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Family firms employ about 60 percent of the global workforce. While it is widely assumed that they are good employers, data about their conduct is mixed. In this study, we extend stewardship and agency theories to test competing propositions about the impact of family on employment practices using data from 14,961 private Belgian firms over a 19-year period. Higher investments, lower dividend payout, and higher risk tolerance indicate that family firms are better financial stewards of their companies than nonfamily firms. However, family firms are worse organizational stewards than nonfamily firms: They offer lower compensation, invest less in employee training, and exhibit higher voluntary turnover and lower labor productivity. Further, and contrary to earlier research, we find that financial practices in private family firms do not change over time, and that the deleterious influence of family on employment practices rises with both firm age and with heightened family involvement. Together, our findings suggest that a more nuanced understanding of stewardship and agency theory is needed to understand the impact of family on the governance of private firms.

By applying stewardship theory and threshold theory, we derive three criteria that founders of social business ventures use to set performance thresholds towards exit: 1) the desired social impact ...

This paper examines why family firms differ in levels of R&D investment by analyzing the agency conflict between family owners and non-family CEOs. Using insights from agency and stewardship theory...

While agency theory assumes that shareholders need to align managers’ interests with their own through the use of monitoring and incentives, stewardship theory argues that managers can behave as st...

Two contradictory theories, agency theory and stewardship theory, on the relationship between CEO duality and firm risk taking are prominent in the literature. This research argues that both these ...

Building on the seminal work of Davis, Schoorman, and Donaldson (1997), using a three study approach and a combined multilevel respondent sample of 847 from 237 firms, we develop a statistically valid and reliable 18-item measure to capture the degree to which executives act to engender a stewardship climate in their organizations. Nomological validity of our dual (psychological and situational) mechanism measure is established by demonstrating significant associations with multiple individual-and firm-level measures.

Motivated by the increased relevance of corporate social responsibility (CSR) in family firms (FFs) within recent decades, and the special characteristics of the Austrian economy (large proportion of FFs, the great influence of governmental and non-governmental organizations, and the recently started CSR discussion), we conduct a multiple case study to examine CSR in FFs, with a special view on Austrian FFs. More specifically, we analyze 30 company cases, based on interviews with persons in charge of CSR (e.g., managing directors). As a theoretical lens, we explain our findings with socioemotional wealth (SEW) and stewardship theory. New insights from Austrian FFs show that the conceptual understanding of CSR is improvable, and CSR is found to be strongly influenced by family members of the corporate family. The main motives for CSR engagement within FFs are image and reputation concerns, a strengthened regional embedment, and employee-related improvements. Nevertheless, not all CSR activities can be expl...

Agency theory suggests that the interests of opportunistic, self-interested agents conflict with those of principals. Stewardship theory suggests instead that executives' interests are aligned with company interests and that executives are thus more intrinsically motivated than agency theory implies. This study develops hypotheses regarding the psychological and situational factors that affect the applicability of each theory to executive compensation. I tested hypotheses using a unique data set of 1,238 executives from 528 private companies. Results suggest significant differences between founder-stewards and nonfounder agents that diminish with company growth, and significant effects of equity ownership and outside rounds of financing.

This study examines the context and variation in which government manages its contracting relationships with nonprofit organizations using agency and stewardship theory. Interviews were conducted w...

Corporate governance is an increasingly provocative topic, evident in ongoing debates between proponents of control versus collaborative approaches. We accommodate these contrasting approaches within a paradox framework, using agency and stewardship theories to elaborate the underlying tensions and to emphasize the value of monitoring, as well as empowerment. Building from these tensions, we examine reinforcing cycles that foster strategic persistence and organizational decline. We conclude by discussing means of managing control and collaboration, highlighting the implications for corporate governance.

This study analyzes the impact of ownership structure on R&D investments in the United States and Japan. It begins with the premise that U.S. and Japanese firms have distinct patterns of ownership that may result in disparities in R&D investments. Agency theory and stewardship theory are used to hypothesize about the relationship between ownership and R&D investments. Empirical evidence shows that the level of ownership concentration, and its impact, differ across countries. We argue that these differences result from a mixture of motives and incentives.

Agency theory suggests that a primary motivation for acquisitions is empire-building, implying that post-acquisition CEO compensation should be higher. Stewardship theory suggests that CEOs manage ...

This study investigated the moderation effect of CEO tenure and firm size on the impact of CEO duality on new venture performance. Based on agency and stewardship theory, a positive interaction eff...

Recent thinking about top management has been influenced by alternative models of man.1 Economic approaches to governance such as agency theory tend to assume some form of homo-economicus, which depict subordinates as individualistic, opportunistic, and self-serving. Alternatively, sociological and psychological approaches to governance such as stewardship theory depict subordinates as collectivists, pro-organizational, and trustworthy. Through this research, we attempt to reconcile the differences between these assumptions by proposing a model based upon the subordinate's psychological attributes and the organization's situational characteristics.

