Stewardship Theory: Realism, Relevance, and Family Firm Governance

Abstract

Stewardship theory is a popular alternative to agency theory for studying family firm governance. Despite its contributions to management and family business studies, stewardship theory’s assumptions limit its realism and relevance. Using agency theory as a standard of comparison, I discuss stewardship theory’s model of man and its assumptions concerning goal alignment and control systems. I also discuss stewardship theory’s lack of assumptions about bounded rationality and pre-employment situations since the neglect of those issues reduce its realism and relevance. Based on this discussion, I argue that to increase its realism and relevance, stewardship theory’s assumptions should be revised.