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

Which kind of motivation does stewardship theory emphasise for a manager, as opposed to agency theory?

Stewardship theory stresses intrinsic motivation: managers are driven by higher-order needs such as achievement, recognition, responsibility and the satisfaction of contributing to the organisation. Agency theory instead relies mainly on extrinsic rewards and monitoring, assuming managers chase their own economic self-interest.

  1. AExtrinsic motivation such as stock options only
  2. BIntrinsic motivation such as achievement, recognition and responsibilityCorrect
  3. CFear of dismissal by the board
  4. DPure economic self-interest maximisation

Explanation

Stewardship theory holds that stewards are driven by higher-order needs such as growth, achievement, recognition and the satisfaction of doing meaningful work. Extrinsic incentives and fear of dismissal are the main agency-theory tools, so those options are wrong.

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