Governance comprises all of the processes of governing – whether undertaken by the government of a state, by a market or by a network – over a social system (family, tribe, formal or informal organization, a territory or across territories) and whether through the laws, norms, power or language of an organized society. It relates to “the processes of interaction and decision-making among the actors involved in a collective problem that lead to the creation, reinforcement, or reproduction of social norms and institutions”. In lay terms, it could be described as the political processes that exist in and between formal institutions.
A variety of entities (known generically as governing bodies) can govern. The most formal is a government, a body whose sole responsibility and authority is to make binding decisions in a given geopolitical system (such as a state) by establishing laws. Other types of governing include an organization (such as a corporation recognized as a legal entity by a government), a socio-political group (chiefdom, tribe, gang, family, religious denomination, etc.), or another, informal group of people. In business and outsourcing relationships, Governance Frameworks are built[by whom?] into relational contracts that foster long-term collaboration and innovation. Governance is the way rules, norms and actions are structured, sustained , regulated and held accountable. The degree of formality depends on the internal rules of a given organization and, externally, with its business partners. As such, governance may take many forms, driven by many different motivations and with many different results. For instance, a government may operate as a democracy where citizens vote on who should govern and the public good is the goal, while a non-profit organization or a corporation may be governed by a small board of directors and pursue more specific aims.In addition, a variety of external actors without decision-making power can influence the process of governing. These include lobbies, think tanks, political parties, non-government organizations, community and media.Most institutions of higher education offer governance as an area of study, such as the Balsillie School of International Affairs, Munk School of Global Affairs, Sciences Po Paris, Graduate Institute Geneva, Hertie School, and London School of Economics, among others.
Origin of the word
Like the government, the word governance derives, ultimately, from the Greek verb kubernaein [kubernáo] (meaning to steer, the metaphorical sense first being attested in Plato). Its occasional use in English to refer to the specific activity of ruling a country can be traced to early-modern England when the phrase “governance of the realm” appears in works by William Tyndale and in royal correspondence from James V of Scotland to Henry VIII of England. The first usage in connection with institutional structures (as distinct from the individual rule) appears in Charles Plummer’s The Governance of England (an 1885 translation from a 15th-century Latin manuscript by John Fortescue, also known as The Difference Between an Absolute and a Limited Monarchy). This usage of “governance” to refer to the arrangements of governing became orthodox including in Sidney Low’s seminal text of the same title in 1904 and among some later British constitutional historians. However, the use of the term governance in its current broader sense, encompassing the activities of a wide range of public and private institutions, acquired general currency only as recently as the 1990s, when it was re-minted by economists and political scientists and disseminated by institutions such as the UN, the IMF and the World Bank. Since then, the term has gained increasing usage.
Governance as process
In its most abstract sense, governance is a theoretical concept referring to the actions and processes by which stable practices and organizations arise and persist. These actions and processes may operate in formal and informal organizations of any size; and they may function for any purpose, good or evil, for-profit or not. Conceiving of governance in this way, one can apply the concept to states, to corporations, to non-profits, to NGOs, to partnerships and other associations, to business relationships (especially complex outsourcing relationships), to project teams, and to any number of humans engaged in some purposeful activity.
Most theories of governance as the process arose out of neoclassical economics. These theories build deductive models, based on the assumptions of modern economics, to show how rational actors may come to establish and sustain formal organizations, including firms and states, and informal organizations, such as networks and practices for governing the commons. Many of these theories draw on transaction cost economics.