Hostname: page-component-586b7cd67f-l7hp2 Total loading time: 0 Render date: 2024-11-23T17:15:57.190Z Has data issue: false hasContentIssue false
  • English
  • Français

Agent and stewardship behavior: How do they differ?

Published online by Cambridge University Press:  30 January 2017

John A. Martin  and
Frank C. Butler
John A. Martin*
Affiliation:
Department of Management and International Business, Wright State University, Dayton, OH, USA
Frank C. Butler
Affiliation:
Department of Management, College of Business, University of Tennessee – Chattanooga, Chattanooga, TN, USA
*
Corresponding author: [email protected]
Get access Rights & Permissions [Opens in a new window]

Abstract

The purpose of this study is examine how agency theory and stewardship theory lead to different firm-level outcomes on an array of different outcomes. Based on these differences, we argue for the development of an agent–steward measurement scale, which will help researchers classify chief executive officers (CEOs) along an agent–steward continuum. This, in turn, will spur research to predict and test CEO behaviors and firm-level outcomes. Agency theory suggests CEOs take advantage of their powerful positions to maximize their personal economic utility, whereas stewardship theory suggests CEOs are motivated through intrinsic awards and will balance their interests with those of other stakeholders. We use these theories to examine possible differences in CEO behaviors. This is important because different CEO behaviors might lead to differing impacts on important firm-level outcomes. This paper reviews the relevant agency and stewardship literatures, then offers propositions regarding CEO behaviors from agent and steward perspectives.

