What coordination mechanisms work to manage regional development programmes? Insights from Southern Italian regions

Abstract

The European Structural Fund programmes are embedded in a multi-level governance system, which has grown in parallel with European integration. Decision-making power is increasingly delegated to territorial authorities on the assumption that local agents possess both contextual knowledge and political legitimacy to integrate different policy measures in a cooperative fashion. Within contexts of structural socioeconomic constraints, problems of coordination are associated with policy co-formulation, governance network management, meta-governance processes, and performance management and evaluation use. This paper aims to examine the variety of coordination mechanisms adopted by regional government agencies in order to collaborate with local authorities to stimulate economically lagging territories. The paper analyses management techniques of local organizational capacity and network building, project development, monitoring and evaluation, highlighting the rationale of regional development policies and the role of institutions. Building upon 2 years of field research on local development programmes in four regions in the south of Italy, this paper shows that cooperation co-exists with opportunistic behaviour during programme design and implementation, while bureaucratic culture and organizational weaknesses hamper managerial leadership and administrative decentralization. Findings highlight that centrally guided decentralization is a more sustainable capacity-building strategy. Furthermore, perceived efficiency, equity, uncertainty, and relational quality shape coordination and its evolution over time. Interpersonal relations may increase to reduce uncertainty, or higher procedural formalization may ensure efficiency, equity, and fair dealings. The evolution of coordination mechanisms has a bearing on administrative capacity of public spending absorption against corruption and waste as well as on the potential for economic development and social cohesion.

Keywords

Coordination local development programmes delegation cooperation institutional analysis

Introduction

The current times of crisis, in which a reduction in sovereign debt and public spending in European countries is required, offer a key opportunity for learning and reflecting upon the experience of economic programming for local development. Over the past decade, collaborative local institutional arrangements for the design of small-scale infrastructure, and the sustainable management of cultural and natural resources, have emerged among numerous political jurisdictions and actors. The European Cohesion Policy is, indeed, embedded within multi-level governance structures and relations (Hooghe, 1998), which have grown in parallel with European integration.¹ Across Italian regions, intergovernmental partnerships have been widened and deepened, and in certain cases they have developed beyond Structural Fund programmes (Barca, 2006, 2009; Trigilia 2005; Magnatti et al., 2005).² While partnership was conceived primarily as the vertical relationship between the European Commission and national, regional, and local authorities, the horizontal dimension of partnership – including a wide range of stakeholders at local, regional, and national levels – has grown over time (Mairate, 2006; Nijkamp et al. 2002). Different actors, including resource users and government agencies, try to work together to solve shared dilemmas of coordination, as an increasingly common alternative to centralized institutions. Decision-making power is delegated to territorial government agencies on the assumption that local agents possess both contextual knowledge and political legitimacy to integrate different policy measures in a cooperative fashion. In these circumstances, problems of coordination are associated with (i) policy co-formulation among multiple actors (Hill and Hupe, 2009), (ii) management of complex governance networks (Koliba and Meek, 2008; Sørensen and Torfing, 2008), (iii) meta-governance processes of interest mediation and information transfer, and finally (iv) performance management and evaluation to ensure efficiency and the effectiveness of administrative action (Wholey, 2001).

This paper examines the variety of ways in which regional government agencies may be mobilized, managed, and coordinated in cooperation with local authorities to stimulate economically lagging territories. The overarching question this study addresses is how coordination occurs across regional multi-objective and multi-actor local development programmes. The paper analyses management techniques of policy co-formulation, network building, project development, monitoring, and evaluation, highlighting also the rationale of regional development policies and the role of institutions. By bridging the neo-institutional perspective (Hacker, 2004; North, 1990) with insights drawn from studies concerning interorganizational relations, this paper addresses the following two research questions:

What formal and informal coordination mechanisms are adopted in European Union (EU) Structural Fund programmes specifically across economically lagging regions – that is, Convergence Regions – in Italy where institutional and organizational working still presents weaknesses?

How do formal and informal coordination mechanisms change from the design to the implementation of EU Structural Funds across Italian Convergence Regions, and why?

