Journal of Business & Leadership (2005-2012)
Volume 3
Number 1 Journal of Business & Leadership
1-1-2007
AN EMPIRICAL TEST OF STEWARDSHIP
THEORY
James Davis
University of Notre Dame
Steven Frankforter
Winthrop University
David Vollrath
Indiana University South Bend
Vanessa Hill
University of Louisiana , Lalayette
Follow this and additional works at: http://scholars.fhsu.edu/jbl
Recommended Citation
Davis, James; Frankforter, Steven; Vollrath, David; and Hill, Vanessa (2007) "AN EMPIRICAL TEST OF STEWARDSHIP
THEORY," Journal of Business & Leadership (2005-2012): Vol. 3: No. 1, Article 6.
Available at: http://scholars.fhsu.edu/jbl/vol3/iss1/6
This Article is brought to you for free and open access by FHSU Scholars Repository. It has been accepted for inclusion in Journal of Business &
Leadership (2005-2012) by an authorized administrator of FHSU Scholars Repository.
Article 6
Davis et al.: AN EMPIRICAL TEST OF STEWARDSHIP
THEORY
Journ al or Business
~nd L~aclcrs hip : Resea rch. Practi ce. and Teachi ng
l)al i'. l'raniJo rtcr. Vo ll rath . and II II I
2007 . Vol. 3. No. I . 40-50
AN EMPIRICAL TEST OF STEWARDSHIP THEORY
Ja mes l);w is, Uni versity o iN otre Da me
Stev en Fra nkfo rt e r. Winthrop Uni versity
Da vid Vo llrat h, In diana Uni ve rs ity So uth Be nd
Van essa llill , Uni ve rs ity o l Loui s iana , Lalayette
This slu t~)' 1es1s !h e model of Davis, Sch oormau , aud Drmaldsou (/ 99 7) llwl proposed delermiuaul.\' of a company's
govemauce .\'lruc/Ure. lu parlicular, we foc us uu Ihe slewardship 1/wury a.\ pecls of !h e model a uri ils ability to predict th e
presen ce of a slewarrf.l·hip-orieulatiou CEO at publicly listed U.S. companies. Using survey based data obtained from
CL'O.~ all(/ directors of I 00 compauie.1· iu a match-pair desixu, we identified three va riables that predicted th e occurrence
of stewardship-oriented behavior.\· by th e company's CEO. These results feud support for th e model's ability to predict
tl1e conditions under which steward.l11ip-orieuterl iudividua/.1· becom e CEOs.
co mpan y situ ati onal va riabl es so th at EOs ca n be empowe red ,
rath er th an co ntm ll ed (Dilv is et al. , 1997) . Wi II iam so n ( 1985)
ack now led ges thi s poss ibilit y but sid es in favo r o f empl oyi ng
stru ctut·il l protec tions aga in st oppo rtuni sm , arg uin g th at th e
tru ·tw o rthin ess o f' a p:t rti cu lilr manager m ay not be known w i th
co ntpl ete :1ss urance . l l owcvc r, o th ers il t·gue th at tru st wo rthin ess
is reliabl y recogni za bl e, and w hen u nfett ered wi th undu e
co ntro l \ truUut·es, tn:ty lea d to pro lit abl c oppo nunit ies th ar
wo uld o th c r w t ~e tl O be pt·cscnt ( Frattk , 1988; Qu inn & Jones,
1995 ; a i. 1997) . D<~vi s et al. ( 1997) nrgue th at oppo rtuni sto t· steward -o ri ent ed govern <J nce Ci1 n be success fu l w hen
prin c ipa ls co rrec tl y id entify un der ly in g age nt psyc ho logy and
firm - leve l. situ at io nal fa ctors.
INTRODUCTION
Wor ld co m . Ad lphi a, T yco, :J ttd Emon, an,; amo ng th e
num erous exa mples of wanton oppo rtu nism leadin g to th e
dec I in c or demi se o f large, import ant ecott o tn ic in sti tuti o ns.
Thi
cri sis o f int egrit y poses h<trd shi ps !'or multiple
co nstitu enc ies, and w ill continu e to rece i ve le gal il m l reg ulil! Or)
att enti On lo r ye at·s 10 CU tll C 'I he C0 111111 0 tl ll't Sdom 0 1' tucb y' '
d ominant co rp orat e govc m ancc th co rt cs (e g. :Jgc ncy th eOI"y)
pre ~c r ib c stronge r mo nit Ot"i ng ~tn d tn o t·c lu crati ve ali gnm ent
in ce nti ves in th e ho pe of di mitti shin g th e dan ge rs opportuni sti c
man ager !> pose to soc iety ( 17 ama & Jensen , 1983) . ll owever,
qu es ti o ns rega rdin g w heth er such stt·uctural remedi es ca n cove r
all po ss ibl e threat s co ntinu e to persist . For exa mpl e, D eA nge lo
( 1988) fo und that manage rs manipu late inco me to achi eve
bonu s targe ts 111 th e presence of in ce nti ve ali gnm ent
mec hani sm s, bringin g int o q ues ti on w hether in ce ntive
a li gnment m ec hani sms ca n re l iabl y at tili n th eir int end ed goals.
Simil arl y, W illi il m son ( 1985) argued th at man age rs pursuin g
sel r- int eres t w ith guil e ma y be suf'fi c icntl y in ve nti ve a11d
inge ni o us
to
thw art
eve n
w ell -c on cei ve d
mo nit orin g
m ec hani sm s. In such li ght , it i ~ doubtfu l thiit stru c tural
pro tec ti o ns co uld success ful l y guat·d again st all threa ts atl
in ve nti ve exec uti ve co u ld improv ise.
A n alt ern ati ve app roac h to c o ttt rn ll in g th e appeti te of th e
opport utti sti c shark s that m ay n1an agc a g i ve n co rporati on is to
avo id emp loy in g suc h indi vi du als it t leadership po sitil)tl S.
D av t-, ct a l. ( 1997) pro posed il heur isti c to id entiry e:-.c:c uti vcs
n: lkct tn g an op p o rtuni ~ t ori etil :lli on o1·
st<.:ll'il rdsh ip
ortc: nt at io n to th e li nn . l hey C\> nl end ed th at ex cc uti 1e
p'>yc lwlog tG il and flm t '> ituattOtl :tl l <~c t m s cou ld l)L' measured
attd ev:ilu :J tcd to d etu nttn e th e appr tl:tch th e c::-.ec tttt ve wo uld
c tnp ln y at th e linn . Thtt s, tl u pp ortunt sts :tn d ol cw<tl·ds catt he
rc l t:tbl y d ist in g u ished, o pt im ;il go ve l'll <l tiCe Stl'lt Ciures <I lid
po li cie'> lnr e ith er <tppmac h co uld be implem ent ed . W hil e th e
nt ode l prov id es a va luab le heut·i -; ti c, th e <Ju th ors 1·ccog ni ze d a
need rm th e empiri cal testin g o r its co mpon ent s. I n thi s paper
11c em p ir ica ll y cx:~ min c th e pro posed psyc ho log icil l and
st lu <Hi \l nal <J nt ccc d cnts to stewa rdsh ip-or ientat ed co rpo rate
gO\c rn <J ncc that Da v is c t al. ( 1997) proposed .
I he crea t ion il nd mil int enan ce o r il 111anagerial sys tem base d
on ste11<t rd ship pr in c ip les al igns exec utive psycho log ica l and
Published by FHSU Scholars Repository, 2007
St ewards hip T h eo r y
Stewa rd ship th eo ry (D av is c t al. , 1997 ; D ona ldson & D av is,
1989 , 199 1) pro v ides il norm at i ve per pec tive int o th e nill ure of
th e manage rs th at se rves as il n alt ern<Jti ve to agency th eo ry.
