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

Which assumption about managers is central to stewardship theory?

Stewardship theory assumes managers are intrinsically motivated and wish to act in the best interests of the organisation and its owners. They see their own success as tied to the organisation's success, so they behave as responsible stewards rather than self-serving agents.

  1. AManagers are opportunistic and act mainly in their own financial interest
  2. BManagers are intrinsically motivated and want to act in the best interests of the organisation and its ownersCorrect
  3. CManagers need constant monitoring through costly contracts
  4. DManagers are motivated only by extrinsic rewards such as bonuses

Explanation

Stewardship theory views managers as trustworthy stewards whose goals align with those of the owners, and who find satisfaction in organisational success. The opportunistic, monitoring-heavy and purely extrinsic views belong to agency theory.

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