subordinates/agents, asymmetric information superior status of subordinates/agents, or transactions costs in supervising and verifying the actions of subordinates/agents all can give agents opportunities to escape from principals goals by maximizing agents interests. Typically, principals find means to ameliorate these problems, for example, by relying on signals that warn them when agents step outside certain bounds. (Song, Segal, and Cameron, 1976) Limitations of Principal-Agent Theory Principal-Agent theory, which characterizes relationships that develop and evolve, is supposed to be a dynamic, rather than a static theory (Waterman and Meier, 1998). It provides insightful and predictive theoretical contribution to organization and incentive theory development. Principal-agent theory provides a unique, realistic, and empirically testable perspective on problems of cooperative effort (Eisenhardt, 1989). Besides its theoretical contribution, however, principal-agent theory needs further improvement as the following: Principal-Agent Theory merely displays a partial aspect of the real world, although it is valid, and it also ignores a great amount of organizational complexity. Additional perspectives could contribute to attain the more important complexity (Eisenhardt, 1989). According to Ogden (1993), the highly simplified model of organizational conflict and the contrasting complexity of the mathematics required to provide solutions to the agency problem have been frequently cited as limitations to principal-agent theory. In addition, principal-agent theory could be developed to a richer and more complicated range of contexts. Principal-agent theory studies the relationship between the principal and the agent defined by contract, resting on a basis in economics. Under this theory, relationship problems are explained from a contractual perspective; and solutions derives from the change of contract. However, noneconomic considerations should be emphasized as well, such as cultural, social, psychological, and political. And some scholars have already argued to look at important non-contractual aspects of principal-agent relationship. So, to study principal-agent relationship from non-contractual perspectives is demanded and valuable. Conclusion Starting from an introduction to what is the principal-agent theory and the importance of the theory in public administration, we conclude that the principal-agent theory has contributed a lot to the development of organization theory and incentive theory. Although theoretical significant, principal-agent theory still has its limitations, such as simplified model and ignorance of non-economic factors, which leaves a long way for future development. Nevertheless, this term paper merely provides a short review and summary of principal-agent theory and its theoretical contributions. It is far from a comprehensive and deep study on principal-agent problems and solutions. Much more works are needed to elaborately review this theory.

College Writing in the 21st century :: Education Writers Essays

College Writing in the 21st century How should it be thought and taught? With the diverse world we live in, I can only see one thing we all possess. The one thing that everyone has in one form or another is his or her individuality. A lot of people have different cultures that make them more of an individualistic group in a modern society. America would scare me out my mind if I came from a society not like Americas, from Japan or areas of the Middle East. I would have to go into a whole different frame of mind to try to survive in this society and be successful. For children or young adults this would be a tough time for them to adapt themselves to our school system. When it comes to college writing, I think teachers in the most part understand they have a cross-cultural influenced student body. With the Students point of view, it's hard to accept people who seem different or blocked from normal social events or interactions. When I was in High school, we had 14 different nationalities within it. It was interesting to have a class with such a wide range of people, beliefs, and learning styles. I would feel bad for the teachers and other students mostly because the new kids that didn't speak nglish very well struggled to communicate with everyone. This caused problems with the teachers trying to teach them and keep them equal in the classroom. This caused some teachers to give up a little bit and not treat them like normal students. When I read Amy Tans essay " Mother Tongue", I noticed that she said that she spoke very good nglish but her mother did not. This caused many problems for her mother like the kids in my school, because people wouldn't take her seriously. This caused a lot of embarrassing moments for Mrs. Tan. She pointed out that when she was a child that her teachers would try to point her in the math and science direction because she showed that she was stronger in those areas which most Japa nese or Chinese are stronger in. Amy expressed that she didn't want to go into math or science she wanted to write. Her teachers tried to sway her decision but she stood strong. People should be able to come into a class and feel not only welcome but also secure with the people around them.