Whi le stewa rd ship th eo ry h <:~ s bor rowed so m e of th e Sil m e
ter ms co mm o n ly used in age ncy th eo ry resea rc h, such as
"age nt ," " pt·in c ipal, " and " <J ii gnm ent ," r:tdi call y different ro les
arc ilSS Utlt ed . T hese term s wi ll be used to desc r ibe exec uti veshJreho iJ er relations und er eith er <tn agency o r stewa rd ship
gove rn ance stru c ture. G t·o tmd ed in psyc ho lo gy, soc io logy, and
lead ershtp th eo ri es, steward ship th eo ry arg ues lo r th e poss ib le
a li gnm ent bc tii'Ce tt prin c ipals and age nt s w hi ch i s rc n cc ti ve o f
a psyc ho logica l co ntrac t (Sc he tn , I % 5; Y an, Z hu , & II all ,
200 2 ) ur a c lthe re l :~t i o n s hip (U v: i, 1996) , w ith age nt s
a co mmunit y- loc used
tnilnn er,
d irec tin g
hclta v in g
111
tru -, tw<H·tlt ; ~ tn d ur mora l behav iors towa t·ds th eir finn s and its
~ t ock lt o ld e r \. Steward ship -o ri ented lead ers d er i ve utilit y by
se r v tn g tlt c need <; o l· til l' cmpora ti o n a11d it s stak eho lders rath er
thatt by put·s uitl g sho n - tcnn oppo rtuni sm at th ei1· empl oye t·s '
ex pense ( l) ;tv is, c t al. , 199 7; F t·il nk . 1988) . T he primary
obsta c le to e!Tec tiv ely imp le111 entin g a stew ard sh ip app roach to
govern att ce
is
to
acc un11 ely
di stin gui sh in g
betwee n
opportuni sts il nd stew<J rd s. Mi sa li gnin g co rp o rat e g overn ance
st t·uctures w ith exec uti ve ori ent ati o n co uld res ult in seve re
losses to th e llrtn . Dav i s et a l. ( 1997) ide ntifi ed psyc hologica l
and situ ati ona l antecede nts th at wou ld permit principa ls to
di stin gui sh betw een oppo rtuni sti c and tru st wo rth y agents. The y
40
1
Dav is. Frankfo rter. Voll ra th . and Hill Journal
of Business & Leadership (2005-2012),Journ
Vol.al3o f[2007],
6ip : Resea rch. Prac ti c~. and Teaching
13usinessNo.
and 1,
L~ Art.
aders h
2007 . Vo l 3. No . I. 40-50
argue th at wh en situati ons at a co mpa ny favo r a stewardshi pori ented govern ance stru cture, th en steward-or ient ed execut ive s
should be employed as CEOs.
Quinn and Jones ( 199 5) and U zz i ( 1996, 1997) argued that,
with ex peri ence, one can ident ify trustwo rth y age nt s and then
sa fely rely on th ese agent s to behave w ith se l f- r·es traint and to
serve th e good of th e co mpany. Such individu als forge
relati onships w herein th ey crea te uni qu e co mpetit ive
adva ntages through inves tm ent in relati onship-spec i fi c asse ts
(Jones, 1995), pursuit of long-term val ue-bui ldin g strateg ies
( Davi s et al. , 1997), acce ss to propr ietary and/o r fi ne-grain ed
inform ation (Uzzi,
1996) , in creased co mmitm ent and
in vo l vement in th e affairs of th e fir m (Ya n et al. , 2002), and
improved access to key reso urce s (Uzz i, 1996).
ex trin sic moti va tors.
respons ibi I it ies .
w o ul d
tend
to
shirk
their
H y p oth es is I : Exec ut ives reportin g higher order need s
motiva t ion w i ll be positi ve l y assoc iated wit h d irec to r
o bser va t ion of steward ship-or iented CEO behav io r .
H y poth es is 2: Exec utives repo rtin g low ex tr in sic
moti va ti on w ill be pos it ive ly ass oc iated w ith direc tor
obser vat ion of stewa rdship-ori ented CEO behav ior .
I de ntifi ca ti o n : M anage rs id ent i fy w ith an orga ni zati on
w hen th ey de fin e th em se lves in term s o f an orga n iza t ional
membershi p w herein th ey accep t it s m iss io n, vi sio n, and
objec ti ve s ( K elm an, 1958; M ae l & A shfo t1h , 1992) . U nder
th ese co ndit ions, th e orga ni za ti on beco mes an ex tensio n o f th e
manager' s psycho log ica l stru cture (B row n, 1969) . A n
identi fy in g
manager
inter prets
co mm ents
abo ut
th e
orga ni za ti o n as referrin g also to him se l f or hersel f, all ow in g
manager s vicar iously ex per ience th e orga ni za ti on's successes
and failu res (e .g. , Katz & K ahn , 1978 ; T urn er, 198 I ) . T his
v iew of orga nizational identi fi ca t ion is co nsistent w ith
stewa rd ship .
W hen manage rs ex tern al ize 01·ga n iza ti ona l prob lems to
avo id b lam e or sh ift res po nsib il it y to oth ers (D ' A veni &
MacMi ll an , \ 990) they cl o not id entify w ith th e organi za ti on
nne! he/she w i ll v iew th e orga ni zati on onl y in in strum ent al
term s, foc usin g on how using it may perso na ll y benefit him or
her (Jenst> n & M eck l in g, 1976) . T hu s, an orga ni zati onal foc us
required fo r identifi ca ti on is lac k ing. T h is is co nsistent wi th th e
age ncy theory perspect ive .
H y potheses: Testin g Da v is, Sc hoorman, and D onaldso n' s
Heuristic
We tes t th e mode l that Dav is, et al. ( 1997) proposed to
predi ct th e conditio ns fo r a stewa rdshi p-o ri ented co rporate
govern ance to fl ouri sh. We o btained sur ve y responses and th en
ass oc iated CEO- repo rt ed psycho log ical and situa ti onal factors
aga in st direc tor-report ed ob se r v:-~ ti o n s o f the stewa rd shi p
attribu te s o f th eir CEOs.
Psycholo gical Fa ctor s
M o ti vation : Steward s are prim aril y moti va ted by hi gher
ord er needs, such as opportunity o f growt h, achieve ment .
affili ati on , and se l f-ac tu ali za t ion (Dav is, et al. , 1997) . T his
d iffers fro m opp ort uni sts, w ho are mot iva ted by ex tr in sic
fac tors I ike tangible rell'a rds and incenti ves posse ss ing a
meas urab le market va lue. CEOs pr imar i ly mo ti va ted by hi gher
order needs fi nd per fo rm ance o f or·ga niza ti onal wo rk itse l f to
be a strong moti va tin g fac tor. Th e basis fo r the ass umpti on
lin k ing th e pursuit o f hi gher· order needs to a stewa rdship
ori entati on ca n be fo un d in m ost of th e estab li shed th eo ri es o f
moti va ti on, in pa rti cul ar, hig her Ol'dcr needs as descri bed by
M aslow's hi erarc hy ( 1970) , A lder fer' s growth need ( 1972). and
th e achi eve ment and affili ati on needs of M cC lelland ( 1975)
and
M cG regor ( 1967). O pportuni sts,
look
at
work
in strum entall y, expend in g effo rt s w hen th ere is materi al
compensati on for th eir effo rts (Fa ma & Jense n, 1983) .
A steward w ill tend to be int r insica ll y moti va ted and wi ll
form int ern al chall enges th :-~ t lead to hi gher leve ls of
perform ance as w ell as sa t i s f;:~ c ti o n w ith hi s/her wo r" .
Hac k man and O ld ham ( 197 6) argued th at three psycho log ica l
states (experi enced mea ni ng fu lness o f wo rk, ex peri ence d
responsib ility for outcomes. and k no w ledge o f actual result s)
media te th e relati onship betwee n task character isti cs and
int ern al work mot iva ti o n. T his model o f wo r·k moti va t io n i ~ one
o f th e foun dati onal ass umpt ions o f stewil rdshi p th eo ry M:~ n z
( 1986) argued th at se l f- e fl~ caC). se l f-determinati on. and
fee lings of purpose are c h :~ rac t c ri zcd as bt> ing n it ica l
determin ants of intr in sic moti va ti on. Co nve r·sc ly, th e age ncy
approach emphas ize
th e ro le o r ex tr in sic rewa rds in
moti va tin g a CEO, em p loy in g a tit - lo r- tat perspec tive in w hi ch
rewa rds are conti ngent on effo rt and tang ib le result s. Absent
http://scholars.fhsu.edu/jbl/vol3/iss1/6
agent s
H y po th esis 3: Exec ut ive s repo rtin g h igh identifi ca ti on
ll' it h the mga ni zati on w ill be positi ve ly assoc iat ed w ith
cl irec tm observa ti on of stewa rdshi p-ori ented CEO
behav ior.
