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According to English and American law the liability of a principle for his agent torts in the ordinary course of his employment depended upon the existence of a master- servant relationship. The master was vicariously liable for his servant tortuous conduct committed within11
the course of employment (Yin,1994). There were cases where an agency relationship arose when an individual group called principal hired someone called an agent to perform some services, where the principal delegated decision making power to the agent. This kind of relation included those between share holder and managers. The managers of Imarisha SACCO are the agents while the shareholders are the principles. The management of Imarisha is expected to work on the interest of the shareholders rather than their own interests.Institutional Perspective TheoryInstitutional theory attends to the deeper and more resilient aspects of social structure. It considers the process by which structures, including schemas; rules, norms and routines, become established as authoritative guidelines for social behavior. It enquires into how these elements arecreated, diffused, adopted over space and time; and how they fall into decline and disuse. Although the ostensible subjects is stability and order in social life, students of institutions must perforce attend not just to consensus and conformity but to conflict and change in social structures (Meyer & Rowan, 1991).The basic concepts and premises of the institutional theory approach provide useful guidelines for analyzing organization-environment relationships with an emphasis on the social rules, on the concept of legitimacy rather than efficiency or effectiveness as the primary organizational field, professional’s norms, interest groups, public opinion, laws, rules and social values. This theory is relevant to this study as it informs the SACCO on which products and services to develop which conforms to the environment that is in.12