Governance relates to decisions that define expectations, grant power, or verify performance.It consists either of a separate process or of a specific part of management or leadership processes. Sometimes people set up a government to administer these processes and systems.

In the case of a business or of a non-profit organization, governance relates to consistent management, cohesive policies, processes and decision-rights for a given area of responsibility. For example, managing at a corporate level might involve evolving policies on privacy, on internal investment, and on the use of data.


The word "governance" derives from Latin origins that suggest the notion of "steering". One can contrast this sense of "steering" a group or society with the traditional "top-down" approach of governments "driving" society, distinguish between governance's "power to" and governments' "power over".

Processes and governance

As a process, governance may operate in an organization of any size: from a single human being to all of humanity; and it may function for any purpose, good or evil, for profit or not. A reasonable or rational purpose of governance might aim to assure, (sometimes on behalf of others) that an organization produces a worthwhile pattern of good results while avoiding an undesirable pattern of bad circumstances.

Perhaps the moral and natural purpose of governance consists of assuring, on behalf of those governed, a worthy pattern of good while avoiding an undesirable pattern of bad. The ideal purpose, obviously, would assure a perfect pattern of good with no bad.A government, comprises a set of inter-related positions that govern and that use or exercise power, particularly coercive power.

A good government, following this line of thought, could consist of a set of inter-related positions exercising coercive power that assures, on behalf of those governed, a worthwhile pattern of good results while avoiding an undesirable pattern of bad circumstances, by making decisions that define expectations, grant power, and verify performance.

Politics provides a means by which the governance process operates. For example, people may choose expectations by way of political activity; they may grant power through political action, and they may judge performance through political behavior.

Conceiving of governance in this way, one can apply the concept to as large a nation-state as desired, to corporations, to non-profits, to NGOs, to partnerships and other associations, to project-teams, and to any number of humans engaged in some purposeful activity.

Different definitions

The World Bank defines governance as :"the exercise of political authority and the use of institutional resources to manage society's problems and affairs" [World Bank, Managing Development - The Governance Dimension, 1991, Washington D.C.] .Fact|date=July 2007

The Worldwide Governance Indicators project of the World Bank defines governance as:"The traditions and institutions by which authority in a country is exercised." [ [ A Decade of Measuring the Quality of Governance] .] 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".Fact|date=July 2007

English-speakers sometimes erroneously confuse the term "governance" with the term "government".

According to the UNDP'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).Fact|date=September 2007

The state and politics

Some suggestFact|date=June 2007 making a clear distinction between the concepts of governance and of politics. Politics involves processes by which a group of people with initially 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.

In general terms, 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

These modes of governance often appear in terms of hierarchy, markets, and networks.

Corporate organizations

Corporate organizations often use the word "governance" to describe both:
# The laws and customs (rules) applying to that direction
# The manner in which boards or their like direct a corporation, and

Fair governance

A fair 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.

Types of governance

Global governance

:"see the main article at Global governance for a more detailed explanation."

In contrast to the traditional meaning of "governance", some authors like James RosenauFact|date=February 2007 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 in the international system or relationships between independent states. The term can however apply wherever a group of free equals need to form a regular relationship.

Corporate governance

"See the main article at corporate governance."

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, pg. 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). These origins support a multiple constituency (stakeholder) definition of corporate governance.

Project governance

:"See Main article Project governance."

The term "governance" as used in industry (especially in the information technology (IT) sector) describes the processes that need to exist for a successful project.

Information technology governance

:"See Main article Information technology governance."

Measuring governance

Over the last decade, several efforts have been conducted in the research and international development community in order to assess and measure the quality of governance of countries all around the world.

One of these efforts to create an internationally comparable measure of governance 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 a 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.

ee also

*Agency cost
*Collaborative governance
*Corporate governance
*International healthcare accreditation
*Internet governance
*Global governance
*Good Governance
*Participatory democracy
*Principal-agent problem
*Public choice
*Public management and New Public Management
*Social innovation
*World Bank Governance Surveys
*Worldwide Governance Indicators


* [ Becht, Marco, Patrick Bolton, Ailsa Röell, "Corporate Governance and Control" (October 2002; updated August 2004). ECGI - Finance Working Paper No. 02/2002.]
* [ Eells, R.S.F. (1960), The Meaning of Modern Business: An Introduction to the Philosophy of Large Corporate Enterprise (Columbia University Press, NY).]

External links

* [ Center for Democratic Network Governance]
* [ Hertie School of Governance (Berlin)]
* [ Country Governance Diagnostic Surveys] of the World Bank Institute
* [ Directory of links on governance and related topics.]
* [ Governance and Social Development Resource Centre]
* [ Governance community]
* [ History of Parliament] , a histoy of the development of government in Britain.
* [ International Forest Governance Learning Group]
* [ Revue Governance] , Canadian, online journal on governance.
* [ The Encyclopaedia about Corporate Governance] from "ViamInvest", an asset management company
* [ The Institute On Governance]
* [ Worldwide Governance Indicators] Worldwide ratings of country performances on six governance dimensions from 1996 to present.

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