Va lu e co mmitm en t: Va lue co mmitm ent is th e be li ef in and
va lu es (Mayer and
Schoo rm an, 1992) . T he se l f- im age o f o rga ni zat ionall y va lueco m m itt ed managers refl ects t he co m pany ' s im age (Ecc les &
No hr ia, l ':t J2) . Va lue co mm itt ed exec uti ve s d c tin e th em selves
in term s of th eir mem bership in th eir parti cul ar organi zati ons
(Mae l & A shfo rth , 1992) , prod uc ing a sa ti sfy in g re lati onship
(S uss man & V ecc hi o. 1982) . V alue co m m itt ed exec uti ves
possess a psycho log ica l al ignm ent w ith th eir organ izati ons o r
pri ncipals because th ey shar·e th e sam e v ision. va lues. and
mi ss ion, and exe rt co nsiderab le effort to sec th at th e
o rg ;:~ni z a ti o n succee ds (D::tv is, et al .. 1997). Co nve rse ly,
opport uni sts tend to p lace import ance on m::t teri al ga in ra th er
th :1 r1 va lu es . Th e) lack co m mitm ent o r all egia nce to
orgar1i zat io ns. v iew ing th e fi rn1 as an in strum ent 11·ith w hi ch to
achi eve per·so r1 :1lm atc r·i:J I grt in (Fa ma and Jensen, 1983).
:~ccep t a n ce o f orga nization al goa ls and
H y po tl11:s is ~:
Ex ec uti ves report ing hi gh va lu e
co mm itm t> nt 11 i ll be positi ve !) ass oc iated w ith direc to r
obser va ti on o f stewa rd ship-ori ented CEO behav io r-.
Pe r so n a l Power : G ibson, l van cev ich ::tnd Donn ell y ( 199 1)
clas sifi ed powe r as eith er perso nal or in stituti onal . A manage r's
41
2
Dm is.
F ra n ~ lon er.
Davis et al.: AN EMPIRICAL TEST OF STEWARDSHIP
THEORY
Journa l of Business
and Leadership: Research, Practi ce. and Teaching
Vo llrat h. and II ill
2007 . Vo l. 3. No . I. 40-SO
personal power is developed w ithin th e context of th e
interpersonal relati onships rath er th an th e manage r's positi on
within the fi rm. and is grounded upon th e subord in ate's
identi fi ca tion w i1h and res pec t for th eir leader's co mpetence
and abi l ity . T hi s fo rm o f pow er inc ludes French and Raven' s
( 1959) referent and ex per1 power . Director·s w ill perceiv e CEO
stewa rdsh ip w hen 1hey obser ve th eir man age rs utili zing
persona l power to modify th e behav ior o f th eir fo ll ower s
( Da v is et al. , 1997). Converse ly, o pporluni sts wi ll tend to
emp loy differenl ty pes o f power th an do stewa rd s. For instance,
they wi ll tend to use coercive or instituti onal power th at is
deri ved by v inu e o f th eir form al author-il y in th e orga ni za ti on
( Dav is, et al, 1997) .
H y po th es is 5 : Exec ul ive repon ing hi gh perso nal power
w ill be pos il ive ly assoc ia1ed w ilh d ir·ector· obse rva ti on
o f stewardship-o ri ented C EO beha vior.
Sit ua ti ona l Fact o r s
M an age m ent phil oso ph y: /\ rgyri s ( 1973 ) arg ued fo r ih c
deve lopment o f norm al iw models of organ iza l io n base d o n
se l f-ac tu al izi ng ass um pl ions to create an orga ni zati onal cu lture
that supported the development of slewa rd ship types of
relationshi ps be twee n excc ul ivcs and th eir firm s. T he positi on
advoca ted by A rgy r is ( 1973) wa s sim i lar to th e argum ent s
adva nced ea r li er by McGrego r ( 1960) in hi s d isc uss io n o f
T heo ry Y manage ment and by Like rt ( 196 1) in hi s co mpari son
of Sys tem ~ manage rn cnl w it h more co ntro l-o ri ent ed sys tems.
Eac h o f th ese ih eo ri sts advoca ted th e deve lopment of
normalive mode ls o r organi za1i on. brea k in g w il h tradi 1i onal
managem ent phil oso phies to fac i I ilatc th e se l f-act uali zin g
be hav iors that arc co nsistent wi 1h stewa rdshi p th eo ry.
W alton ( 1980 , 1985) ad voca ted
hi gh-co mmitm ent
rna nage mcnl ph i loso phv that wa s char·actcr ized by hi g h
parti cipati on. open co mm uni ca ti on, empowe rm ent o f wor·kers.
and th e es tab l ishment of trust. Law ler ( 1986 , 1992) elaborated
on t his vi ew by co ntra sl in g the manage ment phil osophi es he
described as co ntro l-o ri ent ed ve rsus in vo lve ment -or ienl eu .
Acco rdin g to L aw ler. the co n1r·o l-mi cn1 ed approac h is based 0 11
a rnanagc ment phi losop hy th ilt the think in g ami contro ll ing pa 1·1
or the wo rk mu st be: sepa rated from the doin g pn rt o f the wo rk
Invo l ve ment -o ri ent ed ::tp pi'Oac hes cnlph asi;e scl l'-conlr·o l and
<;c l r- mana ge mcnt ::t nd do not crc:at c a scp<ll·a t ion a1 nong
thin k ing. co ntr o l lin g. ::t nd do ir 1g th e wol'k . T he key ass ump tio n
in i nvo lve m ent-ol'i ented appi'Oachcs is that w hen emp loyees ar·e
given chall cnoe s and responsib i l it y they wi ll deve lop se l fcon tro l of th eir he hJv io r.
T he manage ment phi losop hy of an organi za tio n ca n crea te a
context in w hi ch a stewa rdship approach is maintain ed. Th e
crea ti on o f the invo l ve ment -o r ienl ed management "'ill lead to
th e emerge nce o f o rga ni;:a ti onal behav iors co nsistent w ith
stc11 ard sh ip th eo ry.
C ulture:
Hofstede
( 1980 ,
199 1)
described
an
indi v iduali sm-co ll ec tiv ism d im ension of culture th at 1vo uld
support a stewa rdship-ori ented govern ance stru cture. The
individuali sm dimension emphasizes personal goa ls over group
goals w hi le th e co ll ec ti v ist d im ension defin es th e se lf as a part
of th e group . O ne's group m ember ships are an import ant
stat em ent o f id enti ty and achi evement . Co llectivi sts have very
positi ve allitudes tow ard harm ony w ithin groups, avo iding
confrontati on,
wh il e
indi v idu ali sts
see
co nn ict
and
co nfrontati on as an oppo rtunity to acti vely reso lve co nflict by
communi ca tin g more direc tl y. Co ll ec t ivi sts prefer long-term
relati onships and wil l frequentl y require more tim e and expend
grea ter effot1to become fami li ar w ilh oth ers prior to a bu sin es s
transac ti o n. Indiv idu ali sts are mo re short-term orie nted,
choos in g to co nduct business in depend entl y of persona l
re i ~Hi o n s hi p s, usin g a cost-bene fit approach to eva lu ate
bu sin ess exc hanges, and au empt ing to redu ce th e ri sk s of doing
bu siness through form al co nlr·acts. li enee. co ll ecti v ist cultures
arc mo r-e co ndu ci ve to stewa rdship govern ance structu r es w hil e
in d iv idual ist ic cultures tend to foster opportu ni sm .
H y poth es is 7: Exec uti ves repo rtin g co ll ectivi st cultures
at th eir· co mpani es w ill be pos iti ve ly ass oc iat ed w ith
director obser va t ion of stewa rd ship-o ri ented C EO
behav ior.
