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

Under stewardship theory, which of the following is the most likely source of a steward's motivation?

A steward is mainly motivated by intrinsic rewards such as achievement, recognition, responsibility and identification with the organisation. Stewardship theory does not rely chiefly on financial incentives or fear of penalty, which are assumptions characteristic of agency theory.

  1. AIntrinsic rewards such as achievement, recognition and sense of responsibilityCorrect
  2. BOnly performance-linked cash bonuses and stock options
  3. CFear of being dismissed by the board
  4. DOpportunity to pursue private perquisites at the firm's cost

Explanation

Stewards are driven by intrinsic, non-financial motives like achievement, responsibility and identification with the organisation. Reliance on financial incentives and fear of dismissal reflects agency theory's assumptions about self-serving agents.

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