Stewardship as an organizational approach
This section moves stewardship theory on from applying it at an individual level, for example, to an individual person who is committed to the sustainable supply chain and applying stewardship behaviours to whole organizations and networks. Stewardship theory is typically applied on an individual level (e.g., Rezaee, 2018), but stewardship behaviours can be applied to the actions of a firm. For sustainability, firms have an overall mutual goal of bettering the world and their actions align with those goals. It has previously been covered that decision-making managers are required to be the steward of the company’s resources and aim its strategic supply chain decisions through the effective utilization of resources. That manager thus has the primary role for improving sustainability performance and managing related risks, and maximizing utilization of all capitals (such as strategic, financial, reputational, manufactured, human, social and environmental) to create shared value for stakeholders. Of course, leadership is thus an important factor in fostering stewardship behaviour (Hernandez, 2008; Madison et al., 2016). For example, transformational leadership can lead to a stewardship culture (Eddleston et al., 2008). But, although people — both individually and collectively — are the drivers behind each company, it is the supplier processes that specifically employ a more sustainable approach that also demonstrate stewardship qualities. By doing so, they are reducing the need for the buyer to audit andmonitor behaviours. Looking at stewardship theory beyond a person (which is how it is often viewed) and instead organizationally as an entity, provides the opportunity to unearth interesting behavioural and governance insights of the network. Figure 4.1 showed stewardship theory applied on an organizational level.
Unlike the traditional control-oriented mechanisms that are common in agency governance, stewardship governance encourages cooperation and empowers and motivates employees, thereby enabling pro-organizational behaviours and ultimately enhanced firm performance (Davis et al., 1997; Eddleston and Kellermanns, 2007). This enhanced performance is a result of a combination of individual-level behaviours and firm-level governance (Davis et al., 1997; Tosi et al., 2003). The behavioural actions of individuals can be categorized as self-serving or other-serving (Davis et al., 1997), but at an organizational level, the stewardship approach to governance is how organizational behaviours play out. So, although stewardship is considered as suitable to shape important employee behaviours (Schepers et al., 2012), stewardship theory also emphasizes that stewardship outcomes can be contingent upon specific organizational structures (Hernandez, 2012). The theory suggests that there are situational factors that define the stewardship nature of the work environment and culture of the organization (Davis et al., 1997). Examples of stewardship governance include systems that allow for employees to have a high level of authority and discretion, such as an involvement-oriented approach to management and a collectivist culture (Davis et al., 1997). The rationale for implementing stewardship governance mechanisms can be linked back to McGregor (I960). Support for stewardship theory being applied at an organizational level also comes from Schillemans and Bjurstrom (2019) who consider the stewardship approach as a governance scheme at an organizational level.
The adoption of organisational strategies based on both mutual trust and cooperation are highly beneficial to firms (Donaldson and Davis, 1994; Cuevas-Rodríguez et al., 2012), and herein lies the advantages to these types of stewardship behaviours. The supplier behaves cooperatively or collaboratively because the suppliers task is to see that the buyer’s objectives are met, thus ensuring longevity of the buying relationship which will lead to the supplier’s financial viability. By doing so, the suppliers maximize their wealth by ensuring the feasibility of the buyer. Thus, the supplier gains greater economic rewards in the long term as a result of collaboration with buyers than when they are purely driven by self-interest. Therefore, trusted supplier stewards who are motivated to act responsibly may result in more desirable outcomes through better firm performance and positive impact on society for both parties (Davis et al., 1997). The information sharing now reaches a new dimension whereby buyers and suppliers are keen to discover how they can improve their sustainability performance, by leveraging one another’s strengths (Cole and Aitken, 2020) and with some ownership of these initiatives by the supplier, organizationally.
Applying stewardship theory to SSCM works because at a macro-organizational level, aligned goals in sustainability binds industries, companies and economic systems into communities (Donaldson and Dunfee, 1999). At the individual and group levels, commitment to a transcendent set of values such as an overarching mission or vision of an idealized future state or condition such as in sustainable supply chain pursuit is present. Beyond individuals, stewardship behaviours can be enacted across all levels of the organization (Hernandez, 2012). The beneficiaries of these stewardship behaviours can include the organization, its owners and wider constituents (Donaldson and Davis, 1991)-