Discussions concerning governance originally based on new or neo institutional theories, such as agency theory or stakeholder theory. These approaches focused on an optimal design of governance mechanisms to enhance performance and its exchange especially in a corporate context (corporate governance) in the private sector. Following economic and sociological discussion and realising that the pure corporate approach was not applicable in education, the educational approach to governance was founded: Educational Governance. However, the theoretical impetus from the fields of economics (e.g. New Public Management) has been an important rationale for the transformation of several school systems in the last decade. These often include a standards-based reform with high-stakes testing and school choice policies which imply more competition among schools. Although these measures are intended to improve effectiveness and efficiency of the school system, studies have revealed a mix of positive and undesirable effects on teaching and other aspects of educational practice (Koretz, 2008). The unintended effects of these programs may even be of greater importance than the intended ones. 

However, several aspects of the modern economic discussion have not yet found their way into this discourse, although they provide important food for thought concerning governance, especially in the educational field. Education is based on collaborative common understandings. Performance as such, is heavily immaterial and relies on trust. High degrees of participation, teamwork and flexibility are required, which makes performance difficult to control and, as a result, contracts are incomplete (Alvesson, 2004). These characteristics diverge from the assumption of a control oriented approach such as agency theory, which relies on the idea of man as homo-economicus which “depict subordinates as individualistic, opportunistic, and self-serving” (Davis et al., 1997). Based on that theory, a control oriented approach on educational governance might have negative side effects such as motivational crowding out (Frey, 1997) or result in self-fulfilling prophecies (Argyris, 1973). An alternative approach such as stewardship theory “depict[s] subordinates as collectivists, pro-organizational, and trustworthy” (Davis et al., 1997). Blair and Stout have a similar understanding (1999, 2001). They point out several critical aspects on team production, describing it as a “complex productive activity that requires multiple parties to make contributions that are to some extent both team specific and unverifiable to an outside party” (Blair and Stout, 2001). The result of team production activities are “nonseparable, meaning that it is not possible to attribute any particular portion of the result to any particular member’s contribution” (Blair and Stout, 2001), different governance mechanisms are therefore needed. Also the Ostrom findings on the question of common pool resources (1990) provide convincing evidence for the success of alternative governance mechanisms.

When discussing governance mechanisms in an educational context, modern economic approaches should be taken into account.

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