In particular, this paper examines the coordination mechanisms that regional agencies have adopted to design and implement some specific European Cohesion Policy instruments – the so-called Territorial Integrated Programmes (TIPs) – carried out across four selected southern regions of Italy, namely Basilicata, Calabria, Campania and Molise. TIPs are distinctive for being multi-annual programming, multi-objective, public–private partnerships designed and implemented through the collaboration of regional and local authorities.

From a theoretical standpoint, this paper seeks to develop an understanding of how programme coordination occurs among different organizations and institutions, which operate within contexts presenting structural constraints. Empirically, the contribution of this study consists of mapping out how EU Structural Fund programmes are embedded within a multi-level governance environment, where uneven institutional and organizational capacities may undermine programme outcomes in favour of economic development and social cohesion. From a normative perspective, this research, given the existing governance structures, identifies those coordination mechanisms that open up the opportunity for administrative change and innovation at the regional level.

In addition to scholars in regional studies, governance, and public policy, this study also addresses policy makers, public managers, and evaluators keen to integrate effective coordination mechanisms into the planning and systematic assessment of regional development programmes. The features of specific formal and informal coordination mechanisms that managers prefer, the types and costs of coordination mechanisms perceived as most effective and relevant for local development programmes and the factors affecting coordination over time are the key concerns of the research. The findings allow us to reconstruct the role of coordination mechanisms as factors of organizational, institutional and ultimately socioeconomic change.

The paper is organized as follows. By outlining the key conceptual premises underlying the rationale and functioning of EU Structural Fund programmes, the first section classifies different types of coordination mechanisms, their cost and evolution. The second section describes the study methodology, and the third examines the key features of TIPs as designed and implemented across the four selected regions. The fourth section identifies the coordination mechanisms at work and the factors shaping their evolution over time. Finally, the analysis concludes by raising both theoretical and practical implications for future research.

Coordination mechanisms at the forefront

Over the past decade, public sector scholars, economists and policy makers have debated how to improve the performance, as well as systems, of public organizations because of the renewed emphasis on institutions as agents of economic development and growth (North, 1990; Putnam et al., 1993). Two significant literatures in public administration and economic development have recently unfolded along remarkably separate tracks, despite their evident connections. The first is a comparative literature on intergovernmental relations, public management reform and modernization (Barzelay 2001; Christensen and Lægried 2002; Goldsmith and Eggers, 2004; Hood 2000; Kettl, 2000; Klijn and Edelnbos, 2008; Pollitt and Bouckaert 2000; Sørensen and Torfing, 2008). Public administration scholars have focused on such dimensions as (i) policy co-formulation (Hill and Hupe, 2009), (ii) governance networks (Koliba and Meek, 2008; Sørensen and Torfing, 2008), (iii) meta-governance processes (Agranoff and McGuire, 2001; Klijn and Edelenbos, 2008), (iv) performance management (Poister, 2010; Wholey, 2001), and (v) evaluation utilization (Cousins and Leithwood, 1986; Patton, 2008). These are crucial aspects explaining organizational change and institutional performance within multi-level governance structures and relations. The second literature strand is a somewhat specialized literature on the EU’s regional policies (Diez, 2002; European Commission, 2001; Roberts, 2003; Shaw et al. 2000; Thielemann, 2000) with a subset of econometric studies estimating convergence in economic growth across member states and regions and in the productivity of specific industries (Boldrin and Canova, 2001; Leonardi, 2005; Puga, 2002).

The disconnected development of these two literatures has an obvious explanation: contributors to the first literature discuss state reform, modernization, decentralization and federalism, whereas the EU is neither a federal nor a decentralized state. Yet the EU does include regional and local administrative agencies, which operate within complex governance networks according to the horizontal and vertical subsidiarity principle. Conversely, contributors to the second literature focus on the EU policy design and impact assessment with respect to economic growth and development across European regions. They overlook issues of implementation within intergovernmental and interorganizational structures and relations occurring across very heterogeneous political and socioeconomic contexts.

