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CMA Foundation · Fundamentals of Business Economics and Management · Stewardship Theory and Agency Theory of Management

Stewardship theory of management is generally associated with which of the following ideas about managers?

Stewardship theory holds that managers are trustworthy custodians who act in the best interests of the organisation and its owners. They are motivated by responsibility and achievement rather than purely personal gain, so close monitoring is not considered essential.

  1. AManagers are motivated mainly by personal financial gain and need close monitoring
  2. BManagers are trustworthy and act in the best interests of the organisation and its ownersCorrect
  3. CManagers are indifferent to organisational goals and work only under penalty
  4. DManagers should be replaced every year to avoid entrenchment

Explanation

Stewardship theory assumes managers are collectively oriented, want to do a good job and act as responsible custodians of the owners' resources. The first option describes the agency theory view, which assumes self-interest and a need for monitoring.

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