Continuity Model Generation. Justin B. Craig
According to Jim Davis, David Schoorman, and Lex Donaldson, the authors of the seminal stewardship work (Davis, Schoorman, and Donaldson 1997), stewardship can be characterized by six interrelated dimensions: intrinsic motivation, organizational identification, use of personal forms of power, collectivism, low power distance, and involvement orientation (Illustration 3). They propose that, unlike agency theory, which emphasizes economic rationality, the concept of stewardship captures other-focused, prosocial non-economic behaviors. More specifically, in contrast to agency-based situations, where extrinsic, tangible, and exchangeable commodities are used to motivate and reward employees, a stewardship-based environment will emphasize intrinsic rewards that foster intrinsic motivation, such as opportunities for personal growth and achievement, affiliation, and self-actualization. To fulfill these higher-order needs, stewards’ intrinsic motivation will push them to work harder on behalf of the organization, which in turn aligns their behaviors with their principals’ interests. Generally, stewards will work harder to achieve the organization's goals when they believe their work is meaningful and their tasks are significant.
Organizational practices that emphasize employee growth and signal managerial support to employees can provide stewards with the rewards they seek and nurture their intrinsic motivation.
Another key distinction of stewardship is that it fosters members who identify with the organization and view it as an extension of themselves. According to Davis et al. (1997, p. 29), “identification occurs when managers define themselves in terms of their membership in a particular organization by accepting the organization's mission, vision, and objectives.” Stewards, therefore, have a strong sense of attachment to their organizations, possess high levels of psychological ownership, and wish to see their organizations succeed. Relatedly, stewards have a psychological preference for using personal power instead of institution-based forms of power. Rather than flowing from formally established authority, personal power stems from interpersonal relationships, is often built over time, and is based on mutual trust, norms of reciprocity, and information exchange.
From an organizational—as opposed to individual—level, stewardship directs behavior toward enhancing the collective good. A collectivist organization emphasizes the accomplishment of organizational goals, and individuals define themselves as part of the organization, one in which group identity and a sense of belonging reign supreme. That is, organizations with a stewardship climate are more likely to emphasize collectivism over individualism.
Such organizations are also identifiable by low power distances between managers and subordinates. Power distance is the extent to which less powerful members of an organization accept an unequal distribution of power across organizational levels. In organizational settings characterized by a high power distance, people with less power are dependent on those with high power and status, and special privileges are given to those with higher rank. Conversely, in organizations with low power distances, processes and interactions are egalitarian, inequalities are discouraged, and members are treated equally.
Finally, stewardship engenders a high involvement orientation. High-involvement work practices expand employee autonomy and involvement in decision-making processes and produce beneficial results for organizations and their employees. For example, such systems offer employees the chance to expand their knowledge and task-level expertise, involve people across levels in important organizational processes, and link individual performance to organizational outcomes. Reward systems are linked to performance in a way that instills individuals with the desire to accomplish organizational goals. Such involvement-oriented management environments, in which people are enabled to reach their potential and awarded increasing responsibilities and challenges, are consistent with a stewardship orientation and with the pursuit of aligning individual and organizational objectives.
We can plot the six dimensions of stewardship on a series of continua. For example, motivation can be anchored by extrinsic at one end and intrinsic at the other. For culture, it is collectivist and individual; power distance is high versus low; involvement orientation is involved versus detached; power is positional versus personal; the extent to which individuals view the business as an extension of themselves is high versus low. It is important to note that each of these dimensions, depicted through the series of continua, do not represent an either–or, or all–or–none, situation. For example, someone is not either intrinsically or extrinsically motivated; they will fall somewhere along that dimension. Thus, we can better understand stewardship by recognizing that a recommended position along a given continuum leans toward the preferred stewardship characteristic end.
Integrating the stewardship and agency arguments, or theoretical perspectives, we can suggest that it is preferred that agents appointed by principals are stewards. Below we embellish this further with the addition of the steward, or the concept of stewardship, to the three circles framework.
Without giving too much away, but as a way to reinforce the conceptualization of agents as stewards, continuity modelling is predicated on the notion that owners need to be stewards, that families need to be stewards, and that managers need to be stewards, who are more likely to: be intrinsically motivated, see the business as an extension of themselves, and use personal rather than positional power in companies characterized by collectivist cultures, low power distances, and a strong involvement orientation.
If being a steward is at one end of a continuum, what is at the other? It was only recently that I have begun to figure this out. The inverse to being a steward is being a corporate psychopath. This may sound confronting, and it is. The characteristics of a corporate psychopath, as defined in the psychology literature, can easily be accessed, and this is encouraged if you, like me, were wanting to better understand others who thrived in plain sight, even though their behaviors were so contrary to others in the system. A cursory review of this literature will reveal that while the word “psychopath” is a popular one, it's a colloquial term, not a medical one. The technical diagnosis that appears in the Diagnostic and Statistical Manual of Mental Disorders is “antisocial personality disorder.” A closer investigation will reveal that psychopathy is one of three traits that make up what the personality psychologists refer to as the Dark Triad, with narcissism and Machiavellianism being the others.
Illustration 3 STEWARDSHIP
Resource-Based View
The resource-based view (RBV) of the firm suggests that firms survive based on their ability to combine heterogeneous and imperfectly mobile resources. Broadly, the RBV incorporates the complex, idiosyncratic, and unique nature of a firm's internal processes and intangible assets, including the values, beliefs, symbols, and interpersonal relationships that individuals or groups within the firm possess. As such, the RBV focuses on an analysis of the nature, characteristics, and potential of a firm's resource base and assumes that each firm's internal resources and capabilities are heterogeneous, which ultimately delivers a competitive advantage. Barney (1991) identified that in order to contribute optimally to firm sustainability, resources must be valuable, rare, imperfectly imitable, and non-substitutable (VRIN).
Resources are defined as anything that could be thought of as a firm's strength or weakness and at any given time could be defined as those (tangible and intangible) assets tied semi-permanently to the firm. Firm resources in the RBV perspective fall into four capital-related categories: physical capital, human capital, organizational capital, and process capital. Overcoming newness means that the venture has been able to distinguish itself from others by building a unique combination of resources in these categories.
Using the RBV framework, Sirmon and Hitt (2003) argued that family businesses evaluate, acquire, shed, bundle, and leverage their resources in ways that are different from those of non-family businesses. In part, these unique resources can emerge from the fact that family members often also act as owners and/or managers. In the family business context, the