Editorial

Entrepreneurship Theory and Practice

Stewardship Theory: 2019, Vol. 43(6) 1051–1066
© The Author(s) 2019

Realism, Relevance, and Article reuse guidelines:

​sagepub.​com/​journals-​permissions

Family Firm Governance DOI: 10.1177/1042258719838472

​journals.​sagepub.​com/​home/​etp

James J. Chrisman1,2

Abstract
Stewardship theory is a popular alternative to agency theory for studying family firm governance.
Despite its contributions to management and family business studies, stewardship theory’s as-
sumptions limit its realism and relevance. Using agency theory as a standard of comparison, I
discuss stewardship theory’s model of man and its assumptions concerning goal alignment and
control systems. I also discuss stewardship theory’s lack of assumptions about bounded ratio-
nality and pre-employment situations since the neglect of those issues reduce its realism and
relevance. Based on this discussion, I argue that to increase its realism and relevance, steward-
ship theory’s assumptions should be revised.

Keywords
family business, stewardship

This editorial discusses the realism and relevance of stewardship theory, which is a popular alter-
native to agency theory for studying family firm governance (Madison, Holt, Kellermanns, &
Ranft, 2016). According to Davis, Schoorman, and Donaldson (1997) stewardship theory
assumes that individuals seek to fulfill higher order needs through pro-organizational behavior
and thus will naturally align their interests with those of the organization (and therefore its prin-
cipals). Those authors argue that “even where the interests of the steward and the principal are
not aligned, the steward places higher value on cooperation than defection” (Davis et al., 1997,
p. 24). By contrast, Davis et al. suggest agency theory assumes individuals are self-interested and
will behave opportunistically when their interests diverge from those of principals. Since Davis
et al. recognize that opportunism does not always follow from conflicts of interest, they propose
stewardship theory as an alternative to overcome the limitations of agency theory.
When developing theory it is important that the assumptions made about human nature are
sound (Whetten, 1989) and lead to realistic and relevant depictions of human and organizational
behavior (cf., Bacharach, 1989; McKelvey, 1997; Thomas & Tymon, 1982). Therefore, to the
extent that agency theory distorts reality or leads to questions and answers that are not relevant
to organizational decision makers, stewardship theory is a useful addition to the literature.

1
Department of Management & Information Systems, Mississippi State University, MS, USA
2
Centre for Entrepreneurship and Family Enterprise, University of Alberta, Edmonton, Canada

Corresponding Author:
James J. Chrisman, College of Business, Mississippi State, MS 39762-9581, USA.
Email: jchrisman@business.msstate.edu
1052 Entrepreneurship Theory and Practice 43(6)

Indeed, a recent editorial by Wiklund, Wright, and Zahra (2018) suggests that entrepreneurship
research needs to become more relevant. They view relevance in terms of asking and investigat-
ing research questions that are meaningful to practice; by contrast in the current editorial I focus
on relevance in terms of making realistic assumptions about human and organizational behavior
so that the answers to the questions asked can more effectively contribute to improvements in
management practice and firm performance. The main argument of this editorial is that regard-
less of the shortcomings of agency theory, stewardship theory also has serious shortcomings
because its assumptions are equally unrealistic and are incomplete as well. Thus, although I
agree with many aspects of stewardship theory and applaud the work of stewardship theorists,
particularly Davis et al. (1997) and Hernandez (2012), I believe that further work can make stew-
ardship theory’s assumptions more realistic and relevant.
A brief review of the major tenets of stewardship theory as specified by its leading proponents
in management (Davis et al., 1997; Hernandez, 2012) and family business (e.g., Corbetta &
Salvato, 2004) set the stage for the discussion. First, as suggested above, stewardship theory
relies on a model of man that describes people as self-actualizing and other-serving rather than
self-interested and self-serving. Second, when people hold these attitudes, stewardship theory
assumes they will subsume personal interests to those of the principal, placing higher utility on
organizational goals than on individual goals. Third, because the goals of individuals are pre-
sumed to already be aligned with those of owners and/or the organization, stewardship theory
assumes that the use of formal controls such as monitoring and incentive compensation systems
are unnecessary and potentially counterproductive.
In response, I contend that stewardship theory’s model of man does not realistically depict the
way individuals think and behave; its assumptions regarding goals do not full capture the multi-
ple, heterogeneous, and conflicting goals of organizational stakeholders; and its dismissal of
monitoring and incentives overlooks the value of these mechanisms for communication and
motivation. Thus, I argue that rather than treating stewardship theory as an alternative to agency
theory, it would be better to consider how the two theories can be combined using a more realistic
set of assumptions (Madison et al., 2016). Interestingly, Davis et al. (1997) make a number of the
same points that I will make in this editorial but, unfortunately do not carry those insights far
enough. As a consequence, researchers seem to have forgotten the qualifications Davis et al.
carefully inserted into their work in favor of an unadulterated interpretation. This has led scholars
to treat the two theories as opposites rather than as two parts of the same whole. In this respect,
my views are closer to those of Hernandez (2012, p. 185) who views agency theory and steward-
ship theory as two ends of a continuum. However, even her views do not fully capture my con-
tentions that self-interest and other-interest coexist and influence the behavior of every individual
to varying degrees depending upon personality and circumstances, and that the assumptions and
mechanisms of agency and stewardship theory are both important for organizational governance.
Indeed, these contingencies are already discussed in Davis et al.’s seminal article.
I further contend that these considerations are particularly pertinent to family firm gover-
nance. First, family owners may display bifurcation bias in their supervision of family and non-
family members (Verbeke & Kano, 2012), sometimes treating family members altruistically
(Schulze, Lubatkin, Dino, & Buchholtz, 2001), and sometimes treating nonfamily members with
suspicion (Madison, Daspit, Turner, & Kellermanns, 2018). How family and nonfamily members
are treated can sow the seeds of stewardship or agency (cf., Le Breton-Miller & Miller, 2009;
Miller & Le Breton-Miller, 2006). Second, family owners are presumed to pursue family-cen-
tered noneconomic goals (Chrisman, Chua, Pearson, & Barnett, 2012) that generate socioemo-
tional wealth (Gómez-Mejía, Haynes, Núñez-Nickel, Jacobson, & Moyano-Fuentes, 2007),
which some suggest are more conducive to the behaviors of stewards than agents (e.g., Corbetta
& Salvato, 2004) but which I argue make the tasks of interest alignment more, rather than less
Chrisman 1053

