STEWARDSHIP: POLICIES AND PRACTICES FOR AN ETHICAL MANAGEMENT OF RESOURCES

1. 1
Prof. Dr. Alfonso Vargas Sánchez

2. APPLICATION TO
AGRICULTURE CO-OPS
(In Wales -UK- and Huelva -Spain-)
A connection with the Agricultural
Stewardship Association (ASA)?
2

3. Stewardship…
• … as an ethic that embodies the responsible planning and
management of resources, which can be applied to the
environment, economics, etc.
• … as a theological belief that humans are responsible for
the world, and should take care of it.
• … as a theory in which managers, left on their own, will
act as responsible stewards of the assets they control. 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.
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PRINCIPAL-STEWARD RELATIONSHIP.
MANAGERS’ PSYCHOLOGICAL
CHARACTERISTICS
• Managers
– whose needs are based on
• growth,
• achievement, and
• self-actualization;
– who are intrinsically motivated;
– who are identified with their organizations and
highly commited to organizational values;
– who are inclined to use personal power,
are more likely to serve organizational ends.

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PRINCIPAL-STEWARD RELATIONSHIP.
SITUATIONAL (SOCIOLOGICAL)
CHARACTERISTICS
• Situations in which
– the managerial philosophy is based on
involvement and trust;
– the culture is based on collectivism and low
power distance,
generally result in principal-steward
relationship.

7. 7
Prof. Dr. Alfonso Vargas Sánchez

8. THEORETICAL
BACKGROUND
DAVIS, SCHOORMAN &
DONALDSON (1997)

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STEWARDSHIP THEORY
PRINCIPAL (shareholders)-STEWARD (top managers)
RELATIONSHIP
The steward believes that:
– by working toward organizational, collective ends, personal
needs are met;
– its interests are aligned with that of the corporation and its
owners.
• Therefore, a steward is motivated to maximize
organizational performance, thereby satisfying the
interests of shareholders.
• Because the steward perceives greater utility in
cooperative than in individualistic behavior, and
behaves accordingly, this behavior can be considered
rational.

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STEWARDSHIP THEORY
PRINCIPAL (shareholders)-STEWARD (top managers)
RELATIONSHIP
• If the executive’s motivations fit the model of man
underlying stewardship theory, empowering governance
structures and mechanisms are appropriate. Thus, a
steward’s autonomy should be deliberately extended to
maximize the benefits of a steward, because he or she
can be trusted. In this case, the amount of resources
that are necessary to guarantee pro-organizational
behavior are disminished, because a steward is
motivated to behave in ways that are consistent with
organizational objectives. Indeed, control can be
potentially counterproductive, because it undermines the
pro-organizational behavior of the steward, by
lowering his or her motivation.

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STEWARDSHIP THEORY
PRINCIPAL (shareholders)-STEWARD (top managers)
RELATIONSHIP
• Donaldson and Davis (1991) argued that, for CEOs
who are stewards, their pro-organizational actions are
best facilitated when the corporate governance
structures give them high authority and discretion.
Structurally, this situation is attained more readly
when the CEO chairs the board of directors. Such a
structure would be viewed as dysfunctional under the
agency theory model of man. However, under the
stewardship model, stewards maximize their utility as
they achieve organizational rather than self-serving
objectives. The CEO-Chair is unambiguously
responsible for the fate of the corporation and has the
power to determine strategy without fear of
countermand by an outside chair of the board.

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STEWARDSHIP
THEORY
MANAGERS AS STEWARDS
APPROACH TO
GOVERNANCE
SOCIOLOGICAL AND
PSYCHOLOGICAL
MODEL OF MAN.
BEHAVIOR
COLLECTIVISTIC
PRO-ORGANIZATIONAL
TRUSTWORTHY
MANAGERS
MOTIVATED BY
PRINCIPAL
OBJECTIVES
MANAGER-
PRINCIPAL
INTEREST
CONVERGENCE
STRUCTURES
THAT
FACILITATE AND
EMPOWER
OWNERS’
ATTITUDE
RISK-PROPENSITY
THE PRINCIPAL-
MANAGER
RELATIIONSHIPS
RELY ON
TRUST
(“THE WILLINGNESS TO
BE VULNERABLE”)

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PSYCHOLOGICAL
MECHANISMS
STEWARDSHIP
THEORY
MOTIVATION HIGHER ORDER NEEDS
(GROWTH,
ACHIEVEMENT, SELF-
ACTUALIZATION).
INTRINSIC
SOCIAL
COMPARISON
PRINCIPAL
IDENTIFICATION HIGH VALUE
COMMITMENT
POWER PERSONAL
(EXPERT,
REFERENT)

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SITUATIONAL
MECHANISMS
STEWARDSHIP
THEORY
MANAGEMENT
PHILOSOPHY
INVOLVEMENT
ORIENTED
RISK
ORIENTATION
TRUST
TIME
FRAME
LONG
TERM
OBJECTIVE PERFORMANCE
ENHANCEMENT
CULTURAL
DIFFERENCES
COLLECTIVISM.
LOWER POWER
DISTANCE

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MANAGEMENT
PHILOSOPHY
(THEORY)
INVOLVEMENT
ORIENTED
(STEWARDSHIP)
ADOPTION HIGH LABOR
COSTS.
APPROACH FOCUSED
ON LONG-TERM
EFFECTIVENESS AND
QUALITY THROUGH
SELF-CONTROL.
UNSTABLE,
UNCERTAIN (RISKY)
ENVIRONMENTS.
HOW TO DEAL
WITH
INCREASED
UNCERTAINTY
AND RISK
TRAINING AND
EMPOWERING
PEOPLE.
REDESIGNING JOBS
TO BE MORE
CHALLENGING AND
MOTIVATING.

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Prof. Dr. Alfonso Vargas Sánchez