The Different Meanings of Governance

Term Paper, 2010
11 Pages, Grade: 1,00



Governance is more than an extensively used buzzword of social science literature over the last 20 years. Even though its manifestations have actually existed since the origin of human social thinking, it was not until recently that the concept was adopted, based on an understanding of the genuine realm of governance, encompassing the various facets of its existence. Consequently, work on governance reflects the interest of the social science community in a shifting pattern of governing styles (Stoker 1998).

It is this vast array of phenomena related to governance, which creates confusion and misperception about its actual meaning. Rhodes (1997, 52) points to this problem as it “would seem that governance has too many meanings to be useful”. Systemic, managerial, political and further dimensions of governance compete for a functional definition. Hereby, the meaning is often fitted to a context which does not reduce its ambiguity. Hence, academic literature on governance is eclectic and relatively disjointed (Jessop 1995). The theoretical roots are among institutional economics, international relations, organizational studies, development studies, political science, and public administration. Moreover, it can be interpreted as descriptive term, analytical concept, and normative constitution (Nuscheler 2009, 9).

This essay, unconstrained by any context of a particular study discipline or academic field, investigates different meanings of governance in a more theoretical manner. It aims at discussing some of the most widely used applications of the concept of governance in order to identify diverging strands of meaning as well as common assumptions. For this purpose, the paper looks at governance interpreted as voluntary exchange in the political arena. It explores the meaning of governance as code for a minimal state, and it includes further the connotation of governance as good governance in a separate section. A final point will discuss corporate governance as yet another application field of governance from a business perspective. The main features of each of the four meanings will allow in the conclusion to assess in how far governance has a common understanding in social sciences.

Governance as Voluntary Exchange

The first approach towards a meaning of governance is politically centered. It regards governance as converting individual preferences and resources into collective action through policy coalitions that arrange favorable exchanges among citizens. Hence, the exchange perspective is built around ideas of coalition building and voluntary exchange among self-interested political actors (March and Olson 1995, 8f.). Governance in its pure stage, as a consequence, is neutral among potential human preferences. The voluntary exchange of political actors prevails against the pursuit of a particular moral imperative or constellation. This form of political behavior is inherent within contemporary Western socio-political life. The recent elections and subsequent bargaining and coalition forming in Great Britain and in the German state North Rhine-Westphalia, for instance, reflect the process of political exchange with the aim of achieving collective action.

As Coase (1994) notes, exogenous factors have a significant influence on those processes. The structure of rights and rules matters, as well as the molding of preferences of the actors involved and their resources available. Governance is then the management of political exchange within those constraints (March and Olson 1995, 12). Within this close intertwining of governance and coalition-building, the element of conscious search and subsequent discovery of one or several matching partners plays an important role.

There are two main types of governance prominent in the searching process. Following March and Olson’s (1995, 13) typology, the first type, so-called advocate, aims to improve the chance that specific policies will be implemented by a winning coalition. The advocate, therefore, intervenes to improve prospects for a particular, narrow issue that corresponds to his or her interests. The actual implementation is usually not predictable, due to a missing sustainable and reliable equilibrium between set institutions and a changing environment. Indeterminacies remain, which is why governance matters, for capable political actors manage to work effectively in the governance process within this situation of uncertainty (Anderson 1990, 196f.).

Secondly, the objective of a so-called governor in the governance process is to broaden the coalition building and to expand the capabilities of political actors to succeed in winning bargaining. Consequently, a governor is not interested in day-to-day issues and definitely not in the restriction of information for furthering short-term goals.

As a concluding note, one should keep in mind that exchange and bargaining may also have an unattractive face. That is, exchange can also emphasize coercive qualities when initial endowments are unequal. As a result, the process is far from ‘voluntary’, but simply reflects the imposition of the will of the more powerful actor (Osborne 2001, 62). Yet, this also reduces the chance that an inferior policy set prevails, which is not supported by the majority (March and Olson 1995, 22).

Governance: The Minimal State and Outside Supplements

This section discusses the aspect of governance as a code for less government, for the limits of purely governmental rule for tackling important national and global issues are increasingly recognized. Governance is ultimately concerned with creating the conditions for ordered rule and collective action. Hence, the output is equivalent to governments’ objectives; yet, the process differs. Independently from the different levels of governmental involvement that are advocated, the ‘minimal state’ discussion has the baseline agreement that governance refers to the trend of governing styles where the boundaries between public and private sectors have become blurred (Stoker 1998, 17; Choudhury and Ahmed 2002). Thus, governance in this meaning is about the change in the long-standing balance between the state and civil society.

Jeremy Bentham’s plea for a minimal state shows that such an idea is not exclusive to modern governance debates: “The request which agriculture, manufacture and commerce present to governments, is as modest and reasonable as that which Diogenes made to Alexander: ‘Stand out of my sunshine.’ We have no need of favor – we require only a secure and open path.” (quoted in Bullock and Shock 1967, 29). Minimal state as governance has the objective of increased efficiency, and as Stoker (1997, 6) notes, to cut public spending.

However, despite plans put forward that envisaged the sharing of responsibilities formerly exclusive to the government and the increased involvement of the private and voluntary sectors, Tarschys (2001, 28) observes the trend over the last 100 years towards more public spending, going from ca. 10% to half of a nation’s gross national product. Furthermore, market mechanisms in the public sector are often undone by new regulations which may simply replace former official ownership by narrow regulatory mechanisms (Rhodes 1997, 47). Apart from the results in practice, the ideological preference for less government, and the supplementation of non-state actors for a better governance process, has been and is a claim often and insistently pursued.

Huther and Shah (1998, 2) conclude that “the quality of governance is thus determined by the impact of this exercise of power on the quality of life enjoyed by its citizens.” In an international environment this entails that the minimalist-state hypothesis is adapted to a “networked minimalism” (Kenohae and Nye 2000, 14). As a world government is unfeasible, and laissez-faire, that is minimalism in its purest form, represents anarchy and, thus, a recipe for a backlash, an intermediate solution is required. Consequently, the term above is introduced, since global interdependencies are best described as networks rather than as hierarchical, and because governance at the global level will only be acceptable if it does not supersede national governance, hence, if it is minimalist.

The Meaning of Governance as Good Governance

The World Bank has a comparatively long and substantial tradition of involvement in the governance discourse. Initially, it defined governance as the exercise of political power to manage a nation’s affairs, with a strong thinking in institutional terms (World Bank 1992; Nuscheler 2009, 10). However, the concept of good governance soon went beyond that notion, taking on a normative stance. The organization set the theoretical foundations for good governance from the late 1980s on. Using its definition, good governance is „a predictable and transparent framework of rules and institutions for the conduct of private and public business“ (World Bank 1994, vii).

Within a short period of time, global leaders adopted the idea and included it in their political repertoire, especially with regards to development. Among others, former UN Secretary-General Kofi Annan pointed to the decisive role of good governance in the world:

“Good governance and sustainable development are indivisible. […] Without good governance — without the rule of law, predictable administration, legitimate power and responsive regulation — no amount of funding, no amount of charity will set us on the path to prosperity” (Economic Commission for Africa 2005, ii).


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The Different Meanings of Governance
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