Stewardship Theory Essay

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Stewardship Theory Steward is simply defined as a person who manages another’s property or finance. Stewardship in an ethic that embodies that careful and responsible management of the property entrusted to one’s care. It involved diligence, purpose of duty and a commitment to uphold the law. Stewardship theory engages primarily in analysing the reasons for the co-existence of non-economic, trust based relationships alongside agency relations in organizations, arising out of a principal agent interest convergence (Corbetta and Salvato, 2004). The “stewardship attitude”, which involves trust and commitment to a shared set of values exhibited by the principal and the agent alike (Albanese, Dacin and Harris, 1997; Davis, Schoorman and Donaldson, 1997), is the fundamental basis of this interest alignment. Stewardship theory defines situations in which managers are not motivated by individual goals, but rather are stewards whose motives are aligned with the objectives of their principals. This theory presumes that managers are good steward of corporation and work diligently to achieve higher levels of profits and better shareholder returns. It holds that managers are motivated by achievement and responsibility needs and are self-directed besides attaching significances to their personal reputation. Thus, managers are stewards whose motives are aligned with the objectives of the principal. In this, managers inherently seek to do job, maximising company profits and enhance the return to shareholders. With the action, there are not only going good for their own private interest but out of a strong feeling of duty and loyalty to the firm. Hence, they consider themselves as a part of the company. They merge their ego and sense of work with reputation image of firm. For good stewardship to occur, the managers need to be given clear cut details of

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