Po wer di l ance: A second d im ensio n deve lo ped by
H ofstede ( 1980 , 199 1) to characteri ze t he cross -cu ltural
di fferences thi s is parti cul arl y releva nt to stewa rdship is th e
co nce pt of power di stance . Power d istance is ge nerall y defined
as " th e ex tent to w hi ch less powerful members o f in stitution s
and orga ni zati o ns w ithi n a co untry ex pec t and acce pt th at
powe r is d istri but cd unequall y " ( Ho fstede, 199 1: 28 ) . In certain
cultures, relati ve ly large differences in po wer among members
are accep ted and to leraled. In a culture w ith hi g h power
di stance, th ere is an acce ptance th at less powe rful m embers
w ill be depe ndent on more po w erful mem bers and privil eges
and statu s symbo ls arc both ex pec ted and popu lar. In lo w
powe r· d istance cu lt ures , in equ al iti es are minimi ze d, th e
in depende nce o f th e less pow er ful is va lu ed and enco uraged,
and statu s and c lass sy m bo ls are frow ned upon ( H odgells &
L uth <llh , 1993) In hi gh powe r- d istancc cultures, orga ni za ti ons
ar·c cc ntr;tlr ze d. and th ey include large differences in auth orit y,
sal<11·y. and perqui sites . T he oppos it e wo uld be tru e in a lo w
power di ~ t an ce or·ga ni za ti on. Low powe r d istance cultures are
more co nd uci ve to th e deve lop ment of stewa rd shi p relati ons
beca use their mem bers p lace greater va lu e on th e esse nti al
equalit y o f all peop le.
H y pothesis 8 : Exec uli ves repo rti ng low po w er di stance
at th eir co mpani es wi ll be positi ve ly assoc iated w it h
direc tor obser va t ion o f steward ship-o ri ent ed CEO
behav io r.
M E A SUR ES AND METHODS
Hypothes is 6: Exec ut i ves reponing hi g h in vo lve ment
situat ions at th eir· co m pa ni es w ill be positi ve ly
ass oc iated w ith d irec to r obse rva ti on o f stewa rd shipori ent ed CEO behav io r.
Published by FHSU Scholars Repository, 2007
Sampl e
W e crea ted and mai led a sur vey to 500 rand oml y se lected
pub li cly li sted co rp orati ons, ta rgetin g both th e C EO and th e
42
3
Dav is. Frank fort er. Vo llralh. and Hill
Journal of Business & Leadership (2005-2012),Journ
Vol.al 3or[2007],
Art.
6 : Research. Pracli ce. and Teaching
BusinessNo.
and 1,
Lead
ership
2007. Vo l J. No . I , 40-50
co mponent item s indi cated a three -co mponent so lut io n. Th e
first co mponent ( identifi cati o n) had si x it em s and ex plai ned
23.4% o f th e va ri ance, th e second ( in vo l vem ent) had three
it ems and ex p lain ed an additi onal 16 .9% of th e vari ance, and
th e third (c ul tu re) had fi ve items and ex pl ained an add iti onal
15.4% o f th e va1·iance. The sca les fo r th e depend ent and
in dependent va ri ab les appear in appendi x A .
board s of directors of th ese co mpani es in 1997 . Th e res ult o f
th e initi al mailing and fo ll ow- ups is th at 16 1 d irec tors and 135
CEOs responded . Stati sti ca l tes ts comparin g th e mea n response
for th e va ri abl es betwee n w aves o f data co ll ec tion were
insignifica nt , sugges tin g th at later res pondent s we1·e simil ar to
earli er respondent s. W e y ielded I 02 matched pairs o f CEO and
direc tor respon ses. Miss ing data redu ced th e number o f
companies in o ur analys is to 100 . T hi s stud y mee ts th e
minimum acceptable response rate o f 20% for sm vey -based
resea rch ( H itt . Hosk inso n, Jo hn son. & M oese l, 1996) .
Unmatched res ponses were used in our fac tor an::l l ys is. but
we re di scard ed before we tes ted hypoth eses.
C o ntro l Va ri a bles
We inc lud ed se ve n co ntro l va ri ab les co mm o nly fo un d in
resea rch:
Pro fit abilit y,
cap ital
co rp orate
govern ance
ex pend itures, stoc k o w nership , dualit y, fir m size, lo ng-t erm
compensati on. and board tenure. Th ey are co ntro l va ri ab les in
th e usual, stati sti ca l se nse o f th e ter m . In multi ple regress io n
analys is, th ey may co mpete wi th our hypoth esized co rrelates to
account fo1· vari ance in th e dependent va ri ab le. A lth o ug h we d o
not frame form al hy potheses in vo l v in g th ese vari ab les, we note
th at each may serve as a mechani sm to co ntro l CEOs.
Dependent Variabl e
We mea sured th e dependent va ri able with d irec tor surve ys.
W e deve loped an eight-item scale as ses sin g th e lea dershi p
approach th eir C EO ex hibited . A prin c ipal-co mponents fac tor
analysis determin ed w heth er a redu ce d se t o f the co m ponent
sca le items co uld be ex tracted. T he th re ho ld estab li shed in
advance for th e se lec ti o n of fac tor it ems were a fac tor load ing
of .50 or greater and at least a .20 diffe rence betwee n th e item 's
loadi ng with its fac tor and eac h o f 1he other fac tors. T he
analys is o f th e eight co mponenl items in d ica ted a tw o component so luti o n th at ex piJin ed 56 .-l 0 o o r th e 1·ari ance. T he
first component poss ess ed fi ve items refl ec tin g a stewa rdshi pori entati on. T hese items w ere totaled for th e subseq uent
analys is. T he seco nd co mponent co nsisted of th ree items
unrelated to stewa1·dship and wa s not use d.
Pro fit ab ilit y: Dav is et al. ( 1997) pred icted th at fir ms wi th
good ali gnm ent betwee n th e CEO phi losop hy and the fi rm 's
gove rn ance stru cture wo uld tend to have supe ri or pro fit abi lit y .
W e measured pro fi tabil it y as th e diffe rence betwee n fi nn and
th e mean in dustry relllrn s on equit y, ba se d o n fo ur-d ig it SICs.
D ata we 1·e co ll ec ted fro m Rese:J rch Insig ht.
C apit al Ex penditures: D av is. et al. ( 1997) argued that
C EOs w ith a stewa rd ship perspecti ve wi l l possess a lo ng-term
perspec ti ve fm th e firm and w ill pur ue strateg ies th at suppo rt
long-term perfo rm ance , lik e makin g cap it al in ves tmen ts.
Ca pi tal ex pend itures we r·e com put ed as a fi rm 's capi tal
expe ndi tu res d i v ided by its total asse ts and subt rac t in g th e
equi va lent ind ustr ) mea n, aga in base d on fo u1·-di g it SI Cs. Data
11e re co l lected from Resea rch Insight.
t ock Ow ner shi p: W here CEO's ho ld gre at er proporti ons
Of StOC k . th ere II i ll be grea ter degreeS Of al ig nm ent ll' itiJ th e
int erests o f th e firm and it s shareho lders (Ei se nhardt . 1988:
Jensen & M eck l in g, 1976) . W e co mp ut ed stoc k ow nerships as
the perce nt age o f th e firm 's co mm o n shares held by th e
C EO/ Pre' ;de nt. D ata we re co ll ect ed fro m proxy statements.
Du ali ty: W hen th e CEO also serve s as c hairm an of th e
boa rd (co m rn o nl v refe rred to as the du al govc rn :J nce stru cture),
he/ she ma)
lim it th e boa rd's co ntro l o f mana ge me nt
( D onaldso n & Da1·is. 1989 , 199 1: \.Vi ll iam so n. 1985). Dual it y
is a dic hoto mo us va ri ab le in 11hich 0 represe 111 s out side board
leadership ( kn ow n as the in dependent governan ce stru cture)
and I rcrrese nt s i n ~ t a n ce s 11 here th e CEO a lso ser ves as th e
chai rm an o f t he boa rd . Data we 1·e co l lec ted f ro m proxy
statement s.
Firm size: I'll <.: siLc of th e firn1 ma y 1ntlucn cc the fo rm o f
po we 1· a Ct::O uses. l-o r exa n1p le. a L'EO in a vny large fi rm
111 a) not h:11 e as mu ch opportunit ) to ha ve th e d i1·ec t co ntac t
ncces sa1·) tL) t' Stabli sh personal pown . W e co lll w ll ed to r fi rm
size by takin g the log o f the totn l numbe r of em p loyees
( F1·ank to n er. et <d., 200 I ). Data 11 ere co l lec1cd from Rese arc h
I nsight.
