Why I Wrote, “Stewardship Theory: Realism, Relevance, and Family Firm Governance,” An Unapologetic Confession

[We’re pleased to welcome author James J. Chrisman of Mississippi State University and the University of Alberta. He recently published an article in Entrepreneurship Theory and Practice entitled “Stewardship Theory: Realism, Relevance, and Family Firm Governance,” which is currently free to read for a limited time. Below, he briefly describes the motivation and impact of his research.]

Given stewardship theory’s popularity, especially in family business, some might be surprised that anyone would dare to critique it. However, there are some issues associated with stewardship theory that need to be aired and resolved. That’s what I attempted to accomplish in my editorial. My basic position is that in spite of its positive features, stewardship theory is too extreme in its depiction of human nature and is missing several elements that are necessary for it to be realistic and relevant. Since much of my research is devoted to family business studies, and since stewardship theory is frequently used in that literature, I thought it appropriate to comment on the limits of stewardship theory as it is currently conceived, and to make some suggestions on how the realism and relevance of the theory could be improved. What follows is a brief summary of some of the issues that I have with stewardship theory that are discussed in my editorial, and my unapologetic confession of what led me to buck the conventional wisdom that stewardship theory is good and agency theory is bad.

My Confession

First, I admit that I believe that most individuals behave as stewards some or even most of the time and in this sense stewardship theory makes an important contribution to knowledge. However, I strongly dispute any inferences that all people can be induced to behave as stewards all of the time. I also take issue with the idea that people are not inherently self-interested, or that self-interest is a bad thing.

Second, I have serious doubts that an effective governance structure for an organization can be designed that does not include systems for monitoring and incentivizing the behaviors of individuals. Indeed, I do not believe an organization can long function without such systems since these are primary means for communicating goals and strategies and coordinating actions.

Third, in my view, perhaps the most important factors overlooked by stewardship theory are how to ensure that an organization will attract qualified individuals who will fit its goals and culture (potential stewards, if you will) and how to screen out unqualified or ill-fitting individuals before they become part of the organization (potential opportunistic agents, so to speak).

Postscript

Finally, it is important to acknowledge that when working on my editorial I noticed that several of my concerns about stewardship theory were already discussed by the two main conceptual works on the topic. Although I attempted to take the discussion a step further, it did not escape my attention that the qualifications they made to their arguments seem to have been lost over the years. In my experience, this is not uncommon in the literature, whether in respect to stewardship theory or some other subject. Indeed, a lesson that (junior) scholars can learn from my editorial is that focusing too much on ideal types can cause one to lose sight of reality in the attempt to simplify it.

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