Governance comprises all of the processes of governing – whether undertaken by the government of a state, by a market or by a network – over a social system (family, tribe, formal or informal organization, a territory or across territories) and whether through the laws, norms, power or language of an organized society. 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". In lay terms, it could be described as the political processes that exist in and between formal 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 include an organization (such as a corporation recognized as a legal entity by a government), a socio-political group (chiefdom, tribe, gang, family, religious denomination, etc.), or another, informal group of people. In business and outsourcing relationships, Governance Frameworks are built into relational contracts that foster long-term collaboration and innovation.
Governance is the way rules, norms and actions are structured, sustained, regulated and held accountable. The degree of formality depends on the internal rules of a given organization and, externally, with its business partners. 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 or a corporation may be governed by a small board of directors and pursue more specific aims.
In addition, a variety of external actors without decision-making power can influence the process of governing. These include lobbies, think tanks, political parties, non-government organizations, community and media.
Origin of the word
Like government, the word governance derives, ultimately, from the Greek verb kubernaein [kubernáo] (meaning to steer, the metaphorical sense first being attested in Plato).
Its occasional use in English to refer to the specific activity of
ruling a country can be traced to early modern England, when the phrase
"governance of the realm" appears in works by William Tyndale and in royal correspondence between James V of Scotland and Henry VIII of England. The first usage in connection with institutional structures (as distinct from individual rule) is in Charles Plummer's The Governance of England (an 1885 translation from a 15th-century Latin work by John Fortescue, also known as 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.
However, the use of the term governance in its current
broader sense, encompassing the activities of a wide range of public and
private institutions, acquired general currency only as recently as the
1990s, when it was re-minted by economists and political scientists and
disseminated by institutions such as the UN, IMF and World Bank. Since then, the term has steadily gained increasing usage.
Types
Governance
often refers 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 also define normative or practical agendas.
Normative concepts of fair governance or good governance are common
among political, public sector, voluntary, and private sector organizations.
Governance as process
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 business relationships (especially complex outsourcing relationships), 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.
Public governance
There is a 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
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
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.
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
Nonprofit
governance has a dual focus: achieving the organization's social
mission and ensuring the organization is viable. 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 governance
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, p. 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).
Project governance
Project governance is the management framework within which project
decisions are made. Its role is to provide a repeatable and robust
system through which an organization can manage its capital
investments—project governance handles tasks such as outlining the
relationships between all groups involved and describing the flow of
information to all stakeholders.
Environmental governance
Governance in an environmental context may refer to:
- a concept in political ecology which promotes environmental policy that advocates for sustainable human activity (ie. that governance should be based upon environmental principles).
- the processes of decision-making involved in the control and management of the environment and natural resources. The International Union for Conservation of Nature (IUCN), define environmental governance as the "multi-level interactions (i.e., local, national, international/global) among, but not limited to, three main actors, i.e., state, market, and civil society, which interact with one another, whether in formal and informal ways; in formulating and implementing policies in response to environment-related demands and inputs from the society; bound by rules, procedures, processes, and widely accepted behavior; possessing characteristics of 'good governance'; for the purpose of attaining environmentally-sustainable development."
Land governance
Land
governance is concerned with issues of land ownership and tenure. It
consists of the policies, processes and institutions by which decisions
about the access to, use of and control over land are made, implemented
and enforced; it is also about managing and reconciling competing claims
on land. In developing countries, it is relevant as a tool to
contribute to equitable and sustainable development, addressing the
phenomenon that is known as ‘land grabbing’. The operational dimension of land governance is land administration.
Security of land tenure is considered to contribute to poverty
reduction and food security, since it can enable farmers to fully
participate in the economy. Without recognized property rights, it is
hard for small entrepreneurs, farmers included, to obtain credit or sell
their business – hence the relevance of comprehensive land governance.
There is constant feedback between land tenure problems and land
governance. For instance, it has been argued that what is frequently
called 'land grabbing', was partly made possible by the Washington Consensus-inspired
liberalization of land markets in developing countries. Many land
acquisition deals were perceived to have negative consequences, and this
in turn led to initiatives to improve land governance in developing
countries.
The quality of land governance depends on its practical implementation, which is known as land administration:
‘the way in which rules of land tenure are made operational’. And
another factor is accountability: the degree to which citizens and
stakeholder groups are consulted and can hold to account their
authorities.
The main international policy initiative to improve land
governance is known as the Voluntary Guidelines on the Responsible
Governance of Tenure of Land, Fisheries and Forests in the Context of
National Food Security (VGGT), endorsed by the Committee on World Food Security (CFS).
Internet governance
Internet governance was defined by the World Summit on the Information Society
as "the development and application by Governments, the private sector
and civil society, in their respective roles, of shared principles,
norms, rules, decision-making procedures, and programmes that shape the
evolution and use of the Internet."
Internet governance deals with how much influence each sector of
society should have on the development of the Internet, such as to what
extent the state should be able to censor it, and how issues on the
Internet, such as cyber-bullying, should be approached.
Information technology governance
IT governance primarily deals with connections between business focus
and IT management. The goal of clear governance is to assure that
investment in IT generates business value and mitigates the risks that
are associated with IT projects.
Regulatory governance
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
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.
Contract governance
Emerging thinking about contract governance is focusing on creating a
governance structure in which the parties have a vested interest in
managing what are often highly complex contractual arrangements in a
more collaborative, aligned, flexible, and credible way.
In 1979, Nobel laureate Oliver Williamson wrote that the governance
structure for a contract is the "framework within which the integrity of
a transaction is decided", adding further that "because contracts are
varied and complex, governance structures vary with the nature of the
transaction."
Multi-level governance
Multi-level
governance is the concept and study of the fact that many intertangled
authority structures are present in a global political economy. The
theory of multi-level governance, developed mainly by Liesbet Hooghe and Gary Marks, arose from increasing European integration, particularly through the European Union. José Manuel Barroso, former President of the European Commission,
has stated that "the multilevel system of governance on which our
European regional policy is based provides a key boost to the Union's
competitive edge" and that, in times of economic crisis, "multilevel
governance must be a priority."
Metagovernance
"Metagovernance" is 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
believe metagovernance 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 sociocultural 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.
Collaborative governance
A collaborative governance framework uses a relationship management
structure, joint performance and transformation management processes and
an exit management plan as controlling mechanisms to encourage the
organizations to make ethical, proactive changes for the mutual benefit
of all the parties.
Security sector governance
Security sector governance (SSG) is a subpart concept or framework of
security governance that focuses specifically on decisions about security and their implementation within the security sector of a single state. SSG applies the principles of good governance to the security sector in question.
As a normative concept
Fair governance
When
discussing governance in particular organizations, the quality of
governance within the organization 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
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:
the use of institutions, structures of authority and even collaboration to allocate resources and coordinate or control activity in society or the economy.
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).
Measurement and assessment
Since the early years of the 2000s (decade),
efforts have been conducted in the research and international
development community to assess and measure the quality of governance of
countries all around the world.
Measuring governance is inherently a controversial and somewhat
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 organizations. 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 Worldwide Governance Index (WGI)
was developed in 2009 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.
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