Lu ng- t erm co mpensa ti on : E:-.ec uti vc co m pe nsa ti o n th at is
lo ng- term in natu re mi ght be use d to uea te ali g nm ent w hen a
CEO is ass um ed to be opportuni sti c, rather th an possess 3
Ind epend ent Vari ables
T he independ ent va1·iab les we re mea sured 11 ith C EO
surveys. W e empl oyed pre-p ub li shed sc ales to measure th e fi ve
of th e in depend ent va ri ab les ( hi gh order needs. ex trin sic
mot iva ti on, va lue co mmitm ent , personal power. :J nd p011er
d istance) and crea ted new sca les to r th e three remai ning
ind ependent va ri ab les ( identifi cat ion. i111 o lvemcnt , and culture)
usin g factor analys is.
First, w e se lected th e fi ve pre-pub li shed scales. For th e first
two, w e used Frankfort er, Dav is, & V o llrath 's (:~00 1 ) 10- item
hi gh order needs sca le and th eir 9- it em ex trin sic moti va ti on
scale. Th e third w as a I 0-i tem sca le deve loped by Sc hec hter
( 198 5) meas ured va lue co mm itm ent. Th e fourth and firth were
sc ales develo ped by Frost and Stahelski ( 1988) to mea sure
power and po wer di stance . T hese sca les arc b:J scd upon
French and Raven's ( 19 59) bases o f soc ial powe r and cor rec ts
se veral sca le form at co n fo unds fo und in prev ious resea rch.
Referent and ex pert power subsca les we re co mbin ed to fo rm an
11 - item scale represe nting pe1·sonal powe r. Coe rc ive.
legitim ate, and rewa rd powe r subscaks we re co mbin ed to form
a 12-item sca le representi ng po,ver di sta11 Ce. Si 11 ce th es e
scales had p1·ev io usly -estab l ished rel iabil it) (a lpha) 1neas u1·e<>.
fa ctor analy is wa s not necessa ry to for mul ate th ese ll1 c
meas ures .
Second , we appli ed facto r analys is to til t: CEO surve) S fo r
th e three remainin g ind epend ent va r iab les. empl oy in g th e same
dec ision rul es w ith th e ind epe ndent va ri able s as we did 111
determinin g th e dependent va ri able. T he analys is o f th e 1-1
http://scholars.fhsu.edu/jbl/vol3/iss1/6
43
4
D:" >S. Fr:111 k lon er. Vo ll ra th . and IIIIIDavis
.l oun wl or Ousin
css and Lc~ ders hip ·
et al.: AN EMPIRICAL TEST OF STEWARDSHIP
THEORY
stcwa t·dshi p ori entati on (Jen se n & M eck l ing, 1976) . We
ca lcul ated long-term co mpensa ti on as th e percentage o f shon
term to total exec uti ve compensati on. T hese data were
co llec ted from proxy statement s.
Board tenure: With steward ship's emphas is on deve lopin g
and maint ainin g long-term relati onships, w e anti cipate th at
C EO's wi th stew ard ship phil oso phies will tend to have serv ed
on th e board for a relati ve ly long peri od o f tim e. Board tenure
wa s meas ured as :h e year th e CEO first began ser vice on th e
boa rd . Da ta were co ll ec ted from proxy statements.
Research. Practi ce. and Teaching
2007. Vo l. 3. No . I. 40-50
Method
Th e data for all but one of th e dependent, independent, and
control vari ab les were co ntinuous. The other one was
di chotomous. T herefore, w e co ndu cted hypoth es is testin g using
multipl e regress ion analys is.
Res ult s
Figure I di spl ays a v isual represe ntati on of the control and
ex perim ental vari ab les.
FIGURE I : Visua l Representation of the Co ntrol and Ex perimental Va ri ables
C unlro l \ 'ariahtcs:
l'ro llt:~hli>l y
Cap ll al c.xpe nd>turcs
Sloc k ownersl11p
D u:~ l >l )'
Fmn
I
\ I ll'
ll ll g_- l l: llll CU 1llpC 11 '\ ill 10 11
I)O aHJ IC i llll\..'
Ex pnimtnlal \ 'a ria hl cs
ll> gh Order Needs
Ex tnn ; >c Moi> Viii> On
Idcnl>licai> On
Va lue COilllll>llll CIII
Pcr...,o na l
J>o w~r
ln vn lvcm c111
C ullurc
Tab le I be low shows th e descri pti ve stati stics, alph as,
va ri ati on in nat ion fac tors (V I Fs), and th e co rrelati on
ma tri x. W e meas ured reliabilit y by co mput in g alpha
scores . A ll alp has exceeded th e minimum stand ard o f
.50 fo r ex perim ent al va ri ab les and we re dee med acce pt able
(N unn all y, 1967) . Addit iona ll y, we obse r ved no multico llinea rit y probl ems th at wo ul d affec t th e result s, with only
one va ri able ( hi gh ord er needs) ex hi b it ed a V IF th at exceeded
2.0, far from th e criti ca l I im it of I 0 (Ne tt er, Wa sserm an, &
Kut ner, 1989) .
Tab le 1: D esc r·i ptiv e S tati st ics, A lph as, Variation Infl a tion Fa c to r·s (VI F s ),
an d t h e Co n e lat io n Matr· ix
rvh.:all
.S I)
Alp
II :~
VII'
Sie \\:il'd ' h'IJ
ll >gh
Ex tnn s1c
ld enlli i-
Va lu ~
l'c.rso11al
o rd c1
111 U I I V; I{1 0 1l
CCIII Oil
Cll llll1l -
powe r
11111 Cnl
II CCd \
Sicw:l rlb lllp
l l> t:h nnki 11 ccd'
F\1 11 11 '\ IC 111 0 (1\ ill lO ll
ld enlill cai> Oil
Va lu._; C {) llllllltlll ~ tll
Pc r~ un t ll
po wer
lii \0 \ VC il\ C ill
Cul ture
\\l\VI: r Cli \U II l CC
l'>ulilahllil )
C'< >pll al cx pe nd>lllres
Sloc k O\\ nnsl11p
D11 al11 y
F i1111 Sttc
Ln n g-lcrm co mpe nsat ton
llnard tmurc
~ I 21
43 ~ I
2') 92
20 62
4 5 ()(,
39 S5
10 2 1
20 20
25 c I
o c9
- 14 60
R 08
60
2 66
23
c4 76
2 02
:\8
) 62
-11 9
3 <JX
5 I0
I 97
2 37
5 88
n49
5 1 36
12 6
.49
76
20
9 t8
~
Published by FHSU Scholars Repository, 2007
7<)
X3
~ ()J
X(,
I (,<)
I 35
I 75
I 48
I 16
I 61
I 20
1.3 1
1.1 6
I 12
1.3 3
I 46
1. 50
I 43
71
86
81
71
50
81
10*
07
-O:i
2x•,..
19
26**
50***
- 14
09
- 13
10
-O S
-04
06
-.0 1
44
41 *'
04
31**
47'.
04
20
-.08
26 '*
. OJ
- II
.02
08
09
07
- 06
- 10
23 '
. 01
. 25*
II
08
- 09
- 13
- 2 1*
- I~
- 13
36 ***
.Jo••
. 05
()<_)
.09
03
12
Oc
14
II
24'
34* **
- 25**
t6
18
44*'*
- 20 '
. 02
04
01
19
06
27 **
. 09
. 18
12
.08
. 13
-.00
-.05
.06
03
-.08
OS
5
Journal of Business & Leadership (2005-2012),Journ
Vol.al3o [2007],
Art. 6 : Research. Practi ce. and Tea chin g
r Bu sinessNo.
and 1,
Leadership
Davi s. Frankforter. Voll rath . and Hill
2007. Vol. J. No . I. 40-50
Co ntinued tabl e I
In vo lve-
Culture
Power
lll Cill
di St (l ll Cc.!
Involvement
Culture
Power di stan ce
l'rotit abilit y
Ca pit al expenditures
Stock ownership
Dualit y
Finn size
. I5
-. 10
09
.05
.05
I7
Long·tern l cu mpL: nsation
Board tenure
-.06
- I t}
-.24*
2 1*
. I0
. 16
. II
08
12
-.20
()()
Pro fi tabi lit y
- 05
-01
())
.07
. 19
-.23 *
- 08
10
06
II
Capital
Expendi lures
I0
- 16
. 0~
S tock
owners hip
- 16
07
26*
. 12
-.02
I ~
- OJ
-.06
-.23 *
Duality
S ize
Long -term
Co mpensati on
.22.
