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

Which one of the following is a basic assumption of stewardship theory but NOT of agency theory?

Stewardship theory assumes managers are intrinsically motivated and regard their own interests as aligned with the organisation's success, so they act as responsible stewards of the owners' assets. Agency theory instead assumes self-interest, conflicting goals and the need for monitoring and incentives.

  1. AManagers act opportunistically when information is unequal
  2. BManagers are intrinsically motivated and see their interests as aligned with the organisation's successCorrect
  3. CStrict monitoring and incentive contracts are essential to control managers
  4. DOwners and managers always have conflicting goals

Explanation

Stewardship theory views managers as collective, pro-organisational stewards motivated by achievement, responsibility and recognition. The other options all reflect agency theory's view of self-interested agents who need control.

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