Keywords

agency theoryboard of directorsCEO behavior
Type
Research Article
Information
Journal of Management & Organization , Volume 23 , Issue 5 , September 2017 , pp. 633 - 646
Copyright
Copyright © Cambridge University Press and Australian and New Zealand Academy of Management 2017 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Alammar, F., & Pauleen, D. (2016). Exploring managers’ conceptions of wisdom as management practice. Journal of Management and Organization, 22, 550–565.Google Scholar
Atkinson, L., & Galaskiewicz, J. (1988). Stock ownership and company contributions to charity. Administrative Science Quarterly, 33(1), 82–100.Google Scholar
Berle, A. A., & Means, G. C. (1932). The modern corporation and private property. New York: The Macmillan Company.Google Scholar
Brown, R., & Sarma, N. (2007). CEO overconfidence, CEO dominance and corporate acquisitions. Journal of Economics and Business, 59, 358–379.Google Scholar
Bruhl, R. H. (2003). A possible solution to the principal-agent problem posed by the contemporary corporate CEO. Journal of Business Ethics, 48, 401–402.Google Scholar
Cannella, A. A., & Monroe, M. J. (1997). Contrasting perspectives on strategic leaders: Toward a more realistic view of top managers. Journal of Management, 23(3), 213–237.Google Scholar
Clarke, T. (2014). Dangerous frontiers in corporate governance. Journal of Management & Organization, 20, 268–286. https://doi.org/10.1017/jmo.2014.37.CrossRefGoogle Scholar
CNBC (2015). Mark Zuckerberg, wife donate $75M to hospital. Retrieved from http://www.cnbc.com/id/102404197.Google Scholar
CNN (2005). Ebbers gets 25 years. Retrieved from http://money.cnn.com/2005/07/13/news/newsmakers/ebbers_sentence/.Google Scholar
Cochran, P. L., & Wood, R. A. (1984). Corporate social responsibility and financial performance. Academy of Management Journal, 27, 42–56.Google Scholar
Dalton, D. R., Hitt, M. A., Certo, S. T., & Dalton, C. M. (2007). The fundamental agency problem and its mitigation: Independence, equity, and the market for corporate control. The Academy of Management Annals, 1(1), 1–64.Google Scholar
Davis, J. H., Schoorman, F. D., & Donaldson, L. (1997). Toward a stewardship theory of management. Academy of Management Review, 22, 20–47.Google Scholar
Davis, J. H., Schoorman, F. D., Mayer, R. C., & Tan, H. H. (2000). The trusted general manager and business unit performance: Empirical evidence of a competitive advantage. Strategic Management Journal, 21, 563–576.Google Scholar
Deutsch, Y., Keil, T., & Laamanen, T. (2011). A dual agency view of board compensation: The joint effects of outside director and CEO stock options on firm risk. Strategic Management Journal, 32, 212–227.Google Scholar
Eisenhardt, K. M. (1989). Agency theory: An assessment and review. Academy of Management Review, 14, 57–74.Google Scholar
Fama, E. F. (1980). Agency problems and the theory of the firm. Journal of Political Economy, 88, 288–307.Google Scholar
Ferris, G. R., Treadway, D. C., Kolodinsky, R. W., Hochwarter, W. A., Kacmar, C. J., Douglas, C., & Frink, D. D. (2005). Development and validation of the political skill inventory. Journal of Management, 31, 126–152.Google Scholar
Guardian (2015). Dan Price: The CEO who took a pay cut to give his staff a $70k minimum wage. Retrieved February 28, 2016 from http://www.theguardian.com/society/2015/nov/29/future-of-work-dan-price-gravity-ceo-cut-own-pay-to-give-staff-increased-minum-wage.Google Scholar
Hambrick, D. C., Finkelstein, S., & Mooney, A. C. (2005). Executive job demands: New insights for explaining strategic decisions and leader behaviors. Academy of Management Review, 30(3), 472–491.Google Scholar
Hayward, M. L., & Hambrick, D. C. (1997). Explaining the premiums paid for large acquisitions: Evidence of CEO hubris. Administrative Science Quarterly, 42(1), 103–127.Google Scholar
Hodge, F. D., Rajgopal, S., & Shevlin, T. J. (2009). Do managers value stock options and restricted stock consistent with economic theory? Contemporary Accounting Research, 26(3), 899–932.Google Scholar
Intelligencer (2002). Cisco CEO takes yearly pay of $1. Retrieved February 28, 2016 from http://www.theintelligencer.com/archives/article_bd1e83ff-49c3-5b28-a318-13234cc842f2.html.Google Scholar
Jackofsky, E. F., Slocum, J. W., & McQuaid, S. J. (1988). Cultural values and the CEO: Alluring companions? Academy of Management Executive, 2(1), 39–49.Google Scholar
Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3, 305–360.CrossRefGoogle Scholar
Jones, T. M. (1995). Instrumental stakeholder theory: A synthesis of ethics and economics. Academy of Management Review, 20, 404–437.Google Scholar
Lim, E. N. K. (2015). The role of reference point in CEO restricted stock and its impact on R&D intensity in high-technology firms. Strategic Management Journal, 36, 872–889.Google Scholar
Martynov, A. (2009). Agents or stewards? Linking managerial behavior and moral development. Journal of Business Ethics, 90, 239–249.Google Scholar
New York Times (2002). 2 Tyco executives charged with $600 million fraud scheme. Retrieved June 2, 2015 from http://www.nytimes.com/2002/09/13/business/2-top-tyco-executives-charged-with-600-million-fraud-scheme.html.Google Scholar
Porter, L. W., Steers, R. M., & Mowday, R. T. (1979). The measurement of organizational commitment. Journal of Vocational Behavior, 14, 224–247.Google Scholar
Porter, M. E. (1980). Competitive strategy: Techniques for analyzing industries and competitors. New York: Free Press.Google Scholar
Ranft, A. L., & O’Neill, H. M. (2001). Board composition and high-flying founders: Hints of trouble to come? Academy of Management Executive, 15(1), 126–138.Google Scholar
Sanders, W. G. (2001). Behavioral responses of CEOs to stock ownership and stock option pay. Academy of Management Journal, 44(3), 477–492.Google Scholar
Sanders, W. G., & Hambrick, D. C. (2007). Swinging for the fences: The effects of CEO stock options on company risk taking and performance. Academy of Management Journal, 50(5), 1055–1078.Google Scholar
Spencer Stuart (2005). Spencer Stuart 2005 board index, Chicago: Spencer Stuart. Retrieved from www.spencerstuart.com/practices/boards/publications.Google Scholar
Sundaramurthy, C., & Lewis, M. (2003). Control and collaboration: Paradoxes of governance. Academy of Management Review, 28(3), 397–415.Google Scholar
Taniman, C. A., & O’Shannassy, T. F. (2015). Exploring the infuence of chief executive officer professional development and work context on organisation performance: A multi-theoretic perspective. Journal of Management & Organization, 21, 675–694. https://doi.org/10.1017/ jmo.2015.Google Scholar
Tosi, H. L., & Gomez-Mejia, L. R. (1989). The decoupling of CEO pay and performance: An agency theory. Administrative Science Quarterly, 34, 169–190.Google Scholar
Tosi, H. L., Werner, S., Katz, J. P., & Gomez-Mejia, L. R. (2000). How much does performance matter? A meta-analysis of CEO pay studies. Journal of Management, 26, 301–339.Google Scholar
Ungson, G. R., & Steers, R. M. (1984). Motivation and politics in executive compensation. Academy of Management Review, 9(2), 313–323.Google Scholar
USA Today (2014). Costco’s a deal for shoppers. The CEO may be, too. Retrieved June 2, 2015 from http://americasmarkets.usatoday.com/2014/12/09/costcos-a-deal-for-shoppers-the-ceo-may-be-too/.Google Scholar
Wade, J. B., Porac, J., & Pollock, T. (1997). Worth, words, and the justification of executive pay. Journal of Organizational Behavior, 18, 641–664.Google Scholar
Westphal, J. D. (1998). Board games: How CEOs adapt to increases in structural board independence from management. Administrative Science Quarterly, 43(3), 511–537.Google Scholar
Zajac, E. J., & Westphal, J. D. (1995). Accounting for the explanations of CEO compensation: Substance and symbolism. Administrative Science Quarterly, 40, 283–309.Google Scholar
Zajac, E. J., & Westphal, J. D. (1996). Director reputation, CEO-board power, and the dynamics of board interlocks. Administrative Science Quarterly, 41(3), 507–529.Google Scholar