2 1*
-.28 **
-. 14
-.04
• r < .05
.. p < .0 1
••• r < .oo 1
Tab le 2 shows th e mu ltip le regres sion res ults. Mode l I
eva luates onl y the regress ion result s mea suring th e effect o f th e
contro l variables on th e depend ent va ri ab le (s tewa rd ship) . Thi s
allows us to di stin gui sh between th e effec t of th e con tro l and
th e experimental vari ab les o n th e depend ent variabl e. In thi s
model, if th e co ntrol va ri ab les have no exp lanatory power over
th e depend ent vari ab le, th e F stati sti c w ill not be stati st ica ll y
sionifi ca nt Th e res ults for model I show no exp lanatory power
fo~ any of th e control variab les over th e depende nt va ri ab le.
Sim il arl y, th e overal l mode l ' s ex p lanatory power over t he
dependent va ri abl e shows an in signifi can t F of 1.5 8 and an
2
adju sted R of - .04 .
Table 2: Mu ltiple Reg ress ion Results
t\ lode l I
Variabks
Constant
H ig.h order need s
Ex trin sic mo ti vati on
ldelllilicati on
Beta
22 .3 I
9. 13* **
Va lu e co mmitllh.: ll t
Pe rso na l po wer
l ll vo lv..;ment
Cultu re
1\lwcr di .S l1 11 l Ce
Pwli tahi lit y
C apita l e~ pcnclitun.::-.
Stnc h: owne rship
Dualit y
Firm size
Long-{ crm co mpc nsati0 11
Boa rd tenure
Adju sted R2
2.54*
1. 19
1.28
-138
.38
. 15
1 19*
.J 68***
01
() 6 7
-1 OR
() 66
- 68
()I
-0 1
01
-.32
- 09
77
Beta
8 73
09
2.50*
I 68 *
.34
- 1.57
-.37
20
2 I 3*
OJ
-.07
.02
.0 1
19
..J 7
523***
- 73
- 02
- 01
- 1.08
- I 69
76
- I )7
-.45
I 16
-. 18
-O J
- 01
- 62
- 12
1.1 7
-.0 I
- 28
65
- 01
i\ l o dl'l J
i\ lodcl 2
Beta
7.20
.06
.04
- 06
.02
01
20
.J I
0I
- 48
- 04
10
6 29 ***
.54
df
.36
4.53 ***
15
• p < 05
** p < .0 I
... Jl < .0111
M odel 2 eva luates o nl y th e regres sio n res ult s meas urin g th e
ef fec t of th e ex perim ent al va ri ab les on th e depe nd ent va ri ab le.
exc ludin g the effe cts of th e contro l va ri ab les. I f th e
ex perim ental va ri ables have ex p lanatory power· o ver th e
dependent va ri ab le. th e F stati sti c wi ll be stati sti call y
signifi ca nt. We find th at mode l 2 show s good exp lan:1 tory
power of th e ex perim ent al va r·iab les ov er th e dependent
vari ab le, w ith in vo l vement and cultur-e achiev in g stat isti ca l
signifi ca nce. The ove rall mode l 's ex plan atory power over th e
dependent va ri ab le y ielded a stati sti ca ll y signifi ca nt F of 6.29
and an adju sted R 2 of .30 .
vMiab les do not interac t wi th th e ex perim enta l vJri ab les. th en
th e res ults fo un d in m ode l 3 w ill be sim i lar to th ose foun d in
mode l 2 and mode l I . In thi s m ode l, in vo lve m ent and cu ltu re
contin ued to be stati sti ca ll y signifi ca nt , whi le hi gher mde r
needs wa s stJt isti ca ll y signifi ca nt onl y in th is mod el. Th e
ove rall model 's ex plan atory powe r over th e depende nt var iabl e
was simii Jr to tha t o f model 2 , wi th a stati sti cal ly signifi ca nt F
of 4 .53 and an adj usted R 2 of .36 .
W e co nducted hy poth es is tes tin g usin g o ne-ta il ed tests
beca use d irec ti on was predi cted. H ypo th eses 6 and 7 ac hi eved
clea t· suppon in models 2 and 3, whil e hy po th es is I wa s
support ed onl y in model 3. Th us. one of th e fiv e psycho log ica l
and two of th e tlll'ee situ at ional w ere stati sti ca ll y significant. Of
Mode l 3 di sp lays t·csult s f'or th e full model. in clud in g both
groups of contro l and ex perim ent al va ri ab les . I f th e co ntro l
http://scholars.fhsu.edu/jbl/vol3/iss1/6
45
6
I )," "
l 1:111k l o • 1 ~ 1 .
VP III :ilh. alld II III
Davis et al.: AN EMPIRICAL TEST OF STEWARDSHIP
ltHulla l ul ll" " " THEORY
~ ss a11d L~ackrs hip : R cs ~arc h . Practi ce. "" d Teaching
200 7.
lli c psyc ho log ical variab les , (' I ~O s 1 ursuil o r higher orckr
11<.:ed'> ( li ypolli es is
I ) wa s posili ve ly ass oc i:11 cd
w ilh
~ l e wa rd s h ip .
O r lli e SiiU:lli OnaJ V:J r iab lcs, in VO i Ve lllCnl
( li ) pOih es is 6) and c ullurc ( li y polli csis 7) we re posil i ve ly
a ~s oc i a l e d w ill! sl ewa rd ship . Ove r::~ ll , lli c Davi s el al. ( 1997)
slew <lrd sliip model y ielded good exp lallitl ory power, ex plai nin g
hi g hl y sig nifi canl leve ls o l' va ri ancc in models 2 ::~ nd 3 .
Vol. 3 . No I . 40- SO
Dav is, .1 ., Scll oo m1 an, 1:. , & Do naldso n, L. 1997. Tow ard a
Sleward ship
theo r y of manage menl.
Aca d em y of
Ma na ge m eu t Rev iew, 22: 20-47 .
DeA nge lo. I .. 1988 . M nnage ri al co mpelili on, info rm ali on cos ts,
and co rp orate govern ance : T he u e o r acco untin g
perfonn<tii Ce measures in proxy co nl ests. J ournal of
Acco unting and Eco no mics, 10 : 3-36.
llbcu ss iou ami Future Hese an:h
l)a v is el al. ( 1997 ) argued I hal slewa rdship- and ::~ ge n cy­
l(l cuscd rc la1i o nsli ips rcs ull as a ma ier ol' c ho ice bel wec n
ag<:: nl s and pri nc ipals. O ur slud y find s 11i c C EO -repon .::d
a nl cc~.: d c n! s
ror
~ 1 -:: ward s liip
ass oc ia1 ed
wi lh
dircc10r
p c rcc pli o n ~ of' C I:O I) pe, c u n s i ~ l c nl w i11i c.:: II 4 o r I li e Dav is cl
;II ( 199 7) pr in c ipal -1nnnage r cll(li cc model. 1-'1·o1n our rcs u lh ,
we C811 co nc lu de il lil l :1 sleward sli ip-ori enl ed ali gn111 e111
h.:: ! wee n prin c ip<ds :1 11d C I ~ O s ca11 c!\ i ~ l.
l'li c l lndin g~ o r thi s <llll c k :1re -, ig nillc alll i1 1l wo add i1i onal
ilr<:: a'> . 1-'ir ~ l . i11 l cs !in g !li e :1111 eccd.:: nl s o i' <, lcw; Jrcbliip , we
conllnn cd lli al !h ose 1: 1cl<1rs 11 dll c11d be pl· e ~c lll w hen dlrl·C IO I''>
percei ve !hal !li e c 1:0 I'> ;1 '> lew; m l W hil e W dl i< ll mo ll ( 1')~ 5 )
<trg 11 ed 11!:11 011e callll OI kn own u urc w hi ch lll(lll :tgcrs w ill acl
oppn nuni sl ic;ill y ami so agc ncy CO illrols should bc un i vc rsall y
appli cd, l'ra1 1k ( 1 9~X) . () ui1111 :111d Junes ( 1995) . ami IJ ;; i
( 1996 ) pro v ide ar:.- u1nc nh :u1d /o r cv idcncc 10 I li e C\l lllrary . O ur
findin gs show Ili a! d irec l urs percc i vc sl cll':l rd slii p !rail s i11 !li e
C I:O 11 li en I li e C I:O r c p o n ~ psyc ho log ical ami silllali o nal
li 1c1ors co nsisl <.: lll w i11J D av is' cl al. ( 1997) n10dcl.