difficult. Third, family firms are less likely to professionalize than nonfamily firms, suggesting
that they will, among other things, impose fewer formal controls on organizational members
(Stewart & Hitt, 2012), thus providing a natural laboratory to investigate many of the precepts of
stewardship theory. On the other hand, the lack of professionalization that typically accompanies
an absence of control or coordination mechanisms is often considered a primary weakness of
family firms (cf., Chua, Chrisman, & Bergiel, 2009; Gedajlovic & Carney, 2010). Consequently,
modifying the limiting assumptions of stewardship theory (and agency theory as well) may be
even more relevant to the study of family firms than to the study of nonfamily firms.
In addition, stewardship theory does not include assumptions regarding the ability of individ-
uals to access and process information (bounded rationality) nor about pre-employment consid-
erations, both of which are dealt with in agency theory and can influence the extent to which
individuals will behave as organizational stewards.1 The discussions about the relationships
among individuals in an organization found in the stewardship literature implicitly suggest that
shared leadership, collective responsibility, and intrinsic rewards will allow pro-organizational
individuals to both navigate and overcome bounded rationality and information asymmetry prob-
lems and to naturally align their interests to the organization once they become part of it.
Unfortunately, given that individuals are neither omnipotent nor likely to be perfect stewards (or
agents) before or after joining an organization, stewardship theory will be improved by incorpo-
rating assumptions about bounded rationality and pre-employment considerations into its bound-
aries. Again, these issues are of particular relevance to family firms, which possess broader and
more complex goal sets, suffer from natural fault lines and barriers between family and nonfam-
ily stakeholders, as well as between branches and generations of a family, and are thought to
suffer from managerial capacity constraints owing to difficulties in obtaining enough high-qual-
ity family and nonfamily managers to effectively manage the firm (e.g., Carney, 2005).
This editorial discusses each of these aspects of stewardship theory with the aim of identify-
ing areas where the realism and relevance of its assumptions can be improved. I focus primarily
on the stewardship of managers rather than of owners (cf., Le Breton-Miller & Miller, 2009)
since that was the unit of analysis of the two principle works on stewardship theory in the man-
agement literature (Davis et al., 1997; Hernandez, 2012). Furthermore, if markets are reasonably
efficient, owners will themselves bear much of the costs of opportunistic behavior (Jensen &
Meckling, 1976). Thus, at least in the long term, the interests of owners and the organization
should usually be aligned, with deviations representing either a problem of self-control (cf.,
Thaler & Shefrin, 1981; Jensen, 1994), or a conflict among owners (La Porta, Lopez-De-Silanes,
& Shleifer, 1999) with different views of the organization and its interests.
To provide context, I compare stewardship theory with agency theory (Jensen & Meckling,
1976) and support my arguments where necessary using empirical research devoted to the sub-
ject. However, some of the problems of stewardship theory also apply to agency theory and I do
not attempt a full review of the stewardship literature (see Madison et al., 2016). Where possible,
I will offer suggestions on how to increase the realism and relevance of stewardship theory.
Given the growing use of and interest in stewardship theory, such improvements should increase
the contributions of the theory to the management and family business literatures.

Assumptions of Stewardship Theory

I deal first with the realism and relevance of stewardship theory’s assumptions concerning mod-
els of man, goals, and control systems. I then comment on the need to expand the boundaries of
stewardship theory to incorporate appropriate assumptions about the limits of humans’ ability to
reason and communicate, as well as the importance of pre-employment considerations that are
essential for stewardship governance to emerge and function.
1054 Entrepreneurship Theory and Practice 43(6)

Model of Man
The assumptions of stewardship theory flow to a large extent from the model of man underlying
the theory and which are contrasted with the model of man claimed to be the basis for agency
theory. Therefore, I begin by discussing the realism and relevance of both models as depictions
of human nature and behavior. Stewardship theorists characterize the agency theoretic assump-
tion of self-interest as extreme (e.g., Hernandez, 2012), partially because it is supposed that
opportunistic behavior invariably follows from the pursuit of self-interest. However, Jensen and
Meckling (1976, p. 308, italics added) actually argue that “If both parties to the [agency] relation-
ship are utility maximizers there is good reason to believe that the agent will not always act in the
best interests of the principal.” This statement suggests that agency theory is not based on an
extreme characterization of human nature but rather a characterization that acknowledges that
individuals may or may not behave opportunistically. In fact, Davis et al. (1997, p. 23) note as
much in their development of stewardship theory.
In work initially written in the early 1970s but published two decades later, Jensen and
Meckling (1994) clearly reject the economic model of man that stewardship theorists claim is at
the root of agency theory (e.g., Davis et al., 1997) in favor of the Resourceful, Evaluative,
Maximizing Model (REMM) of man where people care about many things (money being but
one), have preferences and unlimited wants, make trade-offs, act to maximize satisfactions based
on these trade-offs, and are resourceful. Jensen (1994) also points out that self-interest is not
necessarily inconsistent with other-interests and that people respond to incentives of all types,
not just money. In other words, the REMM model allows for self-interested and other-interested
behavior and therefore does not appear to portray man as purely selfish or opportunistic.
But whether or not one believes agency theory to be based on an extreme and unrealistic por-
trayal of human behavior, it is difficult to argue that stewardship theory is not also based on an
extreme portrayal of human behavior. This is problematic because neither extreme is realistic. A
quote, often attributed (some claim wrongly) to Abraham Lincoln captures the argument: “You
can fool some of the people all of the time and all of the people some of the time, but you cannot
fool all of the people all of the time.” Put differently, it is highly unlikely that pure agents and
pure stewards exist, making any assumption based on that notion unrealistic and irrelevant to
organizational governance. Instead, I argue that most people behave, to varying degrees as
self-interested (and potentially opportunistic) agents and other-interested stewards. I further sug-
gest that whether individuals behave as one or the other is likely to vary according to the situation
and over time. Indeed, as stewardship theorists remind us (e.g., Davis et al., 1997; Hernandez,
2012), the tendency of individuals to behave in either way can be influenced by the management
philosophies of principals (e.g., risk orientation; time frame considered; objectives), psycholog-
ical mechanisms within individuals (e.g., reward motivations; identification; use of power), and
situational mechanisms within organizations and societies (e.g., cultural differences such as
power distance and individualism/collectivism). Likewise, how individuals behave can also
influence the organizational environment for good or ill. The discussion of altruism and bifurca-
tion bias in the literature are examples of causes and potential effects of such attitudes and behav-
iors in family firms (Schulze et al., 2001; Verbeke & Kano, 2012).
The importance of these observations are as follows. If there are no (or very few) perfect
agents or perfect stewards then governance systems designed with the idea that the organization
is entirely composed of one or the other will experience difficulties.2 For example, Davis et al.
(1997) present a 2 × 2 matrix of possibilities that represent likely behavioral and performance
outcomes based on whether owners and managers both choose an agency or stewardship rela-
tionship or choose the opposite relationship from one another. As they suggest, only when both
parties choose a stewardship relationship will stewardship endure. However, the problem here is
Chrisman 1055

