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Governance refers to "all of processes of governing, whether undertaken by a government, market or network, whether over a family, tribe, formal or informal organization or territory and whether through the laws, norms, power or language." It relates to "the processes of interaction and decision-making among the actors involved in a collective problem that lead to the creation, reinforcement, or reproduction of social norms and institutions."
A variety of entities (known generically as governing bodies) can govern. The most formal is a government, a body whose sole responsibility and authority is to make binding decisions in a given geopolitical system (such as a state) by establishing laws. Other types of governing bodies are possible. These include an organization (such as a corporation recognized as a legal entity by a government), a socio-political group (chiefdom, tribe, family, religious denomination, etc.), or another, informal group of people.
Whatever form the entity takes, its governance is the way the rules, norms and actions are produced, sustained, regulated and held accountable. The degree of formality depends on the internal rules of a given organization. As such, governance may take many forms, driven by many different motivations and with many different results. For instance, a government may operate as a democracy where citizens vote on who should govern and the public good is the goal, while a non-profit organization may be governed by a small board of directors and pursue more specific aims.
- 1 Origin of the word
- 2 Different uses
- 2.1 Governance as process
- 2.2 Public governance
- 2.3 Private governance
- 2.4 Global governance
- 2.5 The Governance Analytical Framework
- 2.6 Nonprofit governance
- 2.7 Corporate governance
- 2.8 Project governance
- 2.9 Environmental governance
- 2.10 Internet governance
- 2.11 Information technology governance
- 2.12 Regulatory governance
- 2.13 Participatory governance
- 2.14 Multilevel governance
- 2.15 Metagovernance
- 2.16 Collaborative governance
- 3 Governance as a normative concept
- 4 See also
- 5 References
- 6 Literature
- 7 External links
Origin of the word
Like government, the word governance derives, ultimately, from the Greek verb κυβερνάω [kubernáo] (meaning to steer, the metaphorical sense first being attested in Plato). In above-described sense, however, the term governance was re-minted as recently as the 1990s by economists and political scientists, and disseminated by institutions such as the UN, IMF and World Bank. Its use in English can be traced to Charles Plummer’s 'The Governance of England' (published in 1885 as a translation from the original 15th-century Latin of John Fortescue’s 'The Difference between an Absolute and a Limited Monarchy'). This usage of governance to refer to the arrangements of governing became orthodox including in Sidney Low’s seminal text of the same title in 1904 and among some later British constitutional historians.
Governance is a very general concept that can refer to all manner of entities. Equally, this generality means that governance is often defined more narrowly to refer to a particular 'level' of governance associated with a type of organization (including public governance, global governance, non-profit governance, corporate governance, and project governance), a particular 'field' of governance associated with a type of activity or outcome (including environmental governance, internet governance, and information technology governance), or a particular 'model' of governance, often derived as an empirical or normative theory (including regulatory governance, participatory governance, multilevel governance, metagovernance, and collaborative governance). Governance can be used not only to describe these diverse topics but also to define normative or practical agendas for them. Normative concepts of fair governance or good governance are common among political, public sector, voluntary, and private sector organizations.
Governance as process
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In its most abstract sense, governance is a theoretical concept referring to the actions and processes by which stable practices and organizations arise and persist. These actions and processes may operate in formal and informal organizations of any size; and they may function for any purpose, good or evil, for profit or not. Conceiving of governance in this way, one can apply the concept to states, to corporations, to non-profits, to NGOs, to partnerships and other associations, to project teams, and to any number of humans engaged in some purposeful activity.
Most theories of governance as process arose out of neoclassical economics. These theories build deductive models, based on the assumptions of modern economics, to show how rational actors may come to establish and sustain formal organizations, including firms and states, and informal organizations, such as networks and practices for governing the commons. Many of these theories draw on transaction cost economics
It is useful to note the distinction between the concepts of governance and politics. Politics involves processes by which a group of people (perhaps with divergent opinions or interests) reach collective decisions generally regarded as binding on the group, and enforced as common policy. Governance, on the other hand, conveys the administrative and process-oriented elements of governing rather than its antagonistic ones. Such an argument continues to assume the possibility of the traditional separation between "politics" and "administration". Contemporary governance practice and theory sometimes questions this distinction, premising that both "governance" and "politics" involve aspects of power and accountability.
