Seminal Theories of Governance and Stewardship in Organizations

SEMINAL THEORIES OF
GOVERNANCE AND
STEWARDSHIP

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
MAIN BODY ..................................................................................................................................1
Key theories that are contributing to the organisation effectiveness in general. ........................1
Contribution of Stewardship Theory in general to the effective governance in the non profit
organisations and profit organisation...........................................................................................5
Discussion over relationship of values and beliefs of leaders for effective governance in the
organisation. ................................................................................................................................7
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Concepts of governance could be better understood by standards regulations and norms
for social being & public awareness in the society. Governance of nation depends upon board
members & government or the association that have taken together participation in process of
strategic decision making for management. On the other hand stewardship refers to notion for
protecting the human assets & accountabilities for the future aspects. Acts of steward include
administering and organising the delegated tasks. The present report will involve analysis and
discussion of governance theories and usefulness to organisations. It would be including the
theory of stewardships for the robust governance in the profit as well as non profit organisation.
The study will also be emphasizing over the relationship between values and belief of leaders
(Krzeminska & Zeyen, (2017). Study will be providing complete understanding about the
seminal theories of stewardship and governance for informing effective leadership in the non
profit organisations.
MAIN BODY
Key theories that are contributing to the organisation effectiveness
Governance theory is significant and essential in terms of the ethical regulations of the
procedures and for securing valuable organisational asset. There are many methods and theories
some of which are illustrated below.
Theory of Agency
As per agency theory rights and operations of business are handed over by shareholders
to agents. Agents are the executive members at top level of the organisation. Agency theory
helps to understand relationships between principal and agent. Principal is represented by the
agent in the specific business transactions are to be represented in principal's best interest and
not driving self interests in the transactions. Source of conflicts are the varying interests of agents
and principals. Conflicts may arise as agent may not be able to act in the best interest of the
principal. The thing results in various disagreement and miscommunications resulting in number
of problems (Chrisman, (2019). Incompatible desires could drive trigon between shareholders
causing financial losses and inefficiencies.
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Figure 1:
Above chart specifies the strategic flows of implementing a action plan of business. In
the above chart Agent represents senior manager or the Board of Directors, mainly CEO's of
companies. Main objectives of the agency theory is enabling shareholder of company to hire
agent as explained above for organisations for taking best possible responsibilities of the
business in management and decision terms for the organisations. It is also to be noted that the
agents are not under obligations to take concerns of shareholders. Opportunistic behaviours of
agents often fall short for probability of the shareholder. Study of theory gives an understanding
that it is working resourcefully with division of control and ownership. Theory of agency helps
company in managing the checkpoints of supply chains of organisations that helps in impelling
employees for engaging in the work processes dedicatedly. Theory of agency is constructive &
influential in the nature. It is very useful for employees as it helps in developing competencies
and skills that will make them more responsible & accountable for individual tasks that are
delegated by managers. This theory is also applied for rewarding and reprimanding purpose of
rectifying precedence of agent.
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Illustration 1: Agency theory
(Source: Agency theory, 2016)