that an organization is likely, if not certainly, to be composed of stewards and agents, and that
steward and/or agency relationships can exist at any organizational level (cf., Child & Rodrigues,
2003; Jensen & Meckling, 1976).
In this regard, the realism and relevance of stewardship theory is particularly challenged
because if the entire organization is not composed of perfect stewards then the situation must, by
definition, devolve to that captured in agency theory, which is built on the possibility that at least
some managers will behave opportunistically at least some of the time. Indeed, Hernandez (2012,
p. 183) discusses a case “that illustrates how short-lived stewardship behaviors can be if they are
not displayed across the entire organization.” She goes on to suggest that a “systematic change
of governance from agency toward stewardship may require a paradigm shift in how obligations
are defined and upheld within a social context.” What this means of course is that stewardship
theory’s model of man is an unrealistic theoretical representation of individuals and an unrealis-
tic representation of organizational governance.
One of the most important contributions of stewardship theory is to remind us that individuals
are not all or wholly motivated by money or coercive control. It is thus ironic that stewardship
theorists seem to want to replace what they perceive as an absolutist view of human nature with
another absolutist view where individuals are perfect stewards. More importantly, since the atti-
tudes and behaviors of individuals are heterogeneous and situationally influenced (which also
means they can change over time), stewardship governance is likely to be more problematic than
agency governance because stewardship governance as originally suggested by stewardship the-
orists such as Davis et al. (1997) will have few, if any incentive or control systems and therefore
will have trouble detecting, let alone correcting, defections. At the very least, the presence of
agents in a firm may influence the behavior of stewards in potentially negative ways (cf., Kidwell,
Kellermanns, & Eddleston, 2012). This may be why Hernandez’s (2012) recent stewardship
model includes relational control and intrinsic reward systems and why Ghoshal and Moran
(1996) acknowledge that opportunism exists and that organizations need controls. Indeed,
although stewards may have intrinsic motives for their actions, this does not mean that these
actions will automatically or inherently align with the interests of principals or each other in the
absence of direction and feedback.
In summary, the model of man purported to underlie agency theory is a caricature, as is the
model of man that underlies stewardship theory; both are unrealistic. Thus, a model of man that
better captures the confluence of self-interested and other-interested motivations of family own-
ers, managers, and employees (both family and nonfamily) is needed. At this point, owing to
propensities toward altruism, bifurcation bias, preservation of SEW, and family conflicts that
exist in varying degrees among heterogeneous family firms, I suggest that the REMM model
(Jensen & Meckling, 1994) might be a useful alternative to the unrealistic models currently asso-
ciated with stewardship theory and agency theory.

Goals and Goal Alignment

The primary focus of stewardship theory, as well as agency theory, is to understand how human
beings can be motivated to contribute to the achievement of the goals of organizational princi-
pals. A major assumption of stewardship theory is that individuals who behave as stewards will
align their interests with those of principals. Davis et al. (1997, p. 25) suggest that the organiza-
tion is the principal whereas Hernandez (2012, pp. 175 and 183) argues that the steward picks a
principal, whether it be owners, top managers, organizations, stakeholders in general, or a partic-
ular stakeholder group. Even if one subscribes to the notion that organizations (e.g., Lan &
Heracleous, 2010), as opposed to individuals (e.g., Cyert & March, 1963; Jensen & Meckling,
1976) have goals, it is still necessary to specify those goals, and the goals of those who do the
1056 Entrepreneurship Theory and Practice 43(6)

specifying are not always in alignment and must be negotiated (Cyert & March, 1963).
Furthermore, even an individual can have conflicting goals such as when self-control problems
cause short term and long term interests to diverge (cf., Jensen, 1994; Le Breton-Miller & Miller,
2011; Thaler & Shefrin, 1981).
Davis et al. (1997) propose a solution to the problem of multiple, conflicting goals by arguing
that pro-organizational stewards will be motivated to maximize organizational performance
since that should satisfy most shareholders (and presumably most stakeholders). However, this
does not fully reflect the interests of either principals or stewards. Indeed, if goals are more com-
plex and diverse than performance maximization, the possibility exists that an individual could
be steward from the perspective of one principal and an agent from the perspective of another.
Similarly, since the dominant coalitions in organizations actually do have multiple, often con-
flicting goals (Cyert & March, 1963), an individual could be a steward with respect to the
achievement of one goal and an agent with respect to the achievement of another. Equally con-
fusing from a stewardship perspective, is that among any two individuals, one could be a steward
for one principal and therefore, an agent for another, while the other individual could have rela-
tionships with the two principals that are exactly the opposite. As should be apparent, this prob-
lem is greater if one subscribes to Hernandez’s conception of stewardship theory but it is not
eliminated if one subscribes to Davis et al.’s conception.
The problems of identifying the principal, the potential conflicts among principals, and the
multiplicity of goals that are possible is of special significance to family firms because family
owners are thought to pursue noneconomic goals. This reduces the relevance and realism of
Davis et al.'s (1997) conception of stewardship theory, which has received the most traction in
the family business literature. Since noneconomic goals do not necessarily contribute to the
organization or to nonfamily stakeholders, problems of goal alignment can become magnified for
employees wishing to behave as stewards, because they may be uncertain whose goals or what
goals to follow. As Schulze et al. (2001) point out, the problem of aligning the economic interests
of owners (e.g., whether to use cash flows for reinvestment or to pay dividends) is not trivial but
the problem of aligning noneconomic interests is even more challenging, partially because such
interests are not necessarily fungible and therefore more difficult to calibrate. For example, fig-
uring out how much family harmony is worth is not easy; figuring out the relative value of family
harmony and a family’s reputation is harder still, especially when they come into conflict (cf.,
Vardaman & Gondo, 2014). It does not take much imagination to envision situations where
financial returns, family harmony, family reputation,(and other family-centered noneconomic
goals are valued differently by different family owners or family ownership factions, particularly
when they come in conflict.
Thus, for the purpose of realism and relevance, greater clarity on the identity of the principal
and what goals are germane are problems that stewardship theory (and agency theory) needs to
confront, particularly when used to study family firms. The work of Chua, Chrisman, De Massis,
and Wang (2018) on the relationship among goals and performance in family firms, combined
with the already established concept of SEW (e.g., Gómez-Mejía et al., 2007), may provide a
starting point for dealing with this issue.