This paper seeks to bridge these two divergent perspectives, since the importance of the EU Cohesion Policy is to be found in both its potential socioeconomic as well as political-institutional impact. In fact, the objective of reducing socioeconomic disparities is not merely restricted to the economic field. It also reflects a basic political commitment to institutional reform in order to make public institutions and policy making more responsive to the needs of the electorate (Leonardi, 2005: 87). Thus, we will consider Structural Fund programmes as policies, which are co-formulated by different actors to overcome socioeconomic disparities. We will also and most importantly consider Structural Fund programmes as organizational and institutional mechanisms, which foster integration of intergovernmental administrative relations within the EU multi-level governance system (Hooghe and Marks, 2001). Recently, Structural Fund programmes’ design and implementation have been increasingly devolved to regional and local authorities through complex public–private partnerships. Our focus will be, therefore, centred on the interinstitutional and interorganizational dimensions of coordination of these partnerships, since coordination is crucial to assure cooperation and enhance local processes of economic development and social cohesion.

Coordination is a particularly relevant issue from both a theoretical and a political standpoint. Although the potential benefits of collaborative resource management offer obvious incentives for stakeholders to come together, this is no guarantee that collaboration will emerge around particular resource management dilemmas, especially in settings where actors have held traditionally adversarial or collusive relationships (De Vivo, 2004; Martin and Pearce, 1999). Across economically lagging areas that are plagued by systemic corruption and organized crime – such as the Italian regions belonging to the south – collaborative institutional arrangements may encourage consensus building, offering all relevant groups the knowledge and skills needed to participate in these negotiations. Delegation of decision-making power, however, may open the door to opportunistic behaviour, lacking vision and trust for mutual cooperation. The result would then be detrimental to economic development and social cohesion, keeping the economy within a persisting poverty trap. Thus, a better understanding of the local, national, and European modalities of Structural Fund planning and implementation, and some deeper knowledge of the variety of agents that constitute the governance of local and regional economies, are much needed.

The notion of coordination within organizations and among institutions has to do with how administrative relations and interactions occur over time. Two representative definitions of coordination follow:

integrating or linking together [of] different parts of an organization to accomplish a collective set of tasks. (Van de Ven et al., 1976: 322)

it [coordination] means that different agents working on a common project agree to a common definition of what they are building, share information, and mesh their activities. To build the project efficiently, they must share detailed design specifications and information about the goals and actions. In sum, they must coordinate their work so that it gets done and fits together. (Kraut and Streeter, 1995: 69)

Coordination differs from control. Coordination focuses on managing interdependencies among multiple individuals or activities involved in the overall task (Crowston, 1997; Kraut and Streeter, 1995). Control focuses on improving performance relative to a certain overall goal (e.g. organizational goal) when the goals of individual stakeholders (e.g. employees) differ from those of the larger overall entity (e.g. the organization) (Crowston, 1997; Kraut and Streeter, 1995). Coordination and control are both important issues in multi-level governance. Yet, unlike control mechanisms, coordination mechanisms have not been examined in Structural Fund programmes, specifically implemented within economically lagging EU regions.

Several interorganizational studies classify coordination mechanisms into four broad types: standards, plans, formal mutual adjustment and informal mutual adjustment. These categories distinguish formal from informal coordination mechanisms (Kraut and Streeter, 1995; Kumar and Van Dissel, 1996). The classification shown in Figure 1 allows us to understand what coordination mechanisms consist of, how they evolve over time and what costs – e.g. fixed or variable – they give rise to. Accordingly, mechanisms that seek coordination through standards and plans rely on a priori specification of codified blueprints, formal procedures, action programmes or specific targets (March and Simon, 1958). They are impersonal in nature as, once they are implemented, their application does not require much verbal communication between participants (Galbraith, 1977). These mechanisms generally have high fixed costs (for setting up the mechanism) but low variable costs (for each application of the mechanism). Conversely, coordination mechanisms involving mutual adjustment use interpersonal interaction to make changes based on information obtained during the project (March and Simon, 1958). Being more interactive in nature, mutual adjustment mechanisms incur higher variable cost but lower fixed cost. In particular, informal mutual adjustment differs from formal mutual adjustment in that the adjustments are made in a more structured and formalized fashion. Also, informal mutual adjustment mechanisms would incur greater variable costs but lower fixed costs than mechanisms involving formal mutual adjustment.

Figure 1.

Classification of coordination mechanisms.

