Understanding Governance Theories and Foundations

Understanding Governance

• Governance is the decision-making and implementation process via institutions, mechanisms, and laws that guide a society.
• World Bank (1992) defined governance as the management of a country's political, economic, and social resources for development.
• UNDP (1997) defined governance as the exercise of economic, political, and administrative authority.
• Canada Institute of Governance (2002) defined it as the process of making important decisions and ensuring accountability.

Theories of Governance

• New Public Management (NPM) focuses on efficiency, market-based governance, and performance-driven reforms.
• Governance Theory involves collaboration between government, the private sector, and civil society.
• Stakeholder Theory encourages organizations to consider all stakeholders, not just shareholders.

Foundations of Good Governance

• Effectiveness ensures results with efficient resource use.
• Transparency makes government decisions open to the public.
• Participation allows citizens to engage in decision-making.
• Accountability makes public officials answerable for their actions.
• Predictability ensures consistent and fair policies.
• Accountability as an element of good governance means holding officials responsible.
• Participation allows citizens influence policies.
• Predictability involves implementing consistent policies and laws.
• Transparency provides access to information for the public.

Characteristics of Good Governance (UN ESCAP)

• Participation means engaging men and women in governance.
• Rule of Law entails enforcing laws impartially.
• Consensus-Oriented governance mediates different interests for collective benefit.
• Equity & Inclusiveness ensures all members of society are represented.
• Effectiveness & Efficiency means producing results with minimal waste.
• Accountability means answerability to the public and stakeholders.
• Transparency ensures decision-making is open and accessible.
• Responsiveness involves addressing stakeholder needs promptly.

Impacts of Good Governance

• Results in better decision-making and policy implementation.
• Results in proper management of public resources.
• Results in increased transparency and reduced corruption.
• Results in improved social justice and equity.
• Results in sustainable development and economic growth.

Components of Good Governance

Four-Dimensional Framework (World Bank)

• Public Sector Management means efficient budget and resource use.
• Accountability means holding government accountable internally and externally.
• Legal Framework for Development means strengthening the rule of law and justice systems.
• Transparency & Information means preventing corruption and ensuring public awareness.

Six-Dimensional Framework (World Governance Indicators)

• Voice & Accountability reflects citizens' rights and government responsiveness.
• Political Stability & Lack of Violence ensures security and governance stability.
• Government Effectiveness relates to the quality of public services and policymaking.
• Regulatory Quality involves creating fair regulations for business and citizens.
• Rule of Law means fair legal enforcement and protection of rights.
• Control of Corruption involves efforts to minimize fraud and misconduct.

Understanding Social Responsibility

• Social Responsibility means voluntary effort by businesses to contribute to society's well-being.
• It also refers to the ethical obligation of individuals and organizations to act for societal benefit.

Social Responsibility Theories

• Stakeholder Theory states that businesses must consider the needs of all stakeholders.
• Social Contracts Theory states that companies have implicit obligations to society.
• Corporate Social Performance (CSP) Theory is that beyond profit, businesses must address social issues.
• Instrumental Theory states that social activities should generate economic results.
• Legitimacy Theory says businesses operate within a social contract that requires responsibility.
• Philanthropic Responsibility is that businesses should engage in voluntary charity work.

Four Types of Social Responsibility

• Ethical Responsibility means expected moral behavior by businesses.
• Legal Responsibility means following the law and regulations.
• Financial Responsibility is focusing on profitability while being responsible.
• Philanthropic Responsibility is voluntary contributions to social causes.

Seven Key Principles of Social Responsibility (ISO 26000)

• Accountability is a key principle of social responsibility
• Transparency is a key principle of social responsibility
• Ethical Behavior is a key principle of social responsibility
• Respect for Stakeholders is a key principle of social responsibility
• Respect for the Rule of Law is a key principle of social responsibility
• Respect for International Norms is a key principle of social responsibility
• Respect for Human Rights is a key principle of social responsibility