IDEAS home Printed from
   My bibliography  Save this article

An Empirical Exploration of Decision-making Under Agency Controls and Stewardship Structure


  • Henry L. Tosi
  • Amy L. Brownlee
  • Paula Silva
  • Jeffrey P. Katz


Two theories have emerged in the managerial control literature as to the best way for organizations to ensure that managers are acting in the firm's best interest: agency theory, which stresses controlling decision-makers through monitoring and incentives aligned with organizational goals, and stewardship theory, which stresses that decision-makers will act in the organization's best interest even in the absence of controls. Much of the research investigating the utility of these two positions is based on archival data where actual decision-making can only be inferred. In this study, we utilize a laboratory methodology in order to determine if decision-makers actually make different decisions when under the types of control (or lack thereof) suggested in these two theories. The results of this study show that individuals under agency controls invest more in alternatives that maximize profits of an organization than individuals under stewardship controls. Copyright 2003 Blackwell Publishing Ltd..

Suggested Citation

  • Henry L. Tosi & Amy L. Brownlee & Paula Silva & Jeffrey P. Katz, 2003. "An Empirical Exploration of Decision-making Under Agency Controls and Stewardship Structure," Journal of Management Studies, Wiley Blackwell, vol. 40(8), pages 2053-2071, December.
  • Handle: RePEc:bla:jomstd:v:40:y:2003:i:8:p:2053-2071

    Download full text from publisher

    File URL:
    File Function: link to full text
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    1. Timothy J. Feddersen & Thomas W. Gilligan, 2001. "Saints and Markets: Activists and the Supply of Credence Goods," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 10(1), pages 149-171, March.
    2. Teoh, Siew Hong & Welch, Ivo & Wazzan, C Paul, 1999. "The Effect of Socially Activist Investment Policies on the Financial Markets: Evidence from the South African Boycott," The Journal of Business, University of Chicago Press, vol. 72(1), pages 35-89, January.
    3. Heidrun C. Hoppe & Ulrich Lehmann-Grube, 2001. "Second-Mover Advantages in Dynamic Quality Competition," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 10(3), pages 419-433, September.
    4. Baron, David P., 2001. "Private Politics," Research Papers 1689, Stanford University, Graduate School of Business.
    5. Catherine M. Paul & Donald Siegel, 2006. "Corporate social responsibility and economic performance," Journal of Productivity Analysis, Springer, vol. 26(3), pages 207-211, December.
    6. John M. Abowd & George T. Milkovich & John M. Hannon, 1990. "The Effects of Human Resource Management Decisions on Shareholder Value," ILR Review, Cornell University, ILR School, vol. 43(3), pages 203-2-236-, April.
    7. Mark Bagnoli & Susan G. Watts, 2003. "Selling to Socially Responsible Consumers: Competition and The Private Provision of Public Goods," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 12(3), pages 419-445, September.
    8. Abagail McWilliams & Donald S. Siegel & Patrick M. Wright, 2006. "Corporate Social Responsibility: International Perspectives," Rensselaer Working Papers in Economics 0604, Rensselaer Polytechnic Institute, Department of Economics.
    9. Abagail McWilliams, 2002. "Raising Rivals' Costs Through Political Strategy: An Extension of Resource-based Theory," Journal of Management Studies, Wiley Blackwell, vol. 39(5), pages 707-724, July.
    10. David A. Waldman & Donald S. Siegel & Mansour Javidan, 2004. "CEO Transformational Leadership and Corporate Social Responsibility," Rensselaer Working Papers in Economics 0415, Rensselaer Polytechnic Institute, Department of Economics.
    11. Marvel, Howard P, 1977. "Factory Regulation: A Reinterpretation of Early English Experience," Journal of Law and Economics, University of Chicago Press, vol. 20(2), pages 379-402, October.
    12. Judith F. Posnikoff, 1997. "Disinvestment From South Africa: They Did Well By Doing Good," Contemporary Economic Policy, Western Economic Association International, vol. 15(1), pages 76-86, January.
    Full references (including those not matched with items on IDEAS)


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Pursey P. M. A. R. Heugens & J. A. (Jordan) Otten, 2007. "Beyond the Dichotomous Worlds Hypothesis: towards a plurality of corporate governance logics," Corporate Governance: An International Review, Wiley Blackwell, vol. 15(6), pages 1288-1300, November.
    2. Astrachan, Joseph H., 2010. "Strategy in family business: Toward a multidimensional research agenda," Journal of Family Business Strategy, Elsevier, vol. 1(1), pages 6-14, March.
    3. Pieper, Torsten M., 2010. "Non solus: Toward a psychology of family business," Journal of Family Business Strategy, Elsevier, vol. 1(1), pages 26-39, March.
    4. Yan, Yanni & Chong, Chan Yan & Mak, Simon, 2010. "An exploration of managerial discretion and its impact on firm performance: Task autonomy, contractual control, and compensation," International Business Review, Elsevier, vol. 19(6), pages 521-530, December.
    5. Chrisman, James J. & Chua, Jess H. & Kellermanns, Franz W. & Chang, Erick P.C., 2007. "Are family managers agents or stewards? An exploratory study in privately held family firms," Journal of Business Research, Elsevier, vol. 60(10), pages 1030-1038, October.
    6. Majdi Anwar Quttainah, 2011. "Do Islamic Banks Employ Less Earnings Management?," Working Papers 645, Economic Research Forum, revised 10 Jan 2011.
    7. Sebastian Goebel & Barbara E. Wei├čenberger, 2017. "Effects of management control mechanisms: towards a more comprehensive analysis," Journal of Business Economics, Springer, vol. 87(2), pages 185-219, February.
    8. Patrick Velte, 2010. "Stewardship-Theorie," Metrika: International Journal for Theoretical and Applied Statistics, Springer, vol. 20(3), pages 285-293, April.

    More about this item


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:jomstd:v:40:y:2003:i:8:p:2053-2071. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing) or (Christopher F. Baum). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.