With respect to the factors that influence the evolution of coordination mechanisms over time, a number of studies on interorganizational relations identify at least four factors as potentially shaping programme coordination mechanisms: efficiency, uncertainty, equity and relational quality (Arino and de la Torre, 1998; Ring and Van de Ven, 1994). Efficiency considerations pertain to the benefits from the particular governance structure relative to others available for undertaking a transaction (Ring and Van de Ven, 1994). Thus, within the context of local–regional partnerships, efficiency would reflect the benefits obtained from participation, in terms of timely and within-budget programming of policy interventions. Equity, by contrast, relates to the fairness in the dealings between the various sides, requiring reciprocity but not necessarily equality (Ring and Van de Ven, 1994). In Structural Fund programmes, equity would be jeopardized by perceptions of opportunistic actions as well as by perceptions of roles not being adequately performed as expected.

Arino and de la Torre (1998) suggest that a third factor, relational quality, along with efficiency and equity considerations, influences the evolution of interorganizational relationships. Relational quality depends on personal bonds between participants from all sides, their trust in each other, their reputations for fair dealing and their previous contributions to the relationship (Arino and de la Torre, 1998; Zaheer and Venkatraman, 1995). Thus, relational quality would be enhanced by prior interactions between different organizational/institutional actors as well as similarity of language and culture. Finally, uncertainty (i.e. lack of information) is another relevant factor shaping coordination mechanisms. As uncertainty increases, horizontal channels and group meetings increasingly replace impersonal coordination (Adler, 1995; Van de Ven et al., 1976). The following sections apply this analytical framework to the analysis of local development programmes.

Study design and methodology

This study focuses on the regional and local administrative arrangements in place for the implementation of a specific type of Structural Fund programme – the so-called TIPs – across four selected Italian Convergence Regions, that is regions whose average per capita income is less than 75% of the average EU per capita income. The four regions included in the study are Basilicata, Calabria, Campania and Molise. The choice of these four regions out of the six currently being classified as EU Convergence Regions is in response to a number of opportunities and circumstantial reasons. First, Campania and Calabria presented poor records with respect to the adsorption capacity of EU financial resources (i.e. low disbursement rates with respect to yearly committed expenditure) and low performance in terms of development outcomes over the past two EU programming cycles (European Commission, 2003). By contrast, both Molise and Basilicata were considered the star performers among Convergence Regions.³ Second, while both Campania and Calabria enthusiastically adopted TIPs, Molise and Basilicata allocated significantly fewer resources to these specific policy instruments. Thus, the aim was to understand whether a more participatory and decentralized policy instrument was beneficial both for strengthening institutional capacity and for overcoming socioeconomic disparities. Overall, the assumption was that the chosen regional subset illustrates the institutional and socioeconomic aspects and problems most Convergence Regions present.

This study focuses on TIPs over the late period of the 2000–2006 programming cycle (extending up to 2008 for implementation purposes), for three sets of reasons. First, TIPs were umbrella programmes, which sought to integrate heterogeneous policy measures (e.g. infrastructure building, human capital formation, business support, and sustainable management of natural resources) to spur local development. They were designed to make regional and local authorities collaborate towards commonly shared development goals, and the aim of the present study is to highlight key governance dimensions associated with development processes. Second, TIPs were mostly implemented within economically lagging areas. In these contexts, administrative behaviour and organizational performance were presumed to show not only the typical traits of backwardness, but also the traditional features of Latin institutions, whereby administrative law highly conditions public agencies’ operations. Although regional agencies had by 2008 been exposed to EU procedures and thus acquired experience and know-how, TIPs introduced quite innovative processes for planning and project selection and assessment. Thus, it is relevant to understand coordination processes across the four selected regions to detect change and innovation breaking with path-dependent patterns. Third, owing to common EU-imposed procedures,⁴ TIPs presented manifold similarities in terms of design, monitoring, reporting and evaluation. Yet there were irreducible differences in programme and organizational leadership, political legitimacy, constituency and performance of regional and local public agencies across the four different regions considered. The similarity, therefore, is a workable construct in as much as it takes into account the difference, limiting sweeping generalizations.

