Governance Theories

RUNNING HEAD: GOVERNANCE AND STEWARDSHIP 0
Governance Theories

GOVERNANCE AND STEWARDSHIP 1
Table of Contents
Introduction................................................................................................................................1
Governance and Stewardship.....................................................................................................2
Key theories of governance....................................................................................................2
Agency Theory...................................................................................................................2
Resource Dependency Theory...........................................................................................3
Stakeholder Theory............................................................................................................4
Transaction Cost Theory....................................................................................................5
Stewardship Theory...............................................................................................................6
Stewardship theory- Non-profit organization....................................................................6
Stewardship theory for profit organization........................................................................8
Relationship of a leader’s values and beliefs in organizations............................................10
Conclusion................................................................................................................................11
Bibliography.............................................................................................................................12

GOVERNANCE AND STEWARDSHIP 2
Introduction
This paper will reflect on the theories of governance and stewardship that inform
effective organizational management in both the organization i.e. non- profit organization and
yield organizations.
Governance has been defined to denote to organizational arrangement and processes
that are planned to confirm responsibility, clearness, accessibility, regulation of law,
constancy, equity and comprehensiveness, authorization, and broad-based contribution. Good
governance theory is the one which sets the few basic principles according to which the
government must be run. It is a kind of policy framework which helps in analyzing the
governance and its evolution. It focuses on the co-evolution among discourses, actors and
organizations. Therefore, it provides the way according to which organizations, societies will
evolve (Foss, 2010).
Stewardship theory is a philosophy, which administrators left on their particular, will
implement as accountable stewards of the resources they regulate. Stewardship theorists
presume that providing a superior among self-interested conduct and pro-organizational
performance, a steward will highlight more on a higher value on the organization rather than
on defections. A steward is an individual who carries the responsibility of helping for
something in terms of another person or group of persons. Under the stewardship theory,
organization managers safeguard the welfares of the proprietors or owners and frame choices
on their behalf (Fernando, 2009).
A stewardship-based method accepts that non-profit administrations are driven to
action in the welfares of their providers. When profits are determined by any business then
they consider themselves to be part of something bigger. Stewardship theory believes that

GOVERNANCE AND STEWARDSHIP 3
ownership is not the main thing to own a company; it is simply holding it in faith (Van
Puyvelde, 2012).
Effective leadership can affect the organizational standards such as honesty, respect,
ethics, and tolerance, etc. by representing an ideal boldness in the workplace, founding a
vision among the personnel, reinforcing responsibility, motivating the workforce, making a
vision strategy for the culture and standards (Snyder, 2010).
This paper will be going to tell about the three theories of the authority which help in
enhancing the organizational effectiveness, and the stewardship theory for non-profit & profit
organization. It will also include the argument of the relationship of a leader’s values and
opinions to operative supremacy in companies.
Governance and Stewardship
Key theories of governance
Business governance is frequently identified around major theoretical outlines. The
most governance theories that contribute to organizational usefulness are Agency theory,
Resource-dependence theory, Stakeholder theory, and, Transaction Cost Theory.
Agency Theory
(Günter Bamberg, 2012).