Control Systems
Assumptions regarding the types and use of control systems not only represent a major point of
contention between stewardship theory and agency theory but also represent the area where the
assumptions of stewardship theory are the least realistic and relevant. Hernandez (2012) suggests
stewardship governance would include control systems that use shared leadership practices to
promote relational collaborations and encourage collective responsibility for work outcomes
Chrisman 1057

among employees.3 She also advocates reward systems that focus on intrinsic benefits and
employee development. Her arguments represent an advance to stewardship theory and are con-
sistent with Ghoshal and Moran’s (1996) earlier call for the use of social controls rather than
rational controls in their critique of transaction cost theory.4 In any event, it is clear that steward-
ship theorists are opposed to the standard monitoring and incentive mechanisms proposed by
agency theory as a way to align interests. Davis et al. (1997, p. 25) state that “control can be
potentially counterproductive, because it undermines the pro-organizational behavior of the
steward, by lowering his or her motivation.” Corbetta and Salvato (2004, p. 360) take a more
extreme stance when they assert: “Stewardship theory suggests that any form of direct or indirect
control may lower stewards’ motivation, negatively affecting their pro-organizational behavior,
both in the short and in the long term.” As goals themselves provides control over ends, by defi-
nition, Corbetta and Salvato’s interpretation highlights a potential inconsistency in stewardship
theory that unrealistically restricts its further development. Put differently, why would stewards
align themselves with the goals of principals if goals are a form of control and control is demo-
tivating? Furthermore, given that other organizational mechanisms such as standard operating
procedures are an indirect form of monitoring that control individuals’ discretion to make deci-
sions about means (cf., Cyert & March, 1963, p. 113), it is doubtful if organizations can long
exist without methods of control to coordinate actions toward the achievement of goals.

Level of controls. It is unrealistic to assume that just because an organization engages in monitor-
ing that the monitoring is excessive or coercive. If monitoring is not done in a way that is heavy-
handed or biased, it becomes more difficult to understand how it would be demotivating.5 For
example, as Chua, Chrisman, and Bergiel’s (2009) point out, a precept of agency theory is that
an organization will (should) invest in monitoring and incentive systems up to the point where
their marginal benefits are just equal to their marginal costs. In practical terms, this might repre-
sent a level of control that is in alignment with managers’ or employees’ “zone of acceptance”
(Simon, 1947). In fact, as Davis et al. (1997, p. 23) note, agency theory is based on the idea that
authority is being delegated, which suggests that managers are permitted some degree of latitude;
otherwise, there would be little need for managers and little need for agency theory or steward-
ship theory.
Unfortunately, studies comparing the efficacy of agency and stewardship governance often
distinguish between the two based on degrees of autonomy and empowerment (e.g., James,
Jennings, & Jennings, 2017), with the assumption that agency governance involves intrusive
supervision. However, other than specifying that marginal costs should not exceed marginal
benefits, agency theory does not stipulate the level of monitoring that should be used. Indeed,
excessive governance of any type can have negative consequences. For example, a study of fam-
ily-owned newspapers in Spain suggests relational governance can lead to managerial entrench-
ment (Gomez-Mejia, Nunez-Nickel, & Gutierrez, 2001) and a study of family firms in the
Southeastern United States suggests that unproductive “agent” behavior is highest under low
agency/high stewardship governance structures, whereas performance is highest when both high
levels of agency and stewardship governance coexist (Madison, Kellermanns, & Munyon, 2017).

Controls at different levels. Furthermore, although Jensen and Meckling (1976) foresaw the rele-
vance of the double-agency problems that exist among individuals at different organizational
levels (e.g., Child & Rodrigues, 2003), it is not always clear if stewardship theorists and agency
theorists are dealing with problems that occur in the same or different parts of the organization.
For example, Davis et al.’s discussion of situational factors (Davis et al. 1997, pp. 32–38) and
Hernandez’s discussion of stewardship antecedents (Hernandez, 2012, pp. 176–186) seem to be
more applicable to relationships among managers at different levels and between managers and
1058 Entrepreneurship Theory and Practice 43(6)

nonmanagerial employees, rather than relationships between owners and managers. Chrisman
et al. (2012) imply that differences in double-agency problems in owner-managed family and
nonfamily firms may be greater than differences in principal–agent or even principal–principal
agency problems, which suggests situations where stewardship theory may be singularly import-
ant since relational controls are more widely used in family firms than in nonfamily firms. The
confusion about levels also suggests that to some extent, stewardship theorists and agency theo-
rists may be talking past one another, making the relevance of the assumptions of either theory
more difficult to gauge.

Motivational issues concerning control. Third, as suggested above, all people have preferences.
Incentive systems that are designed to be responsive to those preferences can encourage the types
of behavior principals’ desire (Jensen, 1994; Jensen & Meckling, 1994). Incentives can be mon-
etary or nonmonetary and there is no incontrovertible evidence that stewards are never motivated
by monetary incentives, just as there is no incontrovertible evidence that agents are never moti-
vated by nonmonetary incentives. In order words, people in general are motivated by both mon-
etary and nonmonetary incentives to varying degrees. Furthermore, the two types of incentives
can overlap. For example, monetary incentives have an intrinsic as well as an extrinsic compo-
nent since salary levels and bonuses can be sources of pride, measures of achievement, and sig-
nals about employees’ value to an organization. Given that monetary incentives have been shown
to be beneficial in family firms (e.g., Chrisman, Devaraj, & Patel, 2017), more important ques-
tions than “which is more important” are “when is one more important than the other” and “what
is the proper mix of incentives for different kinds of managers, employees, and family firms?”
These arguments again cast doubts on the realism and relevance of theories (agency or steward-
ship) that focus on only one source of motivation to the exclusion of the others.

Controls as information systems. Fourth, monitoring and incentive systems can have informa-
tional value as well as motivational value. A problem with stewardship theory as portrayed by
Davis et al. (1997) is its implicit assumption that neither monitoring or incentive compensation
are necessary; with the former being unnecessary because the goals of principals are already
fully understood and latter being unnecessary because the steward is already fully motivated to
achieve whatever goals the principals ordain. Hernandez (2012) partially addresses this problem
but even the relevance and realism of her version of stewardship theory could be improved by
considering the two-way flows of information between owners and managers as well as between
managers at different levels or between managers and rank-and-file employees. Thus, monitoring
and incentive systems provide valuable information to agents and stewards alike about organiza-
tional goals and what constitutes contributions to those goals.
For principals (whomever they may be), the agency theory mechanisms of monitoring and
incentive systems provide valuable information about the extent to which goals are being
achieved and the contributions agents are making to goal achievement. It is less clear how the
steward’s natural pro-organizational tendencies provide principals with the information they
need in the absence of control (or coordination) systems. Indeed, even with good intentions,
goals may not be achieved and principals need to know that.
Monitoring and incentive systems provide feedback to stewards and agents alike about how
principals’ assess their contributions. This would seem to be of fundamental importance to stew-
ards whose motivations are supposed to be intrinsic, which I take to mean they gain satisfaction
from contributing to the goals of the principal and would probably like to know how well they
are doing. Overall, recent research suggests monitoring (as well as perceived control and distrib-
utive justice) may be more effective than incentives in promoting pro-organization behavior
among nonfamily managers in family firms (Kotlar & Sieger, 2019). Additional work on the
Chrisman 1059

proper mix of mechanisms to use in different situations would make stewardship theory more
realistic and relevant, particularly for family firms who often must deal with family and nonfam-
ily managers and employees at all different levels of an organization.

