Overview

Use of the term "governance" in place of "government" goes back at least to the work of Harlan Cleveland (1972) and was a way of distancing authors "from the traditions of public administration and from criticisms of bureaucracy" (Frederickson, 1999: 705). Four major influences helped bring governance theory to the fore:
1. The concept of "governance" was used in the 1990s by the "new public administration," the National Performance Review, and the reinventing government movement in the United States to reflect the idea of implementing public policies not just through governmental bureaucracies but also through a variety of public-private partnerships, outsourcing, and privatization.
2. A parallel influence in the 1990s was the growing importance of networking (including electronic networking) in policy development and coordination: governance was associated with networking, whereas government was associated as a term with traditional bureaucratic hierarchies in public administration (ex., Hajer & Wagenaar, 2003)..
3. As a third influence, governance theory in public administration drew directly on governance theory in the corporate and non-profit sectors, where authors like Fishel (2003) were concerned with designing governing boards which might give organizations a competitive advantage through network ties.
4. Fourth, governance theory seemed particularly germane to European authors as they wrestled with how to conceptualize the policy implications for democratic government as policy-making shifted from nation-states to the European Union. The concept of multi-level governance, with its emphasis on networking of policy communities, seemed better calculated to reinforce democratic values than did traditional notions of hierarchical control exercised by EU bureaucrats even further removed from the people than had been national governments (ex., Smith-Hillman, 2006). .

Beyond this, governance theory cropped up as a useful concept in a wide variety of contexts ranging from international relations in the "new world order" after the Cold War (Rosenau & Czempiel, 1992; Hewson & Sinclair, 1999) to the interaction of the political and economic sectors in fostering democracy (Feng, 2005) to governance of the Internet (Maclean, 2005). Today, "governance theory" is a broad umbrella, covering almost any non-hierarchical mode of policy formation exercised by formal governmental bodies interacting with each other and with organizations in civil society (ex., Rhodes, 1997; Mayntz, 1998).

Much of governance theory is close to theories of new institutionalism, discussed separately, since both are anti-rationalist theories emphasizing how decision-making is embedded in many types and levels of influences which lie behind organizational culture and experiences and shape how organizations deal with public policies..

Key Terms and Concepts

• Multi-level governance. Hill and Hupe (2002, 2006) set forth a "multiple governance framework" explicitly influenced by institutional theory. The core concept of multi-level governance is that decision-making authority is distributed through government and beyond, not focused at one authoritative point as in traditional hierarchical theories of government. Multi-layer policy formation is the rule, not the exception. Ultimately, however, the legitimacy of government is sought to make policy decisions for subsequent implementation. While there is some policy discretion afforded to street-level bureaucrats and some degree of self-regulation delegated by government to professional, non-profit, and private sector groups, in multi-level governance upper levels monitor policy and use carrots as well as sticks to attempt to influence policy outcomes, though due to the complexity of the process they never completely control them.

• Governance regimes. Lynn, Heinrich, and Hill (2001) propose "a logic of governance" which sees policy outcomes as the result of numerous interrelated factors which collectively form a governance regime:
  1. Environmental factors: political structures, degree of competition, the larger economy, the extent of system-wide coordination, and legal practices.
  2. Client characteristics: characteristics, needs, and behaviors of the people served.
  3. Treatment factors: organizational mission or objectives, eligibility criteria for the target population, program scope, skills of service providers, and service intensity.
  4. Structural factors: organization type, level of integration, degree of centralization, administrative rules, budget, contractual arrangements, local site management, and institutional culture or values.
  5. Managerial roles and actions: the interpretation of policy directives, leadership practices, staff management, professionalism, and accountability mechanisms.

  In terms of methodology, Lynn, Heinrich, and Hill argued that atheoretical deconstruction of case studies to find administrative best practices may well be biased and oversimplify the true complexity of the policy process. Instead, the logic of governance requires taking a broad, theoretical view of entire governance regimes as the context for decision-making. That is, the focus should be on the broadest feasible context for policy models, not on the details of cases or even performance data. This broad context may be depicted as a relationship hierarchy from citizen preferences to political interests to the structure and management of organizations to the core focus of public agencies to client outcomes to stakeholder assessments, and, completing the circle, back to public and political concerns. Statistically, since a governance regime operates at federal, state, local, organizational, and interpersonal levels, multilevel modeling is often an appropriate quantitative procedure and one which contrasts with the case studies/best practices/performance evaluation approaches hitherto common in public administration. That is, Lynn, Heinrich, and Hill urged a reorienting of public administration as a discipline away from anecdotal cases and bivariate performance correlations and toward multivariate, multilevel modeling of all the factors which constitute a governance regime.

• Adaptive governance is a term developed by Brunner, Steelman, et al. (2005) in the context of science/technology policy to emphasize governance not as a top-down form of expert decision-making (as in scientific management thinking) but rather as a process by which expert-formulated policies are adapted to real people and their real experiences at the street level. As such, the concept of adaptive governance is counter to the idea that there is "one best way" to policy outcomes, discoverable by scientific research, but instead sees policy formulation emerging from processes involving policy communities.

