Conceptualising Governance: A theoretical and practical agenda

The context we refer to for the term governance is necessarily global. Governance is generally understood as a broad process affecting the collective decision-making roles and procedures, management and authority relationships amongst social and economic agents involving multiple jurisdictions and domains. In each of these, there is a divergence of opinion, knowledge and information which limit the options available to each party to reach the optimal (decision, investment, choice, strategy, .) and therefore second best procedures (or contracts) are used to reach agreement. Governance is about governing and therefore cannot be isolated from the notion of political responsibility in all areas in which delegated authority performs decision-making.

We live in the formative era of new global institutions and probably a future world government. Therefore, the internal working of a single organisation is not a major concern here, unless internal voting rights are relevant for major policy decisions - such as the United Nations Security Council - but its relationship with outside partners and their management, coordination and control. For instance, governing the various aspects of technology transfer and administrative reform in advanced as well as less developed countries means often a not always easy reconciliation between commercial and developmental objectives. Such relationship might e true also for many other programmes and initiatives involving cross-sectoral initiatives, a standard practice in nearly all governments around the world.

Three levels of operational activity can be identified. The result would be a 'molecular' mapping closing in the promotion of an ideal type of governance. There are necessary and obvious differences between these activities, but the aim here is to identify as far as it is possible a common model of reference for the above on the theoretical level. Based on size, each actor involved can be an individual or a group. The first level refers to the analysis of roles and forms of organising of the existing governance structure, the instruments used and the methods of decision making. At the second level follows the analysis of roles, responsibilities and competencies of the single individuals and the members of the higher decision-making body (which could be the board of directors, the council of ministries, etc.). Typical of this level are activities aimed at forming committees, the selection of their members from within and from outside independent bodies as well as the decisions related to the internal policies to be pursued as much as the understanding of the specific context which the various actors and organisation operate. Finally, the third level is concerned with the mechanisms of governance based on the roles, functions and capabilities identified and selected at the previous level.

As Satish Jha point out in his intervention in this blog:

'There are several reasons for embracing ICTs [Information and Communication Technologies, n.d.r.] for governance. However, just one, viz. lowering the transaction cost of governance, can alone more than justify any reasonable investment in ICT. It has been demonstrated that even in a rather sub-optimal setting using computerized processes on top of the existing archaic process can reduce the overall transaction cost for the government as well as for the citizen by an order of magnitude. An example frequently cited is delivery of a certificate that is mandated by the state to a citizen using computerized means. Full mechanization of e-governance processes would yield even greater savings'.

That is true, but I would like to point out that a basic problem that governments around the world face at the moment is the continuing reduction of resource availability to promote welfare programmes. So what does global governance has to do with this one may wonder? I will try to convey the message by using the following example. The governance problem of any policy or scheme promoted at the national level is the extent to which present or future generations should pay for it and based on what parameters. Generally, the parameters adopted are of two kinds: tangible (well known and consolidated criteria) and intangibles (less well defined and ranging including the impact on the environment and the ecosystem, but also education and sound management practice). In other words the crux of the argument stands on the sustainability of the proposed scheme in relation to the maximisation problem faced by the proponents, which then could be used as a parameter to measure the transaction costs involved in the process of reform. However, other costs need also to be taken into account. In fact, if the objective would be to maximise profits there will be a certain emphasis on the return on the investment, the financial viability of the plan as opposed to others, and other supply related questions of efficiency and commercial return. On the other hand socio-economic considerations and environmental issues are among the two most mentioned parameters in deciding the impact of government-led programmes as well as in evaluating the extent to which investments made by enterprises are 'socially responsible'.

Allow me to ask a provocative question: to what extent the two modus operandi of government and private sector entities (both converging to become highly focussed on results, on 'contracting in' with their citizens and 'contracting out' their services) are fundamentally different between one another? The question of governance then takes a new shape in relation to jointly owned initiatives. It is not any longer about a dynamic rivalry between the two types (and until recently antithetic forms of governing and organising resources and activities) is not any longer a matter of appartenance to one or the other 'front' since, at in least in terms of governance, there are many growing similarities, or at least a convergence. In nuce this is about the 'commercialisation' of government and the 'social responsibilisation' of firms.

But whereas commercial interest of firms require maximisation of sales, in government it means maximising re-election possibilities. Sometimes unpopular decisions beneficial over the long-term mean losing the chance to be re-elected. Historically very few incumbent governments have drastically eliminated the reforms programmes initiated by their predecessor, since there is the risk that the former would not initiate any sustainable reform since it would take the blame and the successor would take the merit. The key question therefore resides with how such situation could be reversed minimising the impact on future generations. Greater democratic participation in the process of cooperation to reach societal objectives over the long term could be desirable. But translating it into practice would mean not only governing by objectives, but governing by leveraging the possibilities of self-governance which interconnected virtual communities can provide.

It means also delegating authority and responsibility as well as revenue raising functions to provide internal alignment together with enhanced self-control, rather than just re-centralised control. In a sentence, current geo-politics, governance arrangements, governments' shrinking and multinationals' strategies are further re-combining the division of ownership and control back into their convergence irrespective of the scale of activity. The former are enhanced by the increased coordination and communication capacity of open networking architectures like the Internet, which is what is increasing scale by coordination in a variety of small business firms and medium sized enterprises, and leads to a necessary re-conceptualisation of the meaning of industrial policy, district and scope.

For the future there is an urgent need to recognise, without falling in the trap of technological determinism the enhanced possibilities of coordination which ICT create and their inverse relationship with the notion of jurisdiction and boundary regulation for their effectiveness. It follows that future design of governance architectures should focus on the creation of win-win situations for cooperative agreements multilaterally as much as bilaterally. The nexus of risk and responsibility remain a constant for the assessment and functioning of governance mechanisms that could maximise innovation, reduce risk as well as advance welfare enhancing objectives. In the context of merging organsational structures and procedures with delocalisation and mobile expertise, effective governance resides first with the responsibilisation of individuals, networks and communities, which can be essential to produce the results aimed by any government under democratic control. We cannot conclude without launching a few important questions (which can also be considered as guidelines) about:

a) What are the new and emergent organisational forms in the global grids of Information and Communication Technologies?

b) How is this promoting social and economic progress?

c) And, what are the risks that can be identified in this process?

it will be published here.

Related to this article are:

Conceptualising innovation: a theoretical and practical agenda

Conceptualising risk: a theoretical and practical agenda

Further Reading:

Simona Milio's article The mother of all questions: how to reform global governance?

The dialogue between Professor Roberto Panzarani and Tommaso Correale Santacroce on business ethics and evaluation of intangible assets