Trust and verification: balancing agency and stewardship theory in the governance of agencies

Abstract

ABSTRACT Many government services are delivered by (partially) autonomous agencies. Governments need effective measures for contracting, steering, and monitoring agencies and to balance control and trust. In the literature, control-based agency theory and trust-based stewardship theory have often been portrayed as alternative and competing approaches. In empirical studies in public administration, however, these approaches often find mixed and contradictory results. Against this background, this article analyzes how a combination of trust- and control-based approaches, explicitly founded on agency and stewardship theory, can help explain when participants find a given governance regime to be most satisfactory. A survey instrument is developed which, for the first time, fully measures the rich concept of stewardship theory in conjunction with agency theory. The analysis of the governance of Dutch agencies shows that government indeed combines governance solutions from both theoretical camps and illuminates under which conditions this combination is most satisfactory.