Revisiting Agency and Stewardship Theories

• Author: Kathleen Buse,Diana Bilimoria,Ruth Bernstein
• DOI: http://doi.org/10.1002/nml.21199
• Published date: 01 June 2016
• Date: 01 June 2016

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N M  L, vol. 26, no. 4, Summer 2016 © 2016 Wiley Periodicals, Inc.

Published online in Wiley Online Library (wileyonlinelibrary.com) DOI: 10.1002/nml.21199

Journal sponsored by the Jack, Joseph and Morton Mandel School of Applied Social Sciences, Case Western Reserve University.

Correspondence to: Ruth Bernstein, University of Washington Tacoma, School of Interdisciplinary Arts and Sciences,

1900 Commerce Street, Tacoma, WA 98402–3100. E-mail: berstrs@uw.edu.

Research Notes

Revisiting Agency and Stewardship

 eories

PERSPECTIVES FROM NONPROFIT BOARD CHAIRS AND CEOS

Ruth Bernstein,1 Kathleen Buse,2 Diana Bilimoria,2

1University of Washington Tacoma, 2Case Western Reserve University

Using principal–agent theories, this study examined differences in the perceptions of non-

profit chief executive officers (CEOs) and board chairs on key governance aspects, including

board performance, leadership, satisfaction with diversity, and board meetings. Using data

from the CEOs and board chairs of 474 nonprofit organizations, we found statistically

significant differences in the governance perceptions of these leaders of nonprofit organiza-

tions. The findings provide support for an agency theory explanation about the differing

interests of principals (board chairs) and agents (CEOs). The findings suggest that these

two sets of nonprofit actors frequently operate from different perspectives, potentially affect-

ing the governance of their organizations.

Keywords: nonprofit, board of directors, governance, performance, leadership, agency

theory, stewardship theory

NONPROFIT ORGANIZATIONAL GOVERNANCE has traditionally been the role of the

board of directors (Stone and Ostrower 2007). Governance includes “the systems and pro-

cesses concerned with ensuring the overall direction, control, and accountability of the

organization” (Cornforth and Brown 2014, 4–5). Practitioner literature has converged on

good governance characteristics that fulfi ll legal and fi duciary responsibilities and promote

effective board performance based on board roles and responsibilities, including setting

the organization’s mission and purpose; selecting, supporting, and evaluating the chief

executive; strategic planning; oversight of programs and services; fi nancial, ethical, and legal

oversight; fundraising; outreach; and recruiting of new board members (e.g., Axelrod 1994;

Miller 2002).

We thank BoardSource for providing the 2012 BoardSource Governance Index Surveys.