What is Williamson managerial utility maximisation model?

Williamson's managerial utility maximization model posits that managers, rather than solely focusing on profit maximization for shareholders, prioritize their own utility, which includes factors like salary, job security, and personal satisfaction. This model suggests that managers may make decisions that enhance their own welfare, even if those decisions do not align with maximizing shareholder value. Consequently, this behavior can lead to inefficiencies within firms, as managers might prioritize personal interests over optimal operational outcomes. The model highlights the potential conflicts between managerial goals and shareholder interests in corporate governance.