Two Logics of Indirect Governance: Delegation and Orchestration
11 Pages Posted: 9 Oct 2014 Last revised: 19 Oct 2014
Date Written: October 7, 2014
Most governance is indirect, carried out through intermediaries. Governors do not govern targets directly, but bring in third parties to increase efficiency, effectiveness or legitimacy. Sometimes these third parties are "internal" to the governor, as in the case of government bureaucracies, but often they are "external", operating at some distance from the governor. It has become common to treat indirect governance as a process of delegation to be analyzed through Principal-Agent theory (the P-A approach). We agree that much indirect governance can be understood in this way. Yet not all indirect governance can be properly understood as P-A delegation. Governors do not always have hard control over their agents. Often they lack the authority or power to grant or rescind third parties’ authority (at acceptable cost), and rely instead on soft inducements to mobilize intermediaries and keep them in line. In a recent book (Abbott et al. 2014a), we develop Orchestrator-Intermediary theory (O-I theory) to analyze soft, indirect forms of governance. Here we introduce O-I theory and contrast it to P-A theory. We highlight the commonalities and differences between orchestration and delegation, discuss the governor’s calculus of choice between them, and consider the relative effectiveness of orchestration.
Keywords: delegation, principal-agent, orchestration, governance
JEL Classification: D71, D73, K20
Suggested Citation: Suggested Citation