Assumptions

• Distribution of power. By emphasizing the diffuse nature of authority and by stressing the myriad influences on policy from all levels and sectors, governance theory can be overly sanguine about the democratic nature of the state. That is, one critique of governance theory is that network actors are far from equal. State and corporate actors are better positioned than average citizens to "stack the deck" in the game of networking, based on their greater funds, expertise, information, experience, legitimacy, and other resources. Likewise, global governance theory, in emphasizing cooperative policy solutions through public/NGO/private alliances, can gloss over sharp differentials in power among nation states as network actors with opposing interests not amenable to solution simply through more astute networking.

• Actor interest. Some versions of governance theory draw heavily from the corporate governance literature and view policy networks as self-maximizing marketplaces. Michael Jensen (2000), one of the founding fathers of modern corporate governance theory, for instance, argues that social welfare is maximized when all firms seek to maximize total firm value. Such views contrast with those of corporate theorists of the "social responsibility of the firm" variety, not to mention advocates of government regulation of the firm, whether for "liberal" public interest reasons or "conservative" reasons of assuring the long-run interests of business in stable and predictable marketplaces. Just as governance theorists may not clearly address issues of differential power, so they may not clearly address actor interest in networks, instead implying a benign "invisible hand" maximizing social welfare by virtue of the marketplace of self-interested influences represented in the network.

Illustrative Hypotheses

Hypotheses below are illustrative and not all authors associated with this theory would subscribe to all hypotheses listed.
• Over time, an organization will evolve from hierarchical structure coordinated by command processes to a networked structure coordinated by community-building.
• Networking is more effective than command in implementing policy.
• Over time, agencies will evolve toward greater involvement of non-profit and/or private sector groups in policy implementation.
• Agencies which display greater involvement of non-profit and/or private sector groups in policy implementation will be more effective than those which do not.
• The more an agency attempts to implement policy based on rational top-down expertise, the less effective it will be.
• The more an agency takes the five dimensions of governance regimes (environmental, client, treatment, structural, and managerial) into account in implementation, the more effect it will have on policy outcomes.
• The more an agency takes into account organizational experiences of those at the ground level, the more effective it will be in implementation.

Frequently Asked Questions

• What other theories are closely related to governance theory?
  Besides institutional theory, discussed separately, other theories which are related because they also emphasize networked systems, include systems theory, policy network theory, and organizational field theory. Systems theory and policy network theory focus more on networks as systems. Organizational field theory is closer to governance theory insofar as both focus on the role of organizations within networks.

Bibliography

• Brunner, R. D., Steelman, T. A., Coe-Juell, L., Cromley, C. M., Edwards, C. M., & Tucker, D. W. (2005). Adaptive governance: Integrating science, policy, and decision making. NY: Columbia University Press.
• Cleveland, Harlan (1972). The future executive. NY: Harper & Row.
• Feng, Yi (2005). Democracy, governance, and economic performance: Theory and evidence. Cambridge, MA: MIT Press.
• Fishel, David (2003). The book of the board. Effective governance for non-profit organisations. Sydney: Federation Press.
• Frederickson, H. George (1999). The repositioning of American public administration. PS: Political Science and Politics 32(4): 701-711.
• Hajer, Maarten A., & Wagenaar, Hendrick, eds. (2003). Deliberative policy analysis: Understanding governance in the network society. Cambridge, UK: Cambridge University Press.
• Hewson, Martin & Sinclair, Timothy J., eds. (1999). Approaches to global governance theory. Albany, NY: State University of New York Press.
• Hill, Michael & Hupe, Peter L. (2002). Implementing public policy: Governance in theory and in practice. Thousand Oaks, CA: Sage Publications.
• Hill, Michael & Hupe, Peter L. (2006). Analysing policy processes as multiple governance: Accountability in social policy. Policy & Politics 34(3): 557-573.
• Jensen, Michael C. (2000). Theory of the firm: Governance, residual claims, and organizational forms. Cambridge, MA: Harvard University Press.
• Lynn, Laurence E., Heinrich, Carolyn, & Hill, Carolyn (2001). Improving governance: A new logic for empirical research. Washington, DC: Georgetown University Press.
• Maclean, Don (2005). Internet governance: A grand collaboration. NY: United Nations ICT Task Force Global Forum on Internet Governance.
• Mayntz, Renate (1998). New challenges to governance theory. Jean Monnet Chair Paper no. 50. Florence: Robert Schuman Centre of the European University.
• Rhodes, R.A.W. (1997). Understanding governance. Policy networks, governance, reflexivity and accountability. Buckingham/Philadelphia: Open University Press.
• Rosenau, James & Czempiel, Ernst-Otto, eds.(1992). Governance without government: Order and change in world politics. Cambridge, MA: Cambridge University Press.
• Smith-Hillman, A. Vindelyn (2006). EC approach to governance as applied to the modernisation of competition policy. European Business Review 18(1): 33-49.