In general terms, public governance occurs in three broad ways:
- Through networks involving public-private partnerships (PPP) or with the collaboration of community organisations;
- Through the use of market mechanisms whereby market principles of competition serve to allocate resources while operating under government regulation;
- Through top-down methods that primarily involve governments and the state bureaucracy.
Private governance occurs when non-governmental entities, including private organizations, dispute resolution organizations, or other third party groups, make rules and/or standards which have a binding effect on the "quality of life and opportunities of the larger public." Simply put, private—not public—entities are making public policy. For example, insurance companies exert a great societal impact, largely invisible and freely accepted, that is a private form of governance in society; in turn, reinsurers, as private companies, may exert similar private governance over their underlying carriers. The term "public policy" should not be exclusively associated with policy that is made by government. Public policy may be created by either the private sector or the public sector. If one wishes to refer only to public policy that is made by government, the best term to use is "governmental policy," which eliminates the ambiguity regarding the agent of the policy making.
Global governance is defined as "the complex of formal and informal institutions, mechanisms, relationships, and processes between and among states, markets, citizens and organizations, both inter- and non-governmental, through which collective interests on the global plane are articulated, right and obligations are established, and differences are mediated". In contrast to the traditional meaning of "governance", some authors like James Rosenau have used the term "global governance" to denote the regulation of interdependent relations in the absence of an overarching political authority. The best example of this is the international system or relationships between independent states. The term, however, can apply wherever a group of free equals needs to form a regular relationship.
The Governance Analytical Framework
The Governance Analytical Framework (GAF) is a practical methodology for investigating governance processes, where various stakeholders interact and make decisions regarding collective issues, thus creating or reinforcing social norms and institutions. It is postulated that governance processes can be found in any society, and unlike other approaches, that these can be observed and analysed from a non-normative perspective. It proposes a methodology based on five main analytical units: problems, actors, norms, processes and nodal points. These logically articulated analytical units make up a coherent methodology aimed at being used as a tool for empirical social policy research.
Nonprofit governance has a dual focus: achieving the organization's social mission and the ensuring the organization is viabile. Both responsibilities relate to fiduciary responsibility that a board of trustees (sometimes called directors, or Board, or Management Committee—the terms are interchangeable) has with respect to the exercise of authority over the explicit actions the organization takes. Public trust and accountability is an essential aspect of organizational viability so it achieves the social mission in a way that is respected by those whom the organization serves and the society in which it is located.
Corporate organizations often use the word governance to describe both:
- The manner in which boards or their like direct a corporation
- The laws and customs (rules) applying to that direction
Corporate governance consists of the set of processes, customs, policies, laws and institutions affecting the way people direct, administer or control a corporation. Corporate governance also includes the relationships among the many players involved (the stakeholders) and the corporate goals. The principal players include the shareholders, management, and the board of directors. Other stakeholders include employees, suppliers, customers, banks and other lenders, regulators, the environment and the community at large.
The first documented use of the word "corporate governance" is by Richard Eells (1960, pg. 108) to denote "the structure and functioning of the corporate polity". The "corporate government" concept itself is older and was already used in finance textbooks at the beginning of the 20th century (Becht, Bolton, Röell 2004).
The term governance as used in industry (especially in the information technology (IT) sector) describes the processes that need to exist for a successful project.
Information technology governance
IT governance primarily deals with connections between business focus and IT management. The goal of clear governance is to assure the investment in IT generate business value and mitigate the risks that are associated with IT projects.
