Stewardship Theory

Topics: Motivation, Psychology, Utility Pages: 2 (651 words) Published: February 22, 2012
Stewardship theory has its roots in psychology and sociology and was designed for researchers to examine situations in which executives as stewards are motivated to act in the best interests of their principals (Donaldson & Davis, 1989, 1991). In stewardship theory, the model of man is based on a steward whose behavior is ordered such that proorganizational, coUectivistic behaviors have higher utility than individualistic, self:serving behaviors. Given a choice between self-serving behavior and pro-organizational behavior, a steward's behavior will not depart from the interests of his or her organization. A steward will not substitute or trade self-serving behaviors for cooperative behaviors. Thus, even where the interests of the steward and the principal are not aligned, the steward places higher value on cooperation than defection (terms found in game theory). Because the steward perceives greater utility in cooperative behavior and behaves accordingly, his or her behavior can be considered rational.

According to stewardship theory, the behavior of the steward is collective, because the steward seeks to attain the objectives of the organization (e.g., sales growth or profitability). This behavior in turn will benefit principals such as outside owners (through positive effects of profits on dividends and share prices) and also principals who are managerial superordinates, because their objectives are furthered by the steward. Stewardship theorists assume a strong relationship between the success of the organization and the principal's satisfaction. A steward protects and maximizes shareholders' wealth through firm performance, because, by so doing, the steward's utility functions are maximized.

Given the potential multiplicity of shareholders' objectives, a steward's behavior can be considered organizationally centered. Stewards in loosely coupled, heterogeneous organizations with competing stakeholders and competing shareholder objectives are motivated...
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