Stewardship Theory’s Missing Assumptions

As suggested above, stewardship theory argues that stewards will align their interests with those
of principals but the theory does not specify how the goals of principals are communicated to
stewards. These details are relevant for theories of governance such as stewardship theory and
agency theory because as Simon (1947) argues, individuals are boundedly rational in that their
ability to access, process, and utilize information is limited. Since individuals are heterogeneous
in their backgrounds, experience, and intellects, bounded rationality also implies that the infor-
mation possessed by individuals within or across organizational boundaries will be asymmetric.
As suggested in agency theory, monitoring and incentives are methods of economizing on
bounded rationality and reducing information asymmetry.
Stewardship theory does not discuss how bounded rationality and information asymmetry
influences the ability of stewards to understand the goals of principals. Rather, stewardship the-
ory assumes that individuals naturally align themselves with the goals of principals and then,
through empowerment, automatically embark on a path that should lead to the achievement of
those goals. This assumption thus treats the methods of communication between principals and
stewards as a “black box.” However, given bounded rationality and information asymmetry, the
communication of the goals of principals to individuals, stewards or not, can become distorted,
especially when principals pursue multiple goals that can change situationally and over time. As
organizations become larger, the complications involved in overcoming bounded rationality and
information asymmetry become more acute because subsystem goals (e.g., work groups, depart-
ments, business units, and divisions) may diverge from each other and from the goals of the firm
as a whole (Cyert & March, 1963). Lacking mechanisms to transmit information on goals can
therefore cause even perfect stewards to go astray. Furthermore, parochial interests are likely to
be more challenging to resolve when an organization relies solely on relational or social controls
which may be inefficient mechanisms for disseminating information in the absence of communi-
cation from a guiding authority. This is because interpretations of goals differ and any distortions
that occur are likely to increase as information is passed from one steward to another.
Hernandez (2012) comes the closest to providing a basis for explaining how bounded ratio-
nality and information asymmetries might be mitigated. However, she largely focuses on mech-
anisms such as collective responsibility, nonhierarchical relationships, and intrinsic rewards.
These help explain how to encourage pro-organizational behavior but do not satisfactorily
explain how groups of stewards receive the direction that guides their actions in the first place.
Put differently, empowering employees is useful but there still must be some common goals that
everyone understands to a greater or lesser degree if the organization is to move in one direction
rather than several directions according to the whims of the members of organizational units.
As argued above, in family firms this issue is even more complicated because of the quest for
SEW through the attainment of family-centered noneconomic goals. Such goals, and how to
achieve them may be difficult to understand, let alone communicate to others, even for the family
owners who pursue them (cf., Schulze et al., 2001). Consequently, problems of bounded rational-
ity and information asymmetry need to be incorporated into stewardship theory to improve its
realism and relevance.

Stewardship and pre-employment. The problems of bounded rationality and information asym-
metry are especially important in the pre-employment situation because the attitudes and abilities
1060 Entrepreneurship Theory and Practice 43(6)

of individuals prior to their involvement in an organization can affect the extent to which they
become stewards or agents after joining an organization. Stewardship theory would therefore be
more realistic and relevant if it incorporates pre-employment considerations in its assumptions.
Agency theory deals with problems of moral hazard and adverse selection (Eisenhardt, 1989),
whereas stewardship theory deals only with the (absence of the) former, implicitly assuming that
anyone who enters the organization will be immediately induced to take up the goals of the prin-
cipal(s) and/or that principals are perfectly capable of deducing the characters, abilities, and fit
of potential employees. However, this is an unrealistic assumption.
Chrisman, Memili, and Misra (2014) have discussed how problems normally associated with
agency theory regarding the recruitment and employment of nonfamily managers are not neces-
sarily eliminated when the organization consists of stewards rather than agents. Individuals,
regardless of whether they are stewards or agents, are prone to seek organizations that fit their
aspirations (cf., Hernandez, 2012; p. 174), a phenomena referred to as labor market sorting
(Schulze et al., 2001). Likewise, principals wish to hire highly qualified and trustworthy individ-
uals who they believe will be able to perform the requirements of the job and fit into the organi-
zation’s culture. However, since bounded rationality and information asymmetries exist, the
pre-employment matching process will not always go according to plan. Because individuals
will vary both in terms of their willingness to align themselves with the goals of principals and
in terms of their ability to contribute to those goals, it is reasonable to assume that hiring deci-
sions will ultimately play a large role in determining if an organization is composed of self-actu-
alizing stewards or self-serving agents.

Stewards’ abilities. Furthermore, whether an individual is perceived to be a steward or agent may

partially be a function of their ability; principals are concerned with goal achievement, and abil-
ity and effort are sometimes hard to separate as they tend to be related (Bandura, 1982; Chua
et al., 2009; Chrisman et al., 2017). Thus, in the presence of bounded rationality and information
asymmetry, principals may not always be able to distinguish between higher-ability agents and
lower-ability stewards as their outputs may be similar. Lacking necessary controls and given the
vagaries of team production (Alchian & Demsetz, 1972), firms with stewardship governance
may have an even harder time identifying workers who provide substandard output, whether that
is a consequence of a want of ability, a want of effort, or both.

Adverse selection. Finally, adverse selection is based on the ideas that principals will not be able
to fully gauge the abilities and motives of stewards or agents prior to employment and that
self-serving agents have incentives to hide their true natures from potential employers (cf.,
Akerlof, 1970; Chrisman et al., 2017). Such individuals may even seek out firms with reputations
for stewardship governance because their subsequent opportunistic behavior and/or poor perfor-
mance will be harder to detect owing to a paucity of efficient systems for monitoring and reward-
ing behavior. This problem may be particularly severe in family firms and new ventures.
If the potential labor pool available to firms with stewardship governance has a higher propor-
tion of opportunists and, thereby, a lower proportion of capable stewards than firms with more
traditional forms of governance, the firms with stewardship governance may face a greater risk
of hiring opportunists and a more difficult time getting rid of them. Thus, the problems of adverse
selection and moral hazard may end up being more troublesome in firms with stewardship gov-
ernance because they have fewer mechanisms to detect opportunists and poorer workers prior to
or after they are employed in the firm (cf., Verbeke & Greidanus, 2009). This observation is
consistent with stewardship theory as expressed by both (Davis et al., 1997, pp. 39–40) and
(Hernandez, 2012, p. 183), who imply that stewardship governance can only survive and flourish
if the organization is composed entirely, or nearly entirely, of stewards.
Chrisman 1061

The family firm context. All of these problems are likely to occur with greater frequency in fam-
ily firms than nonfamily firms for the following reasons. First, since family firms are more likely
to have informal governance systems that rely on relational controls and decision mechanisms
(Stewart & Hitt, 2012), they are more likely to mistakenly hire family or nonfamily managers
with opportunistic tendencies as well as lower abilities. This propensity is exacerbated by the fact
that family firms generally offer fewer opportunities for advancement, lower wages, and tend to
engage in bifurcation bias that rewards family members (who may be opportunists) at the expense
of nonfamily members (who may be stewards). This also means that stewards, particularly able
stewards, who will still prefer working at organizations that offer the best opportunities for
advancement and/or self-actualization, will be more likely to seek employment at nonfamily
firms than family firms. Stewardship theory currently cannot explain these possibilities or their
consequences because it does not consider the problems of bounded rationality and information
asymmetry or the pre-employment situations facing family firms. Adding assumptions about
these factors may make stewardship theory more realistic and relevant.