Translator As My Dream Job Essay

Ever since I began studying English, I have always wanted to become a translator, translating Chinese into English so that people in other countries can enjoy Chinese poems and stories. Becoming a translator isn’t easy. It takes great patience and perseverance/ (Needless to say heartfelt effort and willing persistence is absolutely needed./ It is a step by step progress that involves confidence, patience and hard work.) Firstly, as a middle school student, I must improve my reading comprehension in both languages so that I can choose the appropriate words when I am translating something. Secondly, in order to become good enough to be a translator, I must learn and use effective learning strategies. I’m still only a middle school student, so I have a long way to go. I hope that I will be able to go to college and become a real translator some day. Ã¥  ¦Ã¤ ¸â‚¬Ã§ ¯â€¡Ã¯ ¼Å¡My dream is to become a successful doctor, helping those sick people and saving their lives. I hope everyone can have an opportunity to receive excellent treatments for their illnesses without having to pay much or just enjoy them free. Of course, I know to achieve my dream , there is a long way to go. I need enough knowledge and experience, so working hard in school will promote me to be a professional doctor. Now everything I do is close to my dream. I feel life is filled with hope and is colorful, and I have enough confidence to realize my dream. Beginning: My dream is to become a __________, +V-ing. ââ€"†My dream is to become a kindergarten teacher, teaching, talking and playing with my dear children. ââ€"†My dream is to become a professional photographer, showing people a different point of view and helping them find a new world in a single photo. Reason: There are several reasons. ââ€"†a kindergarten teacher –I can be myself by opening up my heart, wearing a sincere smile and maintaining a young, optimistic and energetic attitude to life. What’s more, I want to try to ensure that our children experience a memorable childhood by playing musical instruments, painting, singing, swimming and etc. The most important of all, I plan to create a good  circumstance in the kindergarten that every kid can seek out their own hobbies and have an interesting childhood to remember. How: Of course, I know to achieve my dream , there is a long way to go. ââ€"†To reach my dream I will take photography classes in summer and take a photography course in school. The only way to realize my dream is just do it! have enough confidence in yourself Ending: Once I become a doctor, the world is waiting for me to make a difference. With my persistent passion and endeavor, I am sure that I can climb over this mountain, no matter how high or tough it is. My enthusiasm and persistence can motivate me to pursue my dream. Now it’s the time! I always feel fortunate that I got through an unforgettable childhood, for I was never forced to learn what I was reluctant to learn and for I had the opportunity to go to various parks almost every week, going close to nature or making greetings to animals and plants.

History of State and Federal Prisons Essay

The history of state and federal prisons have similar ideals; the state and federal systems have to rely on each other at times for housing each others criminals. A state prison is usually run by that particular states government and they house individuals that have committed crimes against the rules and sanctions of the each state also known as blue collar criminals; the federal prisons house individuals that have committed crimes against the rules and sanctions of the federal government and are called a white collar criminal. State and federal prison systems more or less have the same levels of security; low, minimum, high, max, and super-max. Before federal prisons were created prisoners that were on a federal level had to be housed within state and local prisons. The Federal Bureau of Prisons confines felons convicted of federal crimes and in several large cities pretrial defendants are held in federal jails pending trial (Foster, 2006). The federal prison system began in the 1930’s when President J. Edgar Hoover passed and signed a bill that gave permission for the federal prison system to have a building or federal facility to house it’s prisoners. The first federal U.S. Penitentiary was created in Fort Leavenworth, Kansas this prison was constructed out of an old military prison prison (Foster, 2006). The state prison system was based and founded on the legal reforms of the 18th century â€Å"Age of Enlightenment, (Foster, 2006);† in the 19th century the state prison systems continued to base themselves around the Auburn model (Foster, 2006). Most states began with one state prison and now each state consists of more than 20 prisons, with the exception of the state of Texas that has 100 prison facilities. When state prison systems started men, women, and juvenile offenders were housed together up until it was determined that women, men, and children should have separate facilities to prevent s exual abuse, pregnancy, assault, and the impressionable surroundings of hardened criminals on juveniles. The State facilities offer halfway houses for offenders to be able to go to work then come back to the house on a daily basis for a certain amount of time until the director of the halfway house History of State and Federal Prisons Page 2 and the courts feel as though a person is ready to be put back into society; rehabilitation facilities are also available to help criminals that are drug offenders, or any substance abuse offender kick their habit and give them mental support to stay on the straight and narrow. Overcrowding and funding are the biggest problems in the Department of Corrections today; I think that if we could go back to letting convicts do jobs while in prison and making them pay for their own crimes both with time and money earned from working while in prison this would cut down on the overcrowding as well as funding issues. History of State and Federal Prisons References Foster, B. (2006). Corrections: The fundamentals. Upper Saddle River, NJ: Pearson Prentice Hall.

