This theory is an alternative view of agency theory, in which managers are assumed to act in their own self interests at the expense of shareholders. It specifies certain mechanisms which reduces agency loss including tie executive compensation, levels of benefits and also managers incentive schemes by rewarding them financially or offering shares that aligns financial interest of executives to motivate them for better performance.
In American politics, an example of the stewardship theory is where a president practices a governing style based on belief they have the duty to do whatever is necessary in national interest, unless prohibited by the Constitution.
- Jay B. Barney and William S. Hesterly (2008). Strategic Management and Competitive Advantages. Pearson Prentice Hall. p. 273. ISBN 0-13-613520-X.
- Stewardship Theory or Agency Theory: CEO Governance and Shareholder Returns, Western Washington University