The research unfolded in two phases. In the first phase (October 2005 to September 2006), a survey analysis was developed through the collection of data on Structural Funds’ committed and actually disbursed expenditure across the four aforementioned regions. Additional information was also gathered on the themes of development programmes implemented as well as the types of public investments chosen (i.e. infrastructure, human capital formation, business start-ups and support). Furthermore, data were collected to reconstruct the patterns of organizational/institutional arrangements adopted at the regional and local level. In the second phase (October 2006 to February 2007), the research adopted a qualitative methodology building upon multiple case studies. These case studies focused not on specific TIPs but rather on regional governments’ institutional structures, procedures and coordination mechanisms adopted to carry out TIPs in collaboration with local authorities. The unit of analysis was, therefore, regional agencies’ behaviour rather than the specific integrated projects’ design and implementation. The rationale consisted of identifying institutional factors and coordination processes at play. The aim was to glean empirical evidence of administrative change on a regional scale and participatory decision-making practices modifying regional agencies’ relations to local authorities.⁵ Variation among cases allowed for comparisons according to the well-known Qualitative Comparative Analsysis (Ragin, 1987) and the assessment of similar patterns emerging across different contexts. The specificity of cases and methodology precluded, however, general conclusions. This ‘validity’ problem was dealt with in the present research frame in two ways: first, by the choice of cases with the aforementioned criteria, and, second, by a homogeneous coding of the qualitative case studies according to the theoretical cateogories of formal/informal, a priori/mutual adjustment coordination mechanisms and costs and evolution of coordination mechanisms specified in the previous section. This operationalization may help researchers design future implementation studies and practitioners frame interorganizational relations considering changing contextual conditions.

In this phase, fieldwork was an essential component of this ‘policy research’, which required investigation into the nature and origins of problems that public policy aims to solve (Mead, 2005). ‘Field research’ means inquiry into programmes or policies through direct contact, such as by interviewing beneficiaries or staff, observing operations, reading government documents, or inspecting programme data. Field research emphasizes unstructured learning about a programme, as well as serendipity, discovering the unexpected, and it is guided only to a limited extent by prior hypotheses (Mead, 2005). Forty-two in-depth semi-structured interviews were conducted to gather opinions and perceptions on how TIPs were designed, and what and why institutional and organizational arrangements were chosen. The interviewees’ sample included (i) three high-level decision makers at the European Commission and 18 managers within the four selected regions; (ii) seven managers of provincial and municipal programmes; (iii) seven evaluators working both within the regional evaluation units and as indipenent contractors; and (iv) six key informants among economists, environmental engineers, public sector specialists and local development experts. High-level decision makers were interviewed to understand how they designed Structural Fund programmes at both the European and the regional level. Managers were asked what coordination mechanisms they adopted to implement them both formally and informally. Evaluators responded to questions regarding how the evaluation function, which was statutory, acted as a coordination mechanism in the design and implementation of Structural Fund programmes. Finally, experts provided valuable insights on technical and institutional programme dimensions.

Interview data collection aimed to substantiate the interpretative category of coordination mechanisms and triangulate different perspectives, perceptions, opinions, and descriptions around recurrent emerging themes. The interview data, along with the contents of the documentation and the social science literature review, were analysed with respect to perceptions of change in mechanisms of coordination. As differences can be observed not only across regions but also within the same region, the following analysis puts forward a set of conceptual reflections, which are neither to be considered conclusive nor to be generalized. These are, by contrast, insights into policy design and implementation processes as well as lessons for the current and future programming cycles.

Key programme features across four southern Italian regions

Before TIPs were introduced, the coordination of EU co-funded programmes across Convergence Regions relied on regional managers, who were responsible for programming, funding and reporting on a set of policy measures in each sector of intervention. Local institutions, such as municipalities or provinces or park conservation institutions, were entrusted with the building only. Thus the system was quite centralized at the regional level. With TIPs, innovation first emerged out the multi-sector-based approach as opposed to the traditional mono-sector-based intervention of development programmes. Subsidies targeted to specific firms were combined with interventions to promote employability of human resources, through vocational or on-the-job training, while infrastructure building was complemented with different measures to protect environmental goods. TIPs were, therefore, broad-based programmes that included many specific actions, the rationale of which revolved around an explicitly articulated vision of socioeconomic development of the territory. Tables 1 and 2 indicate the number of TIPs approved by the four regional governments as well as the number of interventions that all TIPs included as a whole.