Discussion and Conclusions

There is no denying that the architects of stewardship theory (Davis et al., 1997; Hernandez,
2012) have made important contributions to the management literature and that the theory has
many applications in the study of family businesses. However, work is still needed to improve
the theory. In this article I argue that the assumptions of stewardship theory need to be adjusted
in some places and augmented in others to improve their realism and relevance. For example, the
model of man proposed by stewardship theory is just as extreme and, in fact, is arguably more
extreme than the model of man used in agency theory. Furthermore, because stewardship theory
ignores some basic truths about individuals such as responses to incentives caused by prefer-
ences based on self-interests and trade-offs, which can sometimes lead to opportunistic behavior,
an uncritical application of stewardship theory to firm governance can be just as “bad for prac-
tice” as agency theory ever was.
Just as important as the need to adjust stewardship theory’s assumptions about human nature,
goals, and controls, is the need to augment its assumptions to include consideration for bounded
rationality and information asymmetry and the pre-employment situation. The fact that individ-
uals are boundedly rational and that information asymmetries exist cannot be wished away, nor
can the fact that goals of individuals will not necessarily be aligned with those of the organization
prior to their employment.
In the case of family firms, the need to adjust stewardship theory’s assumptions is even more
important because family businesses have many of the characteristics associated with steward-
ship theory but stubbornly do not always behave or perform as stewardship theory might lead
one to expect. Indeed, complexities in goal systems and control systems can create interesting
organizational problems for family firms that stewardship theory currently ignores.

Toward an Improved Conceptualization of Stewardship Theory

Having identified some of the most important issues that need to be addressed to improve the
realism and relevance of stewardship theory, particularly in its application to family firm stud-
ies, I encourage further work in this area and reiterate Madison et al.'s (2016) call to integrate
the assumptions of agency theory into those of stewardship theory in order to develop a more
realistic (family business) management view of organizational behavior and governance.
Specifically, any attempt to integrate agency and stewardship theory should be based on the
following principles. First, there are no perfect stewards or perfect agents. The idea that most
1062 Entrepreneurship Theory and Practice 43(6)

individuals will behave as stewards most of the time should replace the idea that it is possible
or likely that all individuals will always behave as stewards (or agents). As noted above,
Jensen and Meckling's (1994) REMM model may provide a viable alternative view of human
nature that seems conducive to both stewardship and agency approaches. Likewise, Verbeke
and Greidanus's (2009) concept of bounded reliability may provide a viable alternative view
of human behavior. The REMM model seems especially useful for the study of family firms
and families, which are both heterogeneous in their goals and behaviors (Jaskiewicz & Dyer,
2017).
Second, principals, agents, and stewards alike all have economic and noneconomic goals.
Rather than concentrating on organizational performance as suggested by Davis et al. (1997), a
revised stewardship theory needs to explicitly deal with the mixture of economic and noneco-
nomic goals that are typically encountered in family firms. As mentioned above, the issues asso-
ciated with measuring and understanding economic goals are not trivial and the issues associated
with measuring and understanding noneconomic goals are even more difficult to untangle.
Similarly, the goals of owners, managers, and organizations (again, assuming one believes, as I
do not, that organizations have goals) are diverse and this must be taken into account. Therefore,
I suggest that the dominant coalition rather than the organization be used to represent the princi-
pal, particularly in the study of family firms (Cyert & March, 1963; Chua, Chrisman, & Sharma,
1999). This is more realistic because the dominant coalition can actually set goals and it is more
relevant because it acknowledges that noneconomic goals are legitimate even if they do not
directly contribute to the well-being of all organizational stakeholders.
Third, organizations require a mixture of mechanisms to communicate preferences, monitor
and incentivize managers to coordinate and control behavior, and allow steward-like qualities
and propensities to flourish. Research suggests that one important factor is to ensure that the
mechanisms are consistently applied, particularly when there are distinct groups involved such
as family and nonfamily managers (Madison et al., 2018). However, as other research has shown,
any revision to stewardship theory must also consider the types mechanisms that are used and the
extent to which they are applied (James et al., 2017; Kotlar & Sieger, 2019; Madison et al.,
2017). The main points here are that excessive use of any type of mechanism may be counterpro-
ductive, and that a mix of formal and informal, rational and relational, and pecuniary and nonpe-
cuniary mechanisms geared toward achieving individual, group, and organizational goals is
likely to be desirable.
Fourth, bounded rationality and information asymmetries are real and should be explicitly
incorporated into stewardship theory. In this regard, attention should be paid to how control
mechanisms act as, or act in conjunction with, systems of communication to coordinate behavior
in an organization. Goals of principals are not transmitted to stewards, or vice versa, through
osmosis. In agency theory, monitoring and incentives are inherently systems of communication
as well as control. Stewardship theorists should seek to expand upon rather than replace the
mechanisms identified by agency theory. In this regard, Hernandez's (2012)work provides a rea-
sonable place to start. Ultimately, I believe that both agency and stewardship mechanisms of
coordination are required for effective governance but there is still a long way to go before the
proper mix is understood. This understanding is of special importance for family firms, which
tend to use formal control and communication systems less (cf., Stewart & Hitt, 2012).
Finally, since individuals will vary in their propensity to act like stewards, pre-employment
considerations are foundational to the effectiveness of stewardship governance. Thus, develop-
ing a stewardship explanation for how individuals should be recruited and selected to fit firms’
cultures should not be neglected (Tabor, Chrisman, Madison, & Vardaman, 2018). Similarly, in
a family firm context, more effort should be made to grasp how the pre-employment conditioning
of children (Lubatkin, Durand, & Ling, 2007), as well as the relationship among siblings and
Chrisman 1063

between extended families (Gersick, Davis, Hampton, & Lansberg, 1997) influences whether
family members become pro-organizational stewards or opportunistic agents.