How to Choose a Title for an Essay

How to Choose a Title for an Essay There is no doubt that the title is a very important part of a scientific work or a work of art, whether it is a novel, a song, or a dissertation. The first component people notice is the title. It may be short, only consisting of one or two words, but it definitely says something important to potential readers, viewers, or listeners. When people have to write an essay, a typical situation looks like this: the student comes up with an idea, narrows the topic, then writes a title, and then begins writing the paper. This may work pretty well if you do everything in that order. However, you might try choosing a title after you finish writing the essay. That way you will definitely know what your essay is all about, what the key points in your work are, and what you should emphasize in your title to draw the readers attention to your work. Did you know that Steve Jobs and Steve Wozniak didnt have a name for their company when they founded what is now called â€Å"Apple?† They actually came up with the name later. The same can be applied to your essay. Plan what to write and how to write it first, not what to call it. By the way, you can choose a working title for your essay and then change it later as you think of new ideas or a different aspect of the problem. Choosing a title that suits your essay best is the finishing touch to your work. The major challenge in developing a title for your essay is that you have to express the theme of the essay in a limited number of words. There are several strategies you can employ to develop a great title. The first one is traditional. We can call it descriptive since it simply describes the main theme of your essay. An example is â€Å"Deforestation in Brazil.† The reader instantly knows that the essay is about deforestation in Brazil. However, this is really not descriptive enough. What about deforestation in Brazil? Are you going to discuss how it is done, or why it is done? Are you going to argue that it should be done or that it should not be done? You have given a topic in your title, but you have not indicated the opinion to be expressed on that topic. Instead, you might title your paper, â€Å"Deforestation in Brazil: A Travesty.† Now, the reader is set to discover what your thoughts are on the deforestation in Brazil. You can also use an intriguing title to make readers guess about the topic of an essay, forcing them to read on to find out. You can omit some words, use synonyms, or replace the exact term with a more general one. For example, you can change â€Å"The Inventions of Thomas Edison† to â€Å"The Man Who Changed the World.† It sounds more intriguing, doesnt it? Another way to create interest and intrigue is to use a question as your title. Well-educated people tend to be very analytical, trying to find all the answers to questions they encounter. If your title is â€Å"Can Bacteria Survive in Space?† chances are that your audience will read your essay to find the answer to that question. Choose your title wisely; dont worry if developing one takes more time than you expected. Jot down all your ideas for a title, eliminate the ones that definitely will not work, and choose the one you think is the best match for your essay. Do you need more essay writing help online? Why not to hire our professional essay writers who will write a custom paper for you!?

