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

Which statement best describes how stewardship theory views a manager's motivation, in contrast to agency theory?

Stewardship theory holds that managers are collectivist and derive satisfaction from achieving organisational goals, so they naturally act in the owners' interest. Agency theory, by contrast, assumes self-interested managers who need monitoring and incentives to prevent opportunistic behaviour.

1. AManagers are collectivist and derive satisfaction from achieving organisational goals, so they act in the owners' interestCorrect
2. BManagers are individualistic opportunists who maximise their own wealth at the owners' expense
3. CManagers must be controlled mainly through monitoring and incentive contracts to prevent self-serving behaviour
4. DManagers and owners always have conflicting objectives that can only be resolved by the market