Conclusion
In conclusion, we owe a debt to the early writers of stewardship theory for providing an alterna-
tive conceptualization to the agency theory of firm governance. However, now seems an appro-
priate time to cast off the unrealistic assumptions of both theories in favor of a middle ground
which will provide a more relevant depiction of organizational life. I have attempted to provide
some initial observations on how to reinvigorate stewardship theory, particular as it applies to the
study of family firms by modifying its assumptions concerning models of man, goals, and control
systems and by incorporating bounded rationality and pre-employment considerations into the
theory. Hopefully, this editorial will encourage further theoretical and empirical work in this
important area.

Acknowledgments
I am indebted to Johan Wiklund, Executive Editor of Entrepreneurship Theory and Practice, and an
anonymous reviewer as well as Josh Daspit, Alfredo De Massis, Hanqing (Chevy) Fang, Daniel Holt,
Franz Kellermanns, Josip Kotlar, Kristen Madison, Pramodita Sharma, Sohrab Soleimanof, Lloyd
Steier, James Vardaman, Alain Verbeke, and Thomas Zellweger for their comments on earlier versions
of this editorial. Needless to say, the opinions expressed and the limitations in the editorial are my own
responsibility.

Declaration of Conflicting Interests

The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or
publication of this article.

Funding
The author(s) received no financial support for the research, authorship, and/or publication of this article.

Notes
1. For ease of exposition, the term “agent” is used to describe situations where individuals behave in
a self-interested and/or opportunistic fashion, even though self-interested behavior is not necessarily
opportunistic. Likewise, the term “steward” is used to describe situations where individuals behave
in a pro-organizational fashion, even though such behavior need not be inconsistent with self-interest,
or opportunism for that matter, since organizational goals are multifaceted and organizations and their
stakeholders can be defined in many ways.
2. Verbeke and Greidanus (2009) and Kano and Verbeke (2015) argue that instead of stewards or agents,
people are better characterized as boundedly reliable, which means they may sometimes exhibit be-
haviors that seem opportunistic but are often (but not always) benevolent in the sense that their failed
commitments occur because of overcommitment, reprioritization, or identity-based discordance, rather
than because of intentional deception. Again, governance systems designed to deal exclusively with
agents or stewards may be inefficient in handling boundedly reliable (and boundedly rational) workers
(cf., Madison et al., 2017).
3. As discussed by Alchian and Demsetz (1972), in their theory of team production, collaborative efforts
can become difficult to manage collectively if all members of the team do not turn out to be stewards.
4. It is worth noting that social controls in the form of mutual monitoring by decision agents has been part
of agency theory for many years (e.g., Fama & Jensen, 1983).
1064 Entrepreneurship Theory and Practice 43(6)

5. Prior research shows that the use of monitoring and incentives to regulate the behavior of family manag-
ers and employees is positively related to firm performance (Chrisman, Chua, Kellermanns, & Chang,
2007). Recent research confirms this finding and also indicates that the demotivating element of the use
of such controls is related solely to their unequal application between family and nonfamily employees
(Madison et al., 2018). Consistent with the work of Verbeke and Kano (2012), this finding suggests that
employees’ perceptions of excessive control depend on the types and amounts of control they experi-
ence relative to that imposed on other organizational members, that is, bifurcation bias, is the primary
problem in family firms.

References
Akerlof, G. A. (1970). The market for “lemons”: Quality uncertainty and market mechanisms. Quarterly
Journal of Economics, 84(3), 488–500.
Alchian, A. A., & Demsetz, H. (1972). Production, information costs, and economic organization. Ameri-
can Economic Review, 62, 777–795.
Bacharach, S. B. (1989). Organizational theories: Some criteria for evaluation. Academy of Management
Review, 14(4), 496–515.
Bandura, A. (1982). Self-efficacy mechanism in human agency. American Psychologist, 37(2), 122–147.
Carney, M. (2005). Corporate governance and competitive advantage in family-controlled firms. Entrepre-
neurship Theory and Practice, 29(3), 249–265.
Child, J., & Rodrigues, S. B. (2003). Corporate governance and new organizational forms: Issues of double
and multiple agency. Journal of Management and Governance, 7(4), 337–360.
Chrisman, J. J., Chua, J. H., Kellermanns, F. W., & Chang, E. P. C. (2007). Are family managers agents or
stewards? An exploratory study in privately held family firms. Journal of Business Research, 60(10),
1030–1038.
Chrisman, J. J., Chua, J. H., Pearson, A. W., & Barnett, T. (2012). Family involvement, family influence,
and family-centered non-economic goals in small firms. Entrepreneurship Theory and Practice, 36(2),
267–294.
Chrisman, J. J., Chua, J. H., Steier, L. P., Wright, M., & McKee, D’Lisa N., McKee, D. N. (2012). An
agency theoretic analysis of value creation through management buy-outs of family firms. Journal of
Family Business Strategy, 3(4), 197–206.
Chrisman, J. J., Devaraj, S., & Patel, P. C. (2017). The impact of incentive compensation on labor produc-
tivity in family and non-family firms. Family Business Review, 30(2), 119–136.
Chrisman, J. J., Memili, E., & Misra, K. (2014). Non-family managers, family firms, and the winner’s
curse: The influence of non-economic goals and bounded rationality. Entrepreneurship Theory and
Practice, 38(5), 1103–1127.
Chua, J. H., Chrisman, J. J., & Bergiel, E. B. (2009). An agency theoretic analysis of the professionalized
family firm. Entrepreneurship Theory and Practice, 33(2), 355–372.
Chua, J. H., Chrisman, J. J., De Massis, A., & Wang, H. (2018). Reflections on family firm goals and the
assessment of performance. Journal of Family Business Strategy, 9(2), 107–113.
Chua, J. H., Chrisman, J. J., & Sharma, P. (1999). Defining the family business by behavior. Entrepreneur-
ship Theory and Practice, 23(4), 19–39.
Corbetta, G., & Salvato, C. (2004). Self-serving or self-actualizing? Models of man and agency costs in
different types of family firms: A commentary on “Comparing the agency costs of family and non-fam-
ily firms: Conceptual issues and exploratory evidence”. Entrepreneurship Theory and Practice, 28(4),
355–362.
Cyert, R. M., & March, J. G. (1963). A behavioral theory of the firm. Englewood Cliffs, NJ: Prentice-Hall.
Davis, J. H., Schoorman, F. D., & Donaldson, L. (1997). Toward a stewardship theory of management.
Academy of Management Review, 22(1), 20–47.
Chrisman 1065

