Governance And Stewardship In Organizations Assignment

Assessment

Table of Contents
INTRODUCTION...........................................................................................................................1
Different key theories of governance and their contributions.........................................................1
Contributions of Stewardship Theory in an organization................................................................3
Essential qualities of leadership for effective governance .............................................................5
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
Theories of governance refers to the factors that determine the relationship between the
different stakeholders of business while conducting the business activities. Many theories of
governance has been developed in order to deal with the challenges related to the governance of
the organizations on timely basis. This report will highlight the different key theories of
governance that have contributed to the organizational effectiveness. The report will also include
the contribution of stewardship theory for effective governance in profit and non-profit
organization. This report will also highlight the discussion of leader's values and beliefs for
effective governance in organizations.
Different key theories of governance and their contributions
The following are the different types of key theories of governance-
Agency Theory- Black, (2015) states the agency theory is a tool that defines the relationship
between the shareholders of the company that act as principals and the directors of company that
act as agents for the company. In short, agency theory determines the relationship between the
agents and the principals. Ansell and Torfing, (2016) states that the principals hire agents in
order to perform the business activities and tasks. The Principals duly assigns different activities
and tasks related to the business, to these directors and managers who are termed as their agents.
In return the owners expect from the agents to perform and make decisions as per the interests of
the principals. Zhang and et.al., (2018) argues that sometimes the decision made by the agents
does not favor and meet out the interests of principals due to some circumstances. There may be
several situations where the agents fails to fulfill all the requirements of the principal due to lack
of resistance in the self-interest opportunist behavior. The main focus of agency theory is to pull
out and separate the ownership and control between the agent and principal. The agency theory
ensures that the employees of the organization are mostly responsible for activities and
performance as well as they should perform their activities efficiently in order to pursue the
organizational goals and objectives. The theory also suggests that the rewards for the best
performance as well as punishment for the lack of performance can be used to enhance the
productivity of the employees or agents.
Stakeholder Theory- Stakeholder theory describes that the stakeholders of the company are
responsible and accountable for the management of the organization. Yacob and et.al., (2018)
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