Regulatory governance reflects the emergence of decentered and mutually adaptive policy regimes which rests on regulation rather than service provision or taxing and spending. The term captures the tendency of policy regimes to deal with complexity with delegated system of rules. It is likely to appear in arenas and nations which are more complex, more global, more contested and more liberally democratic. The term builds upon and extends the terms of the regulatory state on the one hand and governance on the other. While the term regulatory state marginalize non-state actors (NGOs and Business) in the domestic and global level, the term governance marginalizes regulation as a constitutive instrument of governance. The term regulatory governance therefore allows us to understand governance beyond the state and governance via regulation.
Participatory governance focuses on deepening democratic engagement through the participation of citizens in the processes of governance with the state. The idea is that citizens should play a more direct roles in public decision-making or at least engage more deeply with political issues. Government officials should also be responsive to this kind of engagement. In practice, participatory governance can supplement the roles of citizens as voters or as watchdogs through more direct forms of involvement.
"Metagovernance" is widely defined as the "governing of governing". It represents the established ethical principles, or 'norms', that shape and steer the entire governing process. It is important to note that there are no clearly defined settings within which metagoverning takes place, or particular persons who are responsible for it. While some[who?] believe metagoverning to be the role of the state which is assumed to want to steer actors in a particular direction, it can "potentially be exercised by any resourceful actor" who wishes to influence the governing process. Examples of this include the publishing of codes of conduct at the highest level of international government, and media focus on specific issues at the socio-cultural level. Despite their different sources, both seek to establish values in such a way that they become accepted 'norms'. The fact that 'norms' can be established at any level and can then be used to shape the governance process as whole, means metagovernance is part of both the input and the output of the governing system.
Governance as a normative concept
When discussing governance in particular organisations, the quality of governance within the organisation is often compared to a standard of good governance. In the case of a business or of a non-profit organization, for example, good governance relates to consistent management, cohesive policies, guidance, processes and decision-rights for a given area of responsibility, and proper oversight and accountability.
"Good governance" implies that mechanisms function in a way that allows the executives (the "agents") to respect the rights and interests of the stakeholders (the "principals"), in a spirit of democracy.
Good governance is an indeterminate term used in international development literature to describe various normative accounts of how public institutions ought to conduct public affairs and manage public resources. These normative accounts are often justified on the grounds that they are thought to be conducive to economic ends, such as the eradication of poverty and successful economic development. Unsurprisingly different organizations have defined governance and good governance differently to promote different normative ends.
The World Bank defines governance as:
the manner in which power is exercised in the management of a country's economic and social resources for development.
The Worldwide Governance Indicators project of the World Bank defines governance as:
the traditions and institutions by which authority in a country is exercised.
This considers the process by which governments are selected, monitored and replaced; the capacity of the government to effectively formulate and implement sound policies and the respect of citizens and the state of the institutions that govern economic and social interactions among them.
An alternate definition sees governance as:
According to the United Nations Development Programme's Regional Project on Local Governance for Latin America:
Governance has been defined as the rules of the political system to solve conflicts between actors and adopt decision (legality). It has also been used to describe the "proper functioning of institutions and their acceptance by the public" (legitimacy). And it has been used to invoke the efficacy of government and the achievement of consensus by democratic means (participation).
Over the last decade,[when?] several efforts have been conducted in the research and international development community in order to assess and measure the quality of governance of countries all around the world.
Measuring governance is inherently a controversial and political exercise. A distinction is therefore made between external assessments, peer assessments and self-assessments. Examples of external assessments are donor assessments or comparative indices produced by international non-governmental organisations. An example of a peer assessment is the African Peer Review Mechanism. Examples of self-assessments are country-led assessments that can be led by government, civil society, researchers and/or other stakeholders at the national level.