Seco nd , 1hi ~ sllld y :1 dd s lo prc v iuus rese arch by C111pl oy i11g
'> UI vcy- hasc d d:11:1 p1 o v idcd by boil! dirc c l o r~ and C I : O ~ al lli e
s:un c CQ III J1:1 n) . C orpo ral c go vc m :tn cc rc sc:1rch IS l<tr._:e ly
d n vc n by dal :t <t vai l:thilil ) <1 11d is lli crermc li111il cd i11 il ~
lil'cdi cti ve <thi l il y. Thi s is I ru e u i" prev ious rcsc: 1rc li o i' age ncy
lli eo ry, w hi c h li as bce 11 pl agucd hy in consislc lll llndin gs o vu
11111 e. W e be l ic 1c 111,11 o ur sl ud y ' s ' "'..: o rprim :1ry dal<~ scr vc s as
dll e:-.a mplc or lli c hc nc lll s or usin g pri lllill')' d:ll :l ovc r
sec o nda ry da l:l , prov idin g :1 ~ liiiiU:Ird rur lli c C\l llliuclill g o r
l'11111rc co rp OI':I Ic gm <.: l'llilll Cc rc.'> c:l l·cli
REFEltE NC ES
t\ ld c1lcr. ('
I '> T2
E' istt'l ll'l' , n: l:itnlncs , , :111tl g nm t lr :
Jlnn1<111 lll'l' ti'> in orgilniJ.ation :tl '>t:ll in gs . N..:11 \'t11k l 1cc
Donaldso11 , L ., & Da v is, J. 1989 . CEO governance and
shareholder return s: Agc ucy th eo r y o r stewardship
theory. l)apcr presenl cd al llic ann uii l meetin g of lh e
A ca dem y o r Ma11agern cn1 , W ashin gton, D .C.
l)u mtl chon . L .. & Dav is. J. 199 1. Sl eward ship lheor y or ;~ ge n cy
lli co 1-y:
C I ~O
gove rna nce 8nd shareho lder rclurns.
A uslrali an Journal of Manage m ent , 16 : 49-64 .
l ·cc k s, IC , & No llri:. , N . 1')92. Beyo nd th e hy pe. Boslon:
ll ;u·1<11·d l l u-, ill <:: ss Sc hoo l.
l : i ~c i J h ; lrdl ,
K.
19 8X . A ge ncy- and in stiluli o n:J I-Iheo ry
Th e case
rcl ail sales co mpcnsal ion .
Ac:td<:n1y of 1\'lanagt: rn cnt .lournal , 3 1: 488 -5 11 .
or
cxp l ; u ~;JI I O II S
1:a111 a, I '. & .I ' ~'>e n , M . I 'JS J. Sc p:trali on o f' ownershi p and
CO il lru l. .l our nal
Law & Eco nomic s, 2 6 : 30 1-325 .
or
1:1·ank . 1{ . 1 9~X . l'a ss iou s within reason: T he strat eg ic r ole of
emotions. New York : Norlo 11.
l:ranklo n .:: r. S., Da v is, J ., & Vo ll .-a tli , 1) . _()0 1. W hy impl ement
!li e du ;tl gove rnan ce slruclmc') Mu ch :td o abo ul so melhin o.
Ce nlral Busin ess Review , XX : Ll -9 .
Frencl1 . J., & l{avc n, 13 . I 959 . Th e ba ses or suc ial power . In D.
Ca rl wn ghl , (l: d .), Studies in Social Power. Ann Arbor:
ll ni vc rsi1 y oi" Mi c hi gan , ln slilul e for Soc ial Resea rch.
Frusl . 1) ., & Sl:th c lsk i, t\ . 19XX . Th e sysl clll :tli c nl c:J surclnenl
ui' l:rcncli :tml Ra ve n '~ ha <;cs or soc i:d powe r in
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17~ - 1 X t) .
c; lil'>l lll , .I ' II ,II ICCV ICii .1.. & l )o lln c ll y . .1 . 19') 1.
ll ulll ell uod , II . 11 11' 111
Or~.:a ni za tion s.
I'I'CSS
A l !.!.) l l'> , ( '
1'>7 1 O rg: llll / :l l l<l ll 111 :111 1\ ;III OII :II :1 11d ~..: 11 ,lc!uall l tn g. l'uhlil' t\d miuistration l<ni cw , .11 : 15 "1-357 .
ll ;l cklll:tl l , .I , .\: O ldh :t lll , (; . 1')7(> . Mo ii V<t li <lll lh mu gli lh e
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and llum :lll l'l-rformanrc , i 6 : 25 0-2 79 .
:~nd so 111e co ml ili <> IIS o l'
Ad rn inistrativ e Scit: ncc
ll il l , M , ll o~ kin s o 11 , R., Jol111 son, R., & M oc sc l. D . 1996 . T he
lllilrk cl I( H corp oral <.: corllro l amlll rrn i11n ova 1i on. Academy
of Maua~.:ent e nt .lour nal , 39 : I OX<I - 1 II 0.
I)'A,c n i. R . & Mac l\1ill<i ll , I. 1!)90 . C ri sis and co nl cnl oi'
lli(l ll il ~e ri ; d COilllliiiiii C: II iO II S: A ~ lud y or lhe fOCUS Of
:t ll enlio n o f lOp lll <UI :Jg<.: rS i11 SUrvivin g :IIlli li ti l in g llrr ns.
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ll od gc l ls. R., & Lul ha11S, F. 199 , . U .S. M ullin al iona ls'
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25 : 4 2- ·1 ~ .
IIIOII II ,
1\1 .
l l)(,l)
<ll ·g :~n i ; a l io n.JI
ldcnllli c tll\111
ill vu l vc iii CIII.
Q uartcd y, I ..J : 1 <1 6 - )~5
Published by FHSU Scholars Repository, 2007
7
Dav is. Frankforter. Vo llrath . and Hill
Journal of Business & Leadership (2005-2012),Journal
Vol. 3of[2007],
No. 1, Art. 6
Bu sin ess and Leade rship: Research, Pracri cc. and Teachin g
2007 . Vol. 3. No . t. 40-5 0
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Rev iL'" , 27. '73-39 1
e"
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in the
in stituti o ns
of
James Dllv is is an assoc iate pro fessor o l' rn anagc ment <l t No tre Dame Univers it ), ll'her·e he teac hes bus in es' po li cy and
int ern ati onal bu s in ess . l ie is th e Jam es r . O'S haughn eSS) Cha ir· of Fami l) Ent erpri es a nd scl'l e' as th e direc to r of th e Gigo t
Cent er for Entre preneuri :tl tuJies. li e r(!CC il ed hi s l'h .D. in rll illlagc merll fro rn th e Ll nil crs ity' or 1011'<1 . I lis rese:-Jrch int erests
in clu de ste>va rcl ship th eo r·y and tru st.
http://scholars.fhsu.edu/jbl/vol3/iss1/6
47
8
Davis et al.: AN EMPIRICAL TEST OF STEWARDSHIP
THEORY
Journa l o rnus incss an d Leaders hip : Research . Prac tice. and Teaching
IJ.11 " · Frnnkli >n cr. Vo llrat h. ;mel I till
200 7. Vo l. J. No . I . 40-50
Steve n Fra nkfort er i an il ss ociil te pro fessor at Wi nthrop Un ive rsit y. w here he teaches busin ess po li cy . H e rece ived his Ph .D . in
manage nt cnt from th e Uni versity of Was hin gton. lli s research int eres ts in clu de diversit y , stakeho lder th eory, corporate
gove rn il ncc, and stewardship th eory.
David Vo llrath is a professor o f mannge ment at Indi ana U ni versity South Bend , w here he teaches orga ni za ti o nal behav ior and
bu sin ess ethi cs . li e received his Ph .D. in soc ial psycho logy from th e U ni versit y o f Illin o is (C hampaign-Urbana). His research
int eres ts foc us on group compos iti on, performa nce, and deci sion- mak ing.
Va ness;• Hill is an nss istant professor o f management at Uni versit y of L oui siana, Lafaye tt e, w here she teac hes orga ni zati onal
behav ior and human resource management. he recei ved her Ph .D. in business from Carn egie M ell on U niversit y. Her research
int eres ts in c lu de stakeho lder th eory and bu inc ss ethi cs.
