REGÍMENES PERTURBADOS

In 1989, Donaldson and Davis (1991) introduced an alternative view of the purpose and role of the board. Stewardship theory challenges agency theory’s assumptions about human motivation and the subsequent role of the board. Stewardship theory rejects the self-serving model of human motivation and in its

place, builds on the “self-actualizing” motivation theories of Maslow (Argyris, 1973; Lowry, 1973; Maslow 1954; McGregor, 1985).

This model is based on the view that humans have a need to grow beyond their current state and reach higher levels of achievement and that the assumptions of the economic view of man limit people from attaining their full potential (Davis, Schoorman, & Donaldson, 1997, p. 27).

Stewardship theory as an alternative to agency theory has gained a limited foothold amongst management scholars (Davis et al., 1997). Stewardship theory assumed that managers wanted to be good stewards of corporate assets and argued for corporate governance structures that authorised managers to act on their own initiative. It broadened the governance debate by incorporating knowledge from other disciplines thus shifting the focus from demographics, structural mechanisms and selective director’s actions to a much broader view of the directors’ roles, motivations and contributions. Stewardship theory added specific interpersonal behavioural requirements to board roles and responsibilities.

Under the stewardship view, the board is responsible for a) upholding the values of the organisation

b) modelling and conveying to management the board’s commitment to helping employees grow and achieve their potential

c) working with management to fulfill their legal and moral duties d) ensuring that the organisational values are honoured in all decision-

making.

e) co-creating the strategic direction with the employees

f) involvement and accountability for crucial organisational decisions g) empowerment of workers

To fulfill these stewardship responsibilities, the board must be competent in a) ethical awareness (to detect ethical dilemmas) and reasoning to

determine which actions serve to most preserve and protect the organisation’s values

b) strategic thinking, analysis and planning to work with the management team, co-creating the strategy and plans

c) extensive company knowledge, its environment (industry, political, social and technological developments), its competition, sufficient knowledge of marketing, human resources, manufacturing and/or service, quality systems and practices to check for strategic congruence

d) business knowledge and leadership

e) cooperative, altruistic, spontaneous unrewarded citizenship behaviours; highly participative, open communication style

f) developing trust-based relationships and comfort with the vulnerability required to trust that management (and employees) will act in the organisation’s best interests.

Stewardship theory advocates a collaborative approach to governance.

Proponents of this approach focus on enhancing board-management relationships and decision-making by empowering the managers in their role as stewards of the firm (Davis et al., 1997). A comparison of the central attributes of agency theory and stewardship theory is presented in Table 2.1.

Agency theory offers the pessimistic views of human nature McGregor (1985) characterised as Theory X. Stewardship theory promotes the nobler views of human nature consistent with McGregor's (1960) Theory Y. Both are theories of human motivation. Theory X portrays people as inherently lazy, avoiding working and responsibility if they can. Theory Y portrays people as ambitious, self-

motivated, and anxious to accept greater responsibility. McGregor integrated Maslow's hierarchy of human needs into his theories of human motivation as did stewardship theory (Lowry, 1973).

Table 2.1: A Comparison of the Central Attributes of Agency Theory and Stewardship Theory.

Agency Theory Stewardship Theory

Agent’s motivation source

Extrinsic Intrinsic

Agent’s motivation objective

Maximise utility to self Self-actualization

Time frame Short term Long term

Challenge for principals Limit agent’s self-serving

opportunities and divergence from principals’ interests

Provide opportunities for steward’s growth, achievement, affiliation

Focus of principals Conformance Performance

Orientation of principals Control Involvement

Objective Cost control Performance enhancement

Risk management strategy

Control systems

(authorities, delegations, monitoring & reports, threat of termination); Contracts

Align interests through incentives &

consequences

Training, empowerment & trust; Building strong trust- based relationships;

Work and Goal- orientation

Individual Collective/group/team

Fundamental principle Unwillingness to be

vulnerable

Willing to be vulnerable

Power orientation Legitimate: authority of

positions; reward: incentives; coercive: threats of termination

Personal: expert & referent

Values No surprises;

predictability;

Respect authorities & rules;

Separate thinking from doing

No economic utility in value commitment therefore not relevant to exchange agreement

Cooperative, altruistic, spontaneous unrewarded citizenship behaviours; Highly participative, open communication,

empowerment of workers Value commitment: Belief in organizational goals

Leadership orientation Transactional Transformational

Principals’ role A separate body;

Accountable for hiring and firing management who are responsible for organizational results

Part of the collective; accountable to the collective for its

contribution toward the organization’s results

Psychologists refer to this area as the "black box of motivation" (Carl, 2005; Quinn & Cameron, 1988; Schein, 1975), perhaps because there are no consistent

findings supporting a single theory of human motivation. Theory X and Theory Y are generally accepted as extreme positions, neither alone sufficient for capturing the full range of human motivations (Dunnette & Hough, 1991). Perhaps agency and stewardship theories may also be extreme positions of corporate governance polarising issues, such as control versus collaboration (Amihud, Garbade, & Kahan, 1999; Lane, Cannella, & Lubatkin, 1998, 1999) when integration is needed. Acknowledging that humans are a mix of both agents and stewards (Davis et al., 1997), perhaps it is time to seek other explanations for board process.