Table 1.

Number of approved TIPs per region and their stage of advancement in 2006.

	No. of approved TIPs	Ex ante evaluation and monitoring	Implementation
Basilicata	8	n/a	8
Calabria	23	n/a	1
Campania	51	51	39
Molise	7	7	7

Source: Based on ISFOL (2006).

Table 2.

Number of interventions and allocations across TIPs in 2006.

Regions	No. of programmed interventions within TIPs	TIPs’ average total costs (million EUR)	Percentage of total Structural Funds allocated to TIPs	Total amount of specific Structural Funds allocated to TIPs (thousand EUR)
				ERFD	AAEFG	ESF	Total
Basilicata	485	40 (min. 20; max. 190)	n/a	239,504	59,991	18,277	317,773
Calabria	1027	36 (min. 12; max. 61)	23	496,701	96,715	89,492	682,908
Campania	1395	41 (min. 8; max. 190)	42	1,322,772	n/a	185,689	1,508,462
Molise	207		35	45,817	10,564	6,068	62,450

Source: Based on ISFOL (2006).

Second, TIPs’ innovativeness consisted of a less hierarchical and centralized coordination process, which involved local agents in the design phase. Regional governments delegated their decision-making power to local institutions to integrate different policy measures in a cooperative fashion. Delegation of decision-making power was presumed to minimize the unintended or conflicting outcomes emerging, for instance, when environmental protection and infrastructure building are not designed to be consistent with the needs of the local context and they are not pursued through a cooperative effort of local networks of actors. Regional and local governments were meant to share responsibilities for designing and managing TIPs. They had to build local partnerships with for-profit and not-for-profit organizations to produce intangible or relational public goods (trust, social capital, cooperation, stakeholders’ and beneficiaries’ involvement), community empowerment and good governance, besides substantive more tangible objectives such as increase in employment, human capital formation, promotion of tourism and other typical agricultural and food-processed commodities and manufactured goods, environmental protection and business start-up and support, as shown in Table 3.

Table 3.

Percentage of TIPs by size and region.

	Up to 50,000 inhabitants	50,000–100,000 inhabitants	100,000–250,000 inhabitants	More than 250,000 inhabitants
Basilicata	62.5	25.0	12.5	n/a
Calabria	34.8	30.4	34.8	n/a
Campania	15.6	34.4	18.8	31.3
Molise	n/a	n/a	n/a	n/a

Source: Based on ISFOL (2006).

As the data show, Campania relied heavily on TIPs during the 2000–2006 EU Structural Funds programming cycle. In this region, 51 TIPs were approved, accounting for almost 40% of the total Structural Funds appropriations, and the introduction of these policy instruments was supported by political leadership with intense informational campaign and distinctive rhetoric. Calabria followed with 23 TIPs accounting for about 23% of total Structural Funds. Tables 3 and 4 encapsulate how the four regions divided up their territory to distribute TIPs according to socioeconomic needs and specificities. Calabria and Campania showed very similiar percentages of territorial coverage, concentrating respectively 30% and 34% of TIPs across localities with between 50,000 and 100,000 inhabitants (see Table 3). By contrast, Molise and Basilicata showed a relatively modest adoption of TIPs in terms of percentage of total allocations of Structural Funds, as well as low percentages of covered territory.

Table 4.

Percentage of types of intervention per sector in 2005.

Regions	Industrial clusters and small and medium-sized enterprises	Human resources	Infrastructure	Other	Total
Basilicata	63.7	7.2	28.9	0.2	100
Calabria	28.9	34.3	34.8	2.0	100
Campania	16.2	30.3	53.5	n/a	100
Molise	79.2	14.0	6.8	n/a	100

Source: Based on ISFOL (2006).

What emerges is a sort of homogeneous distribution of TIPs across localities with up to 50,000 inhabitants and between 50,000 and 100,000. Although the original plan was to favour programme concentration within territories with severe structural constraints, TIPs turned out to be uniformly spread throughout regional areas. This suggests that TIPs were not a policy strategy to enhance key territorial traits or particularly lagging localities but more an expedient to involve all different political actors operating within the region at the local level. In other terms, TIPs were more distributive spending instruments than public investments seeking to mobilize underutilized resources across territories.

