Jonathan D. Arthurs is a Ph.D. student and Lowell W. Busenitz is an Associate Professor, at the Price College of Business at the University of Oklahoma.
The Boundaries and Limitations of Agency Theory and Stewardship Theory in the Venture Capitalist/Entrepreneur Relationship*
Article first published online: 19 NOV 2003
Entrepreneurship Theory and Practice
Volume 28, Issue 2, pages 145–162, December 2003
How to Cite
Arthurs, J. D. and Busenitz, L. W. (2003), The Boundaries and Limitations of Agency Theory and Stewardship Theory in the Venture Capitalist/Entrepreneur Relationship. Entrepreneurship Theory and Practice, 28: 145–162. doi: 10.1046/j.1540-6520.2003.00036.x
We wish to thank the participants of the retreat, two anonymous reviewers, and Ken Brunsman for their very constructive comments on earlier drafts of this article.
- Issue published online: 19 NOV 2003
- Article first published online: 19 NOV 2003
The dynamic ownership arrangements surrounding the venture capitalist–entrepreneur (VC-E) relationship inherent in new ventures make the examination of principals’ or venture capitalists’ (VCs) and agents’ (entrepreneurs) governance arrangements interesting to explore. This article examines the limitations of agency theory and then stewardship theory in explaining the behaviors of individuals in the VC-E relationship. Our analysis points out the potential problems inherent in each theory's explanatory ability as it relates to the VC-E relationship. Lastly, theoretical gaps in the VC-E relationship are discussed along with suggestions for new theory surrounding this important and intriguing relationship.