GOVERNANCE AND THEORIES OF GOVERNANCE

Meaning

 Governance means “the process of decision-making and the process by which

decisions are implemented”.
 Governance also represents the norms, values and rules of the game through which
public affairs are managed in a manner that is transparent, participatory, inclusive and
responsive.

 Governance can be used in several contexts such as corporate governance,

international governance, national governance and local governance.

 It assures that corruption is minimized, the views of minorities are taken into
account and that the voices of the most vulnerable in society are heard in decision-
making.

 It is also responsive to the present and future needs of society.

Good Governance

Meaning of Good Governance: Refers to the process and mechanisms thought to be needed
to promote governance for e.g. democracy & good civil rights, with transparency, rule of
law and efficient public services.

8 Characteristics of Good Governance

Participation:- People should be able to voice their own opinions through legitimate
immediate organizations or representatives.

- This includes men and women, vulnerable sections of society, backward classes,
minorities, etc.

Rule of Law:

- Legal framework should be enforced impartially, especially on human rights laws.

- Without rule of law, politics will follow the principle of matsya nyaya ie law of
fish which means the strong will prevail over the weak.

Consensus Oriented: - Consensus oriented decision-making ensures that even if

everyone does not achieve what they want to the fullest, a common minimum can be
achieved by everyone which will not be detrimental to anyone.
 - It mediates differing interests to meet the broad consensus on the best interests of a
community.

Equity and Inclusiveness:

- Good governance assures an equitable society.

- People should have opportunities to improve or maintain their well-being.

Effectiveness and Efficiency:

- Processes and institutions should be able to produce results that meet the needs of
their community.
- Resources of the community should be used effectively for the maximum output.

Accountability:

- Good governance aims towards betterment of people, and this can not take place
without the government being accountable to the people.
- Governmental institutions, private sectors, and civil society organizations should be
held accountable to the public and institutional stakeholders.

Transparency:
- Information should be accessible to the public and should be understandable and
monitored.

- It also means free media and access of information to them.

Responsiveness:
Institutions and processes should serve all stakeholders in a reasonable period of time.

Types of Governance

1. 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.

2. 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."

3. 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".

4. Nonprofit governance: has a dual focus: (a) achieving the organization's social
mission and (b) ensuring the organization is viable.

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.

5. Project governance: It is the management framework within which project decisions

are made and outcomes of a project are realized. 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.

6. 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
regulatory governance therefore allows us to understand governance beyond the state
and governance via regulation.
 THEORIES

RATIONAL CHOICE THEORY

• Rational choice theory states that individuals use rational calculations to make
rational choices and achieve outcomes that are aligned with their own personal
objectives. These results are also associated with an individual’s best, self-interests. 

• Attempts to explain all social phenomena with reference to micro level of

individual’s activity. It unpacks social facts, institutions, and patterns of rule entirely
by analyses of individuals acting. It models individuals acting on the assumption
that they adopt the course of action most in accord with their preferences.

• The notion that the behavior can violate a rational perception or fail to conform to a
norm of ideal rationality but be in consistency with the objectives.

• Simply, it says that people behave the way they do because they believe that their
actions have more benefits than cost.

BASIC PRINCIPLES OF RATIONAL CHOICE THEORY

• Individuals are Rational

• Individuals have interests.

• Individuals make their own choices in a rational way to increase their utilities.

• Individual cannot have full control over the results of their choices.

NEW INSTITUTIONALISM THEORY

• Interplay of different institutions within society. An approach to the study of

institutions that focuses on the constraining and enabling effects of formal and
informal rules on the behavior of individuals and groups.

• It comes from Old Institutionalism theory which was focused on state/government

and their various practices applied to citizens.

• The term ‘Institutions’ here basically signifies an organization composed of two or

more people serving social purpose.

• explores how institutional structures, rules, norms, and cultures constrain the choices

and actions of individuals when they are part of a political institution.
• Historical Institutionalists focuses on the way past institutional arrangements shape
responses to political pressures.

• Sociological Institutionalists focus on values, identities and the way they shape the
individual.

SYSTEMS THEORY

• Deals with the study of systems in general.The goal is to elucidate principles that
can be applied to all systems.

• Organised group constitutes a system, which is composed of regularly interacting or

interrelating groups of activities or people performing activities

• System in focus cannot function without its constituents.

• Governance system is responsible for setting strategy and ensuring effective use of
resources.

REGULATION THEORY

• Main approach is derived from Marxism’s theory. Marx argued that capitalism is
unstable because it leads to capital overaccumulation and class struggle.

• Regulation theorists examine the ways in which different varieties of capitalism

attempt to manage these instabilities.

• Theorists describes it as the shift from Fordian to Post-Fordism period.

• Fordism- Combination of ‘intensive accumulation’ and ‘monopolistic regulation’ ;

combination associated with mass production pioneered by Henry Ford in 1920s.