This study investigates the King vs. Rich dilemma that founder-CEOs face at IPO. When undertaking IPO, founders face two options. They can either get rich, but then run the risk of losing the control over their firms; or they can remain kings by introducing defensive mechanisms, but this is likely to lead to lower IPO valuation. Using psychological ownership theory, we argue founder-CEOs to be more likely to choose the King option. This option forces them to leave money on the table at the IPO. However, their stewardship behavior allows them to recover that money on the long-run post IPO. We provide support for all hypotheses using a unique hand-collected dataset covering the full population of 467 IPOs undertaken in France between 1992 and 2011.

The literature on stewardship theory has focused largely on theoretically examining the structural and psychological factors that lead to stewardship behavior (i.e., the sacrifice of short-term per...

This paper elaborates on the process of internal corporate venturing in family businesses. While existing literature mainly focus on the static dilemma “engagement vs non-engagement of family firms in corporate venturing initiatives”, we go deeper and examine how family firms perform entrepreneurial initiatives. Relatedness between a parent firm and its ventures, and the autonomy under which these internal new ventures are managed are the two variables considered. Our conceptual model draws upon stewardship theory in order to take into account the heterogeneity of family firms (different configurations of generational involvement and governance structure). The paper offers theoretical contributions and implications for both research and practice.

Studies abound investigating whether agency or stewardship theory is more predictive of family firm behavior and performance. Rather than this dichotomous approach, our research investigates the in...

Stewardship theory is offered as an alternative to principal-agent based control systems of governance. A foundation for this stewardship system of governance is to establish covenantal relationshi...

We contribute to research on governance structures within organizations by considering how the theoretical assumptions presented in the practice of agency and stewardship theories fulfill the obligations of top-level management to the detriment of employees at lower levels of the organization. We examine these relationships using a sample of 975 employees from universities located in the United Kingdom. As hypothesized, we find that organizations adopt and focus on an overarching governance approach (either stewardship or agency) to meet the prevailing focus of top management. Though, we also reveal that this one-way governance approach that cascades from the top of an organization may misalign with the nature of employment relationships at lower levels of an organization, which consequently engenders adverse consequences for select members of the employment population.

An important emphasis in the literature is placed on strategic leaders influence on organizational performance in nonprofit organizations. However, little research has been conducted regarding the ...

I propose and test a stewardship model of leadership that puts the notion of purposeful leadership (Burns, 1978) back into the study of relational leadership. Where relational leadership is based o...

Socioemotional wealth recently emerged as an important distinguishing characteristic between family and nonfamily firms. It is used in extant literature as a theoretical framework to rationalize th...

A governing structure explains firms’ heterogeneous strategies. Prior literature has discussed the impact of foreign institutional investors on RD short-term orientation leading to RD the positive moderations of Q, firm size and export ratio, but the negative moderation of domestic institutional owners.

In this paper, I examine the relationship between CEO pay and organizational performance in nonprofit organizations. Two theories, agency theory and stewardship theory, offer opposing predictions o...

Social businesses increasingly use franchising to scale their operations. Social businesses combine the social mission of non-profit-organizations with financial self-sustainability of businesses. ...

This paper incorporates stewardship theory into the corporate governance models developed in previous agency theory research. The underlying assumptions of agency theory (moral hazard, risk and los...

The IPO is one of the key milestones in the life of a new venture because it allows the venture to obtain capital that will finance the firm’s future growth and enhances the venture’s legitimacy an...

Stewardship theory suggests that CEOs whose interests are intrinsically aligned with the firm and who are granted more autonomy will curb their self-interested behaviors and act in ways that benefit the firm. In this study, we contrast subordinate perceptions of the other-regarding behaviors of agent CEOs with founder CEOs. We also examine the relationship between these perceived CEO behaviors and employee willingness to sacrifice for the firm. Consistent with our hypotheses, we find that founder CEOs are less likely to be perceived as displaying other-regarding behaviors, and these behaviors are in turn related to employee willingness to sacrifice. Implications for both stewardship and agency theory are discussed.

We adopt a stewardship approach in explaining why family firms achieve growth performance. Stewardship theory rests on the premise that both principals and managers must choose to behave as steward...

Three theories aim to describe managerial behavior in regards to maximizing the firm’s owners’ wealth: agency theory, stewardship theory, and stakeholder theory. These theories have different assum...

Merton (1968) coined the term Matthew effect to reflect cumulative advantage -- systematic disparities in the allocation of rewards, recognition, and resources for scientists based on their publica...