Corporate Governance and Ethics: Summary of Stewardship Theory and Key Concepts

This report provides a summary of an article related to family business and Stewardship theory, along with key concepts of corporate governance. It discusses the importance of ethical behavior, environmental awareness, compensation, corporate strategy, and risk management.

Corporate governance
and ethics

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
Description of theory used in Article...........................................................................................3
Summary of Article.....................................................................................................................3
Key Corporate Governance Concept...........................................................................................3
CONCLUSION................................................................................................................................4
REFERENCES................................................................................................................................5

INTRODUCTION
Corporate governance and ethics are those theories as well as policies through which an
organisation operates its business functions. Violating such ethics can lead to a large amount of
financial loss and even closure of business (Almutairi and Quttainah, 2020). This report is based
on the summary of an article that is related to the family business and concerned theory along
with explanation on key corporate governance concept in context of theoretical aspect.
MAIN BODY
Description of theory used in Article
Within the given article, theory of Stewardship is used that is associated with the concept
of realism, relevance and family business governance. The theory of Stewardship is a framework
which states that human resources of an organisation are intrinsically motivated in order to
complete responsibilities and tasks with they are entrusted. The main concentration of this kind
of theory is to understand the process of motivating manpower for contributing towards the
attainment of business goals and objectives.
Summary of Article
In context to corporate governance, Stewardship theory is said to be the approach of
leadership that can be taken for making the decisions proactively after considering the interests
of each stakeholder including shareholders and employees (Crifo, Escrig-Olmedo and Mottis,
2019). The article includes realism, relevance and family firm governance in relation to this
theory that suggests governance measures on the basis of trust that cooperate and engage
individuals in order to achieve a natural alignment of owner and manager which results in wealth
maximisation and improving business performance. This article also includes assumptions of this
theory which expresses that long-term contractual relations get developed on the basis of
reputation, trust, collective objectives and engagement in which alignment is a result that leads
from relational reciprocity (Mhando, 2019). In this article, the theory of Stewardship also states
that managers, left on their own, will perform their roles as responsible stewards of those assets
that are controlled by them.

Key Corporate Governance Concept
In relation to Corporate Governance, Stewards are considered as those responsibles for the
great shareholders or investors who should be diligent within an organisation and associated with
carrying the board of directors for the investment that are made by them on the behalf and in
interests of the other stakeholders. In context to theoretical aspect, this theory states that
ownership does not actually own an organisation, rather it is merely operating it in trust
(Rossouw, 2020). The key concept of corporate governance includes the areas of ethical
behaviour, environmental awareness, compensation, corporate strategy as well as risk
management. In simple words, basic principles of corporate governance involve transparency,
accountability, responsibility and fairness.
CONCLUSION
From above explanation of report, it has been concluded that corporate governance
includes directing as well as controlling of all the business operations. Hence, all types of
unethical issues are considered as a consequence of incompetent corporate governance. This
report has been included the summary of article that has concerned with Stewardship theory and
has also discussed concept of corporate governance that has demonstrated the process of power
along with responsibility among managers, directors and shareholders of an organisation.

REFERENCES
Books and Journals
Almutairi, A. R. and Quttainah, M. A., 2020. Foreign directors and corporate governance in
Islamic banks. Journal of Islamic Accounting and Business Research.
Crifo, P., Escrig-Olmedo, E. and Mottis, N., 2019. Corporate governance as a key driver of
corporate sustainability in France: The role of board members and investor
relations. Journal of Business Ethics. 159(4). pp.1127-1146.
Mhando, P. C., 2019. Corporate Governance in Tanzania: Ethics and Accountability at the
Crossroads. Routledge.
Rossouw, G. J., 2020. The ethics of governance and governance of ethics in the King
Reports. Journal of Global Responsibility.