Fundamentals of governance: concept, context, and characteristics

Concept of Governance

Governance has been defined to refer to structures and processes that are designed to ensure accountability, transparency, responsiveness, rule of law, stability, equity and inclusiveness, empowerment, and broad-based participation.

It is the processes of interaction and decision-making among the actors involved in a collective problem that leads to the creation, reinforcement, or reproduction of social norms and institutions.

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 is the way that organizations or countries are managed at the highest level, and the systems for doing this.

Governance therefore can be subtle and may not be easily observable.

In a broad sense, governance is about the culture and institutional environment in which citizens and stakeholders interact among themselves and participate in public affairs.

It is more than the organs of the government.

International agencies such as UNDP, the World Bank, the OECD Development Assistance Committee (DAC) and others define governance as the exercise of authority or power in order to manage a country’s economic, political and administrative affairs.

2009 Global Monitoring Report shows governance as ‘power relationships,’ ‘formal and informal processes of formulating policies and allocating resources,’ ‘processes of decision-making’ and ‘mechanisms for holding governments accountable.’

Often there is a tendency to equate governance with management, the latter primarily referring to the planning, implementation, and monitoring functions in order to achieve pre-defined results.

Management encompasses processes, structures, and arrangements that are designed to mobilize and transform the available physical, human and financial resources to achieve concrete outcomes. Management refers to individuals or groups of people who are given the authority to achieve the desired results.

Governance systems set the parameters under which management and administrative systems will operate. Governance is about how power is distributed and shared, how policies are formulated, priorities set and stakeholders made accountable.

 A variety of entities (known generically as governing bodies) can govern. The most formal is a government, a body whose sole responsibility and authority are 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, an informal group of people. In business and outsourcing relationships, Governance Frameworks are built into relational contracts that foster long-term collaboration and innovation.

Table below summarizes the difference between governance and management:



- Set and norms, strategic vision and direction and formulate high-level goals and policies

- Run the organization in line with the broad goals and direction set by the governing body

- Oversee management and organizational performance to ensure that the organization is working in the best interests of the public, and more specifically the stakeholders who are served by the organization’s mission

- Implement the decisions within the context of the mission and strategic vision

- Make operational decisions and policies, keep the governance bodies informed and educated

- Direct and oversee the management to ensure that the organization is achieving the desired outcomes and to ensure that the organization is acting prudently, ethically, and legally

- Be responsive to requests for additional information


In the development literature, the term ‘good governance is frequently used. In particular, the donors promote the notion of ‘good governance as a necessary pre-condition for creating an enabling environment for poverty reduction and sustainable human development. Good governance has also been accepted as one of the targets of the Millennium Development Goals (MDGs). The good governance agenda stems from the donor's concern with the effectiveness of the development efforts. Good governance is expected to be participatory, transparent, accountable, effective, and equitable and promotes rule of law.

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