Eisenhardt, K. M. (1989). Agency theory: An assessment and review. Academy of Management Review,
14(1), 57–74.
Fama, E. F., & Jensen, M. C. (1983). Agency problems and residual claims. The Journal of Law and Eco-
nomics, 26(2), 327–349.
Gedajlovic, E., & Carney, M. (2010). Markets, hierarchies, and families: Toward a transaction cost theory
of the family firm. Entrepreneurship Theory and Practice, 34(6), 1145–1171.
Gersick, K. E., Davis, J. A., Hampton, M. M., & Lansberg, I. (1997). Generation to generation. Boston,
MA: Harvard Business School Press.
Ghoshal, S., & Moran, P. (1996). Bad for practice: A critique of the transaction cost theory. Academy of
Management Review, 21(1), 13–47.
Gomez-Mejia, L. R., Nunez-Nickel, M., & Gutierrez, I. (2001). The role of family ties in agency contracts.
Academy of Management Journal, 44, 81–95.
Gómez-Mejía, L. R., Haynes, K. T., Núñez-Nickel, M., Jacobson, K. J. L., & Moyano-Fuentes, J. (2007).
Socio- emotional wealth and business risks in family-controlled firms: Evidence from Spanish olive oil
mills. Administrative Science Quarterly, 52(1), 106–137.
Hernandez, M. (2012). Toward an understanding of the psychology of stewardship. Academy of Manage-
ment Review, 37(2), 172–193.
James, A. E., Jennings, J. E., & Jennings, P. D. (2017). Is it better to govern managers via agency or
stewardship? Examining asymmetries by family versus nonfamily affiliation. Family Business Review,
30(3), 262–283.
Jaskiewicz, P., & Dyer, W. G. (2017). Addressing the elephant in the room: Disentangling family heteroge-
neity to advance family business research. Family Business Review, 30(2), 111–118.
Jensen, M. C. (1994). Self-interest, altruism, incentives, and agency theory. Journal of Applied Corporate
Finance, 7(2), 40–45.
Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs and own-
ership structure. Journal of Financial Economics, 3(4), 305–360.
Jensen, M. C., & Meckling, W. H. (1994). The nature of man. Journal of Applied Corporate Finance, 7(2),
4–19.
Kano, L., & Verbeke, A. (2015). The three faces of bounded reliability: Alfred Chandler and the min-
cro-foundations of management theory. California Management Review, 58(1), 97–122.
Kidwell, R. E., Kellermanns, F. W., & Eddleston, K. A. (2012). Harmony, justice, confusion, and conflict
in family firms: Implications for ethical climate and the “Fredo effect.”. Journal of Business Ethics,
105(4), 503–517.
Kotlar, J., & Sieger, P. (2019). Bounded rationality and bounded reliability: A study of non-family
managers’ entrepreneurial behavior in family firms. Entrepreneurship Theory and Practice, 43(2),
251–273.
La Porta, R., Lopez-De-Silanes, F., & Shleifer, A. (1999). Corporate ownership around the world. Journal
of Finance, 54(2), 471–517.
Lan, L. L., & Heracleous, L. (2010). Rethinking agency theory: The view from law. Academy of Manage-
ment Review, 35, 294–314.
Le Breton-Miller, I., & Miller, D. (2009). Agency vs. stewardship in public family firms: A social embed-
dedness reconciliation. Entrepreneurship Theory and Practice, 33(6), 1169–1191.
Le Breton-Miller, I., & Miller, D. (2011). Commentary: Family firms and the advantage of multitemporal-
ity. Entrepreneurship Theory and Practice, 35(6), 1171–1177.
Lubatkin, M. H., Durand, R., & Ling, Y. (2007). The missing lens in family firm governance theory: A self-
other typology of parental altruism. Journal of Business Research, 60(10), 1022–1029.
Madison, K., Daspit, J. J., Turner, K., & Kellermanns, F. W. (2018). Family firm human resource practices:
Investigating the effects of professionalization and bifurcation bias on performance. Journal of Busi-
ness Research, 84, 327–336.
1066 Entrepreneurship Theory and Practice 43(6)

Madison, K., Holt, D. T., Kellermanns, F. W., & Ranft, A. L. (2016). Viewing family firm behavior and gov-
ernance through the lens of agency and stewardship theories. Family Business Review, 29(1), 65–93.
Madison, K., Kellermanns, F. W., & Munyon, T. P. (2017). Co-existing agency and stewardship governance
in family firms: An empirical investigation of individual-level and firm-level effects. Family Business
Review, 30(4), 347–368.
McKelvey, B. (1997). Quasi-natural organization science. Organization Science, 8, 352–380.
Miller, D., & Le Breton-Miller, I. (2006). Family governance and firm performance: Agency, stewardship,
and capabilities. Family Business Review, 19(1), 73–87.
Schulze, W. S., Lubatkin, M. H., Dino, R. N., & Buchholtz, A. K. (2001). Agency relationships in family
firms: Theory and evidence. Organization Science, 12(2), 99–116.
Simon, H. A. (1947). Administrative behavior. New York: Macmillan.
Stewart, A., & Hitt, M. A. (2012). Why can’t a family business be more like a nonfamily business? Modes
of professionalization in family firms. Family Business Review, 25(1), 58–86.
Tabor, W., Chrisman, J. J., Madison, K., & Vardaman, J. M. (2018). Nonfamily members in family firms: A
review and future research agenda. Family Business Review, 31(1), 54–79.
Thaler, R. H., & Shefrin, H. M. (1981). An economic theory of self-control. Journal of Political Economy,
89(2), 392–406.
Thomas, K. W., & Tymon, W. G. (1982). Necessary properties of relevant research: Lessons from recent
criticisms of the organizational sciences. Academy of Management Review, 7(3), 345–352.
Vardaman, J. M., & Gondo, M. B. (2014). Socioemotional wealth conflict in family firms. Entrepreneurship
Theory and Practice, 38(3), 1317–1322.
Verbeke, A., & Greidanus, N. S. (2009). The end of the opportunism vs trust debate: Bounded reliability as
a new envelope concept in research on MNE governance. Journal of International Business Studies,
40(9), 1471–1495.
Verbeke, A., & Kano, L. (2012). The transaction cost economics theory of the family firm: Family-based
human asset specificity and the bifurcation bias. Entrepreneurship Theory and Practice, 36(6),
1183–1205.
Whetten, D. A. (1989). What constitutes a theoretical contribution? Academy of Management Review,
14(4), 490–495.
Wiklund, J., Wright, M., & Zahra, S. A. (2018). Conquering relevance: Entrepreneurship Research's
grand challenge. Entrepreneurship Theory and Practice, Advance online publication. doi:
10.1177/1042258718807478.

Author Biography
James J. Chrisman is the Julia Bennett Rouse Professor of Management, Head of the Department
of Management and Information Systems, and Director of the Center of Family Enterprise
Research at Mississippi State University. He also holds a joint appointment as Senior Research
Fellow with the Centre for Entrepreneurship and Family Enterprise at the University of Alberta,
School of Business and is a Senior Editor of Entrepreneurship Theory and Practice.