Proposal for Problem at Work Essay Example | Topics and Well Written Essays - 750 words

Proposal for Problem at Work - Essay Example One of its entrepreneurial ventures focused on health care considering the organization as the â€Å"market leader in cardiac care, acute care and home healthcare, energy efficient lighting solutions and new lighting applications, as well as lifestyle products for personal well-being and pleasure with strong leadership positions in flat TV, male shaving and grooming, portable entertainment and oral healthcare† (Philips: Company Profile, 2011, par. 2). To provide continued service to its wide range of clientele, the Philips Emergency Call Center was designed to respond to medical emergencies through a medical alert service and a medication dispensing service with the ultimate goal of giving peace of mind to consumers. Call center agents, called Lifeline Personal Response Associates, are available 24/7 to assist in responding to various medical assistance inquiries and provide appropriate interventions and support (Philips Lifeline Employment, 2011, par. 1). Statement of the pro blem Parallel to other organizations with diverse composition of personnel responding to various needs of clients, organizational problems normally ensue. At Philip Lifeline, the identified problems are as follows: (1) associates making mistakes in responding to calls due to any of the following factors: cell phone use (texting); noise level (associates being loud while taking a call; people having loud conversations; talking across the room); using work email; associates standing up when handling a call; and (2) associates rushing during calls due in response to increases in call volume to get bonus; to leave for scheduled breaks, and in a hurry to end the shift. Analysis From the problems identified, it could be deduced that the root causes of the dilemmas are interferences that affect productivity (use of cell phones while taking calls, noise levels, and improper work decorum). Further, rushing in responding to inquiries due to various reasons could also be a symptom for lack of motivation and rewards in the workplace. In addition, the inability of management to address infractions or violations to company policies (using cellphone, emails while taking calls) makes these problems persistent and unaddressed. Financial Analysis The financial condition of Philips Lifeline, as revealed in its official website contain information that indicate a decrease in net income during the first quarter of 2011 of EUR 63 million to amount to EUR 138 million, as compared to EUR 201 million in 2010. However, when sales by sector was reviewed, healthcare actually contributed to a 5% comparable growth rate from EUR 1,821 million in the first quarter of 2010 to EUR 1,971 million in the same time period for 2011 (Quarterly Report, 2011). This simply means that the healthcare services encompassing the performance of associates posted positive growth despite the identified problems. More importantly, if these problems are properly addressed, greater performance and productivity wo uld result to increase financial condition and success that would be reflected in positive financial growth and increased bottom line. Objections/Alternatives Given the problems identified and analyzed, as well as the information provided from the organization’s financial condition, the alternative courses of action that management could consider to address the problems are as follows: (1) review company policies and sanctions; (2) re-orient all employees on the organization’s code of discipline by communicating company policies

What is the stated purpose of Canadian multicultural policy Has Essay

What is the stated purpose of Canadian multicultural policy Has multiculturalism been successful for whom - Essay Example This study now seeks to establish the stated purpose of the Canadian multicultural policy. It also seeks to answer whether or not multiculturalism has been successful, and if it has, for whom it has been a success. This study is being undertaken in order to establish a comprehensive understanding of Canada’s multicultural policy, including its impact and its implications in the current trends of globalization. The purpose of the multiculturalism policy of Canada is to â€Å"recognize and promote the understanding that multiculturalism reflects the cultural and racial diversity of Canadian society and that multiculturalism is a fundamental characteristic of the Canadian heritage and identity† (National Capital Commission, n.d, p. 1). In effect, the policy also aims to call on federal institutions to carry out their programs and projects in due consideration of multiculturalism; and to implement various activities with a modicum of sensitivity and in response to the multicultural setting of Canada (National Capital Commission, n.d). In more detail, the Canadian Multiculturalism Act sets forth that the Canadian government acknowledges and supports the fact that multiculturalism expresses the cultural and ethnic diversity of their society and recognizes the right of the people to preserve and share their heritage (Canadian Multiculturalism Act, 1988). Their policy also acknowledges and supports the understanding that multiculturalism is a major characteristic of Canada’s society and that it helps shape the future of Canadian society. The policy also supports the holistic and equal participation of the people from various ethnicities in all aspects of Canadian society, assisting them in eradicating barriers to participation (Canadian Multiculturalism Act, 1988). The purpose of the act is also to recognize that various