Nishtha answered on
Jun 06 2021
Running Head: SEMINAL THEORIES OF GOVERNANCE AND STEWARDSHIP 1
SEMINAL THEORIES OF GOVERNANCE AND STEWARDSHIP 2
SEMINAL THEORIES OF GOVERNANCE AND STEWARDSHIP
Table of Contents
Agency Theory of Governance 4
Stakeholder’s Theory 4
Resources Dependency Theory 5
Contributions of Stewardship Theory to Effective Governance in Non-Profit and For-Profit Organisations 6
Definition of Stewardship Theory 6
Benefaction of Stewardship Theories in general to Increase Performance and Efficient Governance in For-Profit Organisation 7
Contributions of Stewardship Theory to Effective Governance in Non-Profit 8
Relationship of a Leader’s Values and Beliefs to Effective Organisational Governance 9
The concept of the governance refers to the norms, rules and regulation that applied on the particular society. The main motive of the governance is awareness and well-being of the people. It relates to "the processes of interaction and decision-making among the actors involved in a collective problem that lead to the creation, reinforcement, or reproduction of social norms and institutions (Yermack, 2017). Good governance works according to the law. Governance is not a process but a structure and responsibility and accountability in an organisation or in any business.
On the other hand, stewardship is about novelties, which is guide to protect the human assets. Stewardship is caring for something that one values. A steward takes care of something entrusted to him or her. It is a job of monitoring or taking care of something, such as an organisation’s property. It is like protection of something like large household, a
angements of resources for a group and community people.
An example is the responsibility of managing the staff of an estate (West et al., 2018). For example taking data stewards, their job responsibility incudes to maintain the quality of the data, organising of the data according to the needs of the organisation, auditing and monitoring of database structure and create automated report for various external users and for other purposes.
Main Theories of Governance Contributing to Organisational Effectiveness
Theories plays important role in guiding organisation on what to do in a particular situation. It only guides organisation, not a fact that organisation adhere it. Theories of governance sets legal and ethical framework, which helps to protect the valuable assets of the organisation. There are various theories of governance and here only three has been describe. These are agency theory, stakeholder theory and resource dependency theory.
Agency Theory of Governance
Agency Theory is a risk sharing between Principle and Agent. For a company "Principle" means owners or shareholders and "Agent" means managers. Managers are the decision-making authority in an organisation and shareholders are the owners of the organisation. It is concerned with resolving the problems caused by the separation of ownership and control between the principles who are the shareholders and agents who are the directors of the organisation.
The main objective of this theory enables shareholder to hire the agent. However, it is not mandatory and agent is not obliged to obtain best concern of the shareholder. This theory works on division of ownership and control given to the agent (Brown & Roberts, 2016). Organisations use this theory mainly in the management of its supply chain management. For Example: - in transportation of goods, it is usually happen that agent gives important instructions and guidelines to the executive, to avoid any financial losses and damage of goods while transition.
This example shows that agency theory is impressive and constructive in nature. In addition to it, agency theory works with mechanism of reward and reproof for the purpose to co
ect agent’s priority. Accordingly, executive develop the necessary skills and capacity for being more responsible and being more accountable for the job and individual task given by the manager.
“Stakeholder theory is a theory of ethics that addresses values in managing an organisation. The stakeholder theory identifies groups of people who have an interest in a corporation and describes methods to understand their needs and expectations. Anyone who has a legitimate interest or stake in a company, including those whose support is essential for the company to exist, is a corporate stakeholder. Stakeholders are not only the founders or owners of the firm, but the community where the company may affect the economic, social or environmental welfare.” (Biermann & Harsch, 2017)
This theory mainly focuses on the equal opportunities and rights of the manager complement with the stakeholders in the organisation. Stakeholder theory hold that organisations that have close, transparent, effective and efficient relationships with their stakeholders will be better suited to compete and remain sustainable in business (Jones, Wicks & Freeman, 2017). Stakeholders of the organisation include customers, suppliers, shareholders, government, civil society, competitors and employee. Each one of them has unique interest in the organisation.
The role of the government includes monitoring and controlling organisation, whether it is operating business under ethical code of conduct or not. The role of suppliers is to maintain effective supply chain and logistic system of product and services offered by the organisation. Competitors and civil society are the part of external environment of the organisation. They do not have major interest in the organisation.
However, they due consider each other while framing strategies and introducing...