The institutional arrangements chosen to formulate and implement TIPs were similar across the four regions, as shown in Table 5. Both interviews and document analysis findings indicate that there was a rather significant effort on the part of regional government agencies to work out a formalized division of tasks and responsibilities among political and administrative bodies at the regional and local levels. According to the plan, management and evaluation were presumed to unfold through negotiated practices between the regional administration and the local authorities (as shown in Tables 5 and 6). Yet, as explained later, much deeper differences emerged in the way these institutions worked in practice.

Table 5.

Forms of institutional coordination across regions.

Regional governments			Local authorities
Institutional representation	Coordination	Management	Political/institutional function	Technical and operational management	Partnerships
Regional administration (Molise)	Coordination committee (Molise)	Responsible for linking TIP with Structural Fund programmes (Basilicata)	Forum of Mayors (Calabria)	Municipal technical offices (Basilicata)	Local partnerships (Basilicata)
Council (Campania – progetti di iniziativa regionale)	Round tables, institutional leader (Campania)	TIP units (Calabria)	Local Institutional Partnerships/programme manager (Basilicata)	Coordination units/project manager (Basilicata)	Economic and social forum (Calabria)
Steering committee (Basilicata)		Institutional leader (Campania)	Round tables between regions and provinces (Campania)	Territorial coordinator (Campania)

Source: Based on ISFOL (2006).

Table 6.

Patterns of territorial distribution, management and evaluation modes.

	Territorial distribution	Management models	Evaluation schemes
Basilicata	Eight areas	Negotiated	Negotiated
Calabria	23 IPs with sub-provincial dimension	Negotiated	Negotiated
Campania	Thematic delimitation (non-sectoral)	Negotiated	Negotiated with formal evaluations and mandatory approval
Molise	Four territorial systems	Through invitations to tender	Negotiated with formal evaluations

Source: Based on ISFOL (2006).

Table 6 reconstructs the extent to which regional governments implemented the various projects and activities included within TIPs during the time this study was under way. The number of tenders (see Table 7) carried out as of March 2006 (i.e. at the end of the programmeming cycle) shows the capacity of regional agencies in collaboration with local authorities to select eligible private-sector agents and other public entities to stipulate public contracts for realizing infrastructural works or other services to be delivered locally. Tendering for outsourced services and infrastructure was the first step of TIPs’ actual implementation and financial resource disbursement. As is apparent, the number of TIPs that enacted bidding procedures was very low, confirming regions’ weak absorption capacity and the lack of effective coordination mechanisms as two of the key underlying reasons explaining regional poor disbursement performance. For the evaluation departiment of Campania Region, this finding is confirmed by the 2011 ex post evaluation of all 51 TIPs, which reports an average absorption rate of 70% with variation between 35% and 90% and a 40% rate of completion. Specifically regarding TIPs promoting regional parks, for instance, the number of programmed infrastructural interventions (i.e. 379, amounting on average to around €500,000 or more) is indeed far from the actual number of completed projects (namely 33) because of difficulties in the administrative and financial realms (NVVIP, 2011). Accordingly, the programming approach resulted fragmentary and weak in channelling enough resources for significant public investments (NVVIP, 2011). The next section turns to identify what coordination mechanisms were employed across the four aforementioned regions, and the section after it turns to examine the factors affecting those mechanisms over time.

Table 7.

Number of tenders by sector and region in 2006.

Regions	Human resources	Industrial cluster and small and medium-sized enterprises	Tourism, culture and environment	Infrastructure	Technical assistance	Total
Basilicata	2	1	n/a	17	n/a	20
Calabria	n/a	n/a	3	2	3	8
Campania	13	19	27	3	n/a	62
Molise	1	28	11	n/a	1	41

Source: Based on publicly advertised bidding invitations by regions (2006).