Published by FHSU Scholars Repository, 2007
48
9
Davis. rrankfoner. Vo ll rat h. and Hill Journal
of Business & Leadership (2005-2012),Journal
Vol. 3o f[2007],
Art.rship
6
13usin.:ssNo.
and 1,
Leade
Resea rch. Practi ce. and Teach111 g
2007 . Vol J . No I. 40-50
Appendix A
Sc ales
Depe ndent Variable (An s\\ ercd b) directo" )
Please indi cate yo ur reac ti on to each o f the fo ll ow in g statement s
Strongly
Di sagree
Strong.!)
Agree
Steward ship
I.
M y s trategic initialt vcs serve th e co mpa n) 's inte res ts
u
2.
My hudget initi ati ves serve the co mpan J 's interests
SD
SD
J.
f\1 y initiatives rcgn rdin g Ill ) p o ,H.: r and authori t) s en c the Cll lllp ll ll ) 's int c 1 c-,~.:-.
SD
I)
u
4.
My initiati ves rega rd ing my pe t!..: ' '\c rv c the
I)
5.
I prov ide aclcqu(lt c. tim ~ l y co mp;Hl ) ttli {Hm :ll tCHl to ho;~rd dtt\:C tOr'\
\I)
S l)
lJ
ll
co mp i ll l) \
tll! C t c ~ t ~
D
I)
I)
A
SA
SA
S ;\
\
S 1\
A
S!\
A
A
llllkpcnJ cnt Van :d1lcs (A'""c rcd b) l" l (h)
Please es tim ate how important each item is to yo u
NOT
Im portant
VERY
Im portant
~trongl~
Strong!)
D1 sag.rc:L·
t\ greL'
High Order Needs
I. Exceeding hoard expectati ons of you
2. The challenge of the work itsc l f
3. Seei ng the results o f yo ur wo rk
4. Your findin g a so luti on to a problem
5.
Y our agreement with compan y va lues
6.
7.
8.
Your agreement with board interests
Increas in g company va lu e
Your bein g a co mp any t ea m -p l ay ~ r
9.
Performan ce is on par w ith
mana g~ r s
in similar si tu :1ti ons
10. Your loya lt y to the co mpany
Extrinsic Motivation
I. Recogniti on fo r yo ur success
2. Your status within the co mpan y
3. Your j ob securit y
4. Wages whi ch co mpare favo rabl y wi th others doin g sim i1M or same j ob
5. R~ s pec t and re cogniti on from out side the co mpany lo r yo ur "ork
6. Amount of yo ur salar)
7. Opportunit y lo r yo ur advan cement
8. Rece ivi ng prai se from th e b o:~rcl lo r a .i <' h well cl one
9.
Yo ur pcrso nCJ I eco nomi c
gr~ in
ldcntilication
I. The longer I sta y with thi s orga ni zati on. th e harlk r it is to b n c
2. It wou ld be dirti cult lo r me to adapt to a nc·w orga ni za ti on
3. I wo uld give up a lot by lea ving thi s orga 1tizati on
4. I would be wil lin g to stay wit h thi s orga ni n ti on until I retire
5. If I dec ided to leave thi s organi zati on. it would be dirti cultt o C\p lai n to Ill )
fri ends and famil y
6. Man y chan ges wo uld have to occur in 111 ) present c ircumstan ces to ca use
SD
SD
I)
u
u
SD
D
u
so
so
so
I)
SA
I)
u
!\
!\
!\
;\
0
ll
A
SA
SA
I)
ll
!\
s,,
I)
u
u
!\
SA
SA
I)
SA
SA
me to leave thi s orga ni u ni on
Value Co mmitment
I. My va lues and th e organi zati on's va lu es arc very s imil ar
I am willin g to put in a great deal or c11ort beyond th at norm all ) ex pected
in order to help thi s organi zati on be succe>s ful
3. Thi s orga ni zati on inspires my hcstj ob pcr lo nn ance
SD
SD
2.
4.
I usuall y agree with thi s orga ni zati on's
p o l i c i ~s
SD
on important perso nn el mn ttcrs
I c ar~ about the fat e of thi s orga nizati on
I tell my fri end s that thi s orga ni zati on i> a good pl ace to '""'
7. Thi s is one o f th e bes t o f all orga ni zatio ns lo r" hich to 11 0rl8. I am glad I chose th is organi za ti on to "or!- fo r ove r otkrs I was co nsideri ng
at the tim e I j o ined
9. I am proud to tell others th at I am part o f thi > orga nir.Hi on
10. I el l> not intend to k <tvc th is o rga ni ;_..1 tio n in th e fo re ~e \!abk: future
5.
6.
Please estimate ho w ofl L:n ) ou used each heh ::n ior to
http://scholars.fhsu.edu/jbl/vol3/iss1/6
c\c.TC ISC:
I)
A
so
ll
u
A
SA
0
SA
SD
I)
ll
A
A
SD
I)
so
so
u
I)
D
Ll
Ll
,,,,
,,
SD
SD
I)
ll
ll
A
:0, •\
!\
St\
I)
SA
SA
';/\
S.·\
control ()\ er ) our subordinat es.
49
10
Davi s. Frank fo rter. Vollrath . and HillDavis
et al.: AN EMPIRICAL TEST OF STEWARDSHIP
THEORY
Journal of Business
and Leadership : Research, Practice. and Teaching
2007. VoL 3. No . I. 40-SO
Otien
Se ldom
P ~rsona l
Po wer
Pro mote them or reco1nmend the1n lor pro motion
2.
Re commend th em fOr l\wa rd s or co mmendati on
Give th em hi gh I"K::i iOnn ancc ril tin gs
Prai se th em
Give th em ex tra time off
Adv ise and ass ist them
Give them good ass ignments
Rel y on his/her good relations with th em to get the job done
9. Rel y on his/her people gettin g the job done because they do beca use they don' t
want to let him/ her down
I0. Set the exa mple and rel y upon hi s/her peo ple to lo ll ow hi s/her example
II . Rely on them thinking that it's to their advant age as much as it is to his/her to r
them to cooperate with him/her
4.
('7.
8.
4
4
Power Distan ce
I. Demote them or reco mmend th em lo r demoti on
2. Reco mm end th em lo r di sciplin ary acti on or repr im ands
J. G i ve th em lo w perform ance ratin gs
4. Chew tl1 em out
5. Give th em ex tra wo rk as puni shmc111
(,
Let tl1 em know th at I have th e ri ght to ex pec t to have my orders fo ll owe d
7. Expec t th at my orders and requ ests will be carri ed out because I am the
boss and th ey will not ques ti on an ord er from a supai or
Fxpec t them to fo ll ow my orders beca use th ey rea li ze th at I probab ly ha ve
inform at ion they don't have and therefO re a good reaso n for iss uin g (lil Y order
9.
Ge t them to acco mpl ish th e wo rk by demonstrating th at I know how to
perlilrm th e task
I0 Impress them with my overall w mpcten cc And ab ilit y
I I Make on th e sp0t co rrect lOllS
12. Gi ve th em had assignm ent s
Pleas«.: indi cate yo ur
re~1 c t io n
to each i.) r the 1t1 ll owin g s t ~lt ~; IJ l e nt s .
Stron gly
Di sagree
Strongly .
Agree
111\'0 I VC IIIl' rtl
2.
J.
Within
spends
Within
Wit hin
a year. the hoard will beco me more in volved in how the co mp any
money (R)
a ycQr. the iJOQrd wi ll beco me more in vo lve d wi th my deci sions. (R)
a yea r. the boa rd will act to promote ri skier strateg ic dec isions. (R)
SD
D
u
A
SA
SD
SD
D
D
u
u
A
A
SA
SA
SD
SD
SD
SD
D
D
D
u
u
u
u
A
A
A
A
SA
SA
SA
SA
D
u
A
SA
C ulture
I
2.
J.
The
The
Th e
The
board
boa rd
hoard
hoa rd
sees my initi ati ves QS credi ble Qnd attra cti ve
generall y acce pts or complies with my initiati ves
reli cs on tru st more than on mechani sms to co ntrol me
wk es a long-t erm more th an a short -term view of its relati onship
I)
wi lh rn c
Within a year. th e boa rd will not change my pc>wcr an d Qutl lOr it y
SD
(R) = It em is reve rse-scaled
Published by FHSU Scholars Repository, 2007
50
11