The alignment of oversea Chinese family businesses in southeast Asia with agency theory and stewardship model: An exploration of theory and practice

Abstract

The study aims to explore the alignment of overseas Chinese family businesses in Southeast Asia with Agency Theory and the Stewardship Model to provide insights into the balance between agency-driven monitoring mechanisms and stewardship-driven trust and shared vision in family business contexts. Agency Theory, which highlights the conflict of interests between principals (owners) and agents (managers), necessitates governance mechanisms to ensure goal alignment. The focus is on minimizing agency costs through formal contracts, monitoring, and performance incentives. Also Stewardship Model where contrary to Agency Theory, Conversely, the Stewardship Model emphasizes the alignment of interests between owners and managers, rooted in trust, shared goals, and intrinsic motivation. Managers act as stewards, prioritizing organizational well-being over self-interest. This qualitative study employs research methods including case studies and interviews with key stakeholders (e.g., family members, executives, and employees) in Chinese family businesses across Southeast Asia. The study bridges Western theoretical frameworks (Agency Theory and Stewardship Model) with the unique cultural and operational characteristics of overseas Chinese family businesses in Southeast Asia. It introduces the concept of hybrid governance, where Agency Theory and the Stewardship Model co-exist and are shaped by cultural norms. The research offers actionable insights for family business practitioners, policymakers, and scholars to design governance structures that optimize performance while respecting cultural traditions. Few studies have addressed the interplay between Agency Theory, the Stewardship Model, and the distinctive dynamics of overseas Chinese family businesses in Southeast Asia. This research fills this gap by providing both a theoretical and empirical contribution.