One of these efforts to create an internationally comparable measure of governance and an example of an external assessment is the Worldwide Governance Indicators project, developed by members of the World Bank and the World Bank Institute. The project reports aggregate and individual indicators for more than 200 countries for six dimensions of governance: voice and accountability, political stability and lack of violence, government effectiveness, regulatory quality, rule of law, control of corruption. To complement the macro-level cross-country Worldwide Governance Indicators, the World Bank Institute developed the World Bank Governance Surveys, which are country-level governance assessment tools that operate at the micro or sub-national level and use information gathered from a country’s own citizens, business people and public sector workers to diagnose governance vulnerabilities and suggest concrete approaches for fighting corruption.
A new Worldwide Governance Index (WGI) has been developed and is open for improvement through public participation. The following domains, in the form of indicators and composite indexes, were selected to achieve the development of the WGI: Peace and Security, Rule of Law, Human Rights and Participation, Sustainable Development, and Human Development.
Additionally, in 2009 the Bertelsmann Foundation published the Sustainable Governance Indicators (SGI), which systematically measure the need for reform and the capacity for reform within the Organisation for Economic Co-operation and Development (OECD) countries. The project examines to what extent governments can identify, formulate and implement effective reforms that render a society well-equipped to meet future challenges, and ensure their future viability.
Section 10 of the Government Performance and Results Act (GPRA) Modernization Act requires U.S. federal agencies to publish their strategic and performance plans and reports in machine-readable format.
The International Budget Partnership (IBP) launched the Open Budget Initiative in 2006 with the release of the first Open Budget Survey (OBS). The OBS is a comprehensive analysis and survey that evaluates whether central governments give the public access to budget documents and provide opportunities for public participation in the budget process. To measure the overall commitment to transparency, the IBP created Open Budget Index (OBI), which assigns a score to each country based on the results of the survey. While the OBS is released biannually, the IBP recently released a new OBS Tracker, which serves as an online tool for civil society, the media, and other actors to monitor in real time whether governments are releasing eight key budget documents. The Open Budget Index data are used by the Open Government Partnership, development aid agencies, and increasingly investors in the private sector as key indicators of governance, particularly fiscal transparency and management of public funds.
Examples of country-led assessments include the Indonesian Democracy Index, monitoring of the Millennium Development Goal 9 on Human Rights and Democratic Governance in Mongolia and the Gross National Happiness Index in Bhutan.
Section 10 of the Government Performance and Results Act Modernization Act (GPRAMA) requires U.S. federal agencies to publish their performance plans and reports in machine-readable format, thereby providing the basis for evaluating the quality of their performance of the governance functions entrusted to them, as specified in their strategic objectives and performance indicators. Publishing performance reports openly on the Web in a standard, machine-readable format is good practice for all organizations whose plans and reports should be matters of public record.
- Agency cost
- Collaborative governance
- Corporate governance
- Ecclesiastical polity
- International healthcare accreditation
- Internet governance
- Global governance
- Open-source governance
- Participatory democracy
- Policy Governance
- Principal–agent problem
- Public choice theory
- Public management and New public management
- Rule According to Higher Law
- Seat of local government
- Social innovation
- SOA governance
- Strategy Markup Language (StratML), particularly Part 2, Performance Plans and Reports
- Bevir, Mark (2013). Governance: A very short introduction. Oxford, UK: Oxford University Press.
- Hufty, Marc (2011). "Investigating Policy Processes: The Governance Analytical Framework (GAF). In: Wiesmann, U., Hurni, H., et al. editors. Research for Sustainable Development: Foundations, Experiences, and Perspectives.". Bern: Geographica Bernensia: 403–424.
- see document on etymology prepared by the European Commission at http://ec.europa.eu/governance/docs/doc5_fr.pdf
- Marcos Antonio Mendoza, "Reinsurance as Governance: Governmental Risk Management Pools as a Case Study in the Governance Role Played by Reinsurance Institutions", 21 Conn. Ins. L.J. 53, 68-70 (2014) http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2573253
- Thakur, Ramesh; Van Langenhove, Luk (2006). "Enhancing Global Governance through Regional Integration". Global Governance 12 (3 July, September): 233–240.
- James N. Rosenau, "Toward an Ontology for Global Governance", in Martin Hewson and Thomas Sinclair, eds., Approaches to Global Governance Theory, SUNY Press, Albany, 1999.
- Hufty, Marc (2011). "Governance: Exploring four approaches and their relevance to research. In: Wiesmann, U., Hurni, H., et al. editors. Research for Sustainable Development: Foundations, Experiences, and Perspectives.". Bern: Geographica Bernensia: 165–183.
- Spear, Cornforth & Aiken, 2009. The governance challenges of social enterprises: Evidence from a UK empirical study. Annals of Public and Cooperative Economics, 89(2), 247-273.
- Smallwood, Deb (March 2009). "IT Governance: A Simple Model". Tech Decision CIO Insights.
- David Levi-Faur, "Regulation & Regulatory Governance", in David Levi-Faur, Handbook on the Politics of Regulation, Edward Elgar, Cheltenham, 2011, pp. 1-20.
- Braithwaite, John, Cary Coglianese, and David Levi‐Faur. "Can regulation and governance make a difference?." Regulation & Governance 1.1 (2007): 1-7.
- 'Triumph, Deficit or Contestation? Deepening the 'Deepening Democracy' Debate' Institute of Development Studies (IDS) Working Paper 264 July 2006.
- Kooiman, J. Governing as Governance. Sage publications 2003. p170.
- Sorensen, E. Metagovernance: The Changing Role of Politicians in Processes of Democratic Governance. American Review of Public Administration. Volume 36 2006, pp 98-114 (p 103).
- Onyango, P & Jentoft, S. Assessing Poverty in small-scale fisheries in Lake Victoria, Tanzania.Fish and Fisheries. Volume 11 2010, pp 250-263 (p258).
- Evans, J. Environmental Governance. Routledge 2012. p40.
- Kooiman, J. Governing as Governance. Sage publications 2003. p 171.
- World Bank, Managing Development - The Governance Dimension, 1991, Washington D.C., p. 1
- A Decade of Measuring the Quality of Governance.
- Bell, Stephen, 2002. Economic Governance and Institutional Dynamics, Oxford University Press, Melbourne, Australia.
- This is a very widely cited definition, as in Applebaugh, J. (rapporteur), "Governance Working Group", power-point presentation, National Defense University and ISAF, 2010, slide 22.
- "World Governance Index 2009 Report". World Governance. Retrieved 3 February 2013.
- Empter, Stefan; Janning, Josef (2009). "Sustainable Governance Indicators 2009 - An Introduction". In Stiftung, Bertelsmann. Policy Performance and Executive Capacity in the OECD. Gütersloh: Verlag Bertelsmann Stiftung.
- Castro, Michael, 12 September 2013, Open Budgets Key to Open Government: Next Steps for OGP Countries, retrieved 2 December 2014
- "Manifesto for Smarter Intervention in Complex Systems", by Mark Fell, Carré & Strauss. 2013.
- Becht, Marco, Patrick Bolton, Ailsa Röell, "Corporate Governance and Control" (October 2002; updated August 2004). ECGI - Finance Working Paper No. 02/2002.
- Asie Dwise (2011), Corporate Governance: An Informative Glimpse, International Journal of Governance. 1(2) :206-214
- Eells, R.S.F. (1960), The Meaning of Modern Business: An Introduction to the Philosophy of Large Corporate Enterprise (Columbia University Press, NY).
- Heritier, P. & Silvestri P. (Eds.), Good government, Governance, Human complexity. Luigi Einaudi's legacy and contemporary societies, Leo Olschki, Firenze, 2012.
- Senn, Marcell. Sovereignty – Some critical Remarks on the Genealogy of Governance In: Journal on European History of Law, London: STS Science Centre, Vol. 1, No. 2, pp. 9–13, (ISSN 2042-6402).
- Türke, Ralf-Eckhard: Governance - Systemic Foundation and Framework (Contributions to Management Science, Physica of Springer, September 2008).
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