Coordination mechanisms at work: from decentralization to re-centralization

Interview findings show that TIPs’ design built on a mix of a priori and mutual adjustment coordination mechanisms, which were not always in sync. On the one hand, regional governments coercively set financially capped budgets for each type of TIP, and endorsed disbursement and control procedures in compliance with EU Council Reg. 1260/99. The regional administration (i) set delivery schedules in line with EU official delivery deadlines and standards in terms of awarding public contracts, (ii) signed off the overall programme for approval, and (iii) issued invitations to bid. On the other hand, local administrative agencies came to select voluntarily a set of smaller-scale projects characterizing the TIP in accordance with the specific territorial traits and developmental needs. Local agents (i) formulated programme milestones and specified the requirements for project selection; (ii) designed their formal review meetings; (iii) established their internal ‘hierarchy’ by recognizing the role of the leading institution or project manager; and (iv) periodically reported to the regional administration representatives (i.e. the evaluation unit). Local actors held several informal meetings to formulate the main developmental thrust of the TIP and decide upon formal and/or informal division of labour. In one case a support development agency acted as a transition organization for mobilizing local forums conducive to setting up the partnership. Many telephone calls were reported by interviewees as modes of effective day-to-day coordination during the peaks of the TIP design phase.

Coordination issues stemmed from managing complementarities between diverse policy objectives, intersectoral actions, and information flows across different agencies and government levels. Schematically, one would expect that, when the number of participants grows, cohesion among partners weakens. By contrast, research findings show that, when partnering agents reached consensus around priority objectives, the size and heterogeneity of partnership did not necessarily undermine the potential for stable agreements. The key was reaching a stable enough consensus by solving a coordination dilemma, that is choosing either bottom-up processes of decision making, allowing for participatory and equitable sharing or centralized procedures to assure efficiency and reduce uncertainty.

Contrary to the initial effort in favour of decentralized and participatory decision making, centralization subsequently provided the answers to coordination problems, which were addressed through formally binding procedures as set by the national legislation on public contracts and the EU regulation on disbursement and reporting. As organizational economists would point out (Gibbons, 2003; Milgrom, Roberts, 1990), centralization of regional administrative agencies was the answer to ensure fairness and accountability, specifically at a later stage of programme implementation when too many differentiated practices emerged across territories, making regional managers worry about fair and law-abiding administrative conduct. In the early implementation stage, the adoption of informal mutual adjustment coordination modalities emerged as a response to match local needs with regional guidelines. However, this mutual informal adjustment was neither immediate nor seamless. It involved a considerable effort from local authorities to align to regional procedures. Within the same TIP, for instance, mayors were in charge of selecting beneficiaries for infrastructure building, while regional managers assigned business start-up incentives, environmental protection subsidies, and vocational training support. Local managers, who were responsible for the design and implementation of infrastructure, had access to local information, which was to be sent periodically to regional administrative agencies. However, local managers were not informed about the operations funded through regionally executed procedures. In other words, information flowed from the bottom to the higher levels of the regional administrative hierarchy. Yet there was not a top-down information flow reaching localities to make them aware of relevant changes in the regional strategy or of the progress made on implementation.

Furthermore, bidding procedures for the selection of eligible recipients were not specifically tailored for implementing the TIP as a whole-policy entity. The original innovative idea relying on the integration of different policy sectors and activities was, indeed, abandoned since each activity and project included within the overall TIP had its own specific procedure run by regional administrative agencies. TIPs were, therefore, implemented in bits and pieces and fragmented along the way. The umbrella programme, which encompassed heterogeneous policy measures and involved different jurisdictions, came to be decomposed in its diverse parts and enacted according to the regional procedures in place. So the whole implementation effort ended up just business as usual, commented some respondents. In other terms, TIPs’ implementation process unfolded along the typical dynamics in place in each sector of intervention, perpetuating path-dependent practices at the cost of efficiency, equity, and relational quality, as highlighted later on.

Different institutional agents were, first, called on to make a coordination effort to align their priorities towards commonly shared complementary local development objectives. Subsequently, though, the same agents were left alone to comply with existing administrative procedures, whereby regional agencies continued to have the upper hand. Ultimately, regional managers maintained their higher hierarchical positions with respect to local managers, and enjoyed the capacity to decide on financial allocation and eligibility criteria. Only in a few instances did regional managers have to negotiate with local managers the amount of resources to be allocated for specific projects included within the TIP. In such circumstances, regional managers had also to negotiate the timing and eligibility criteria. This occurrence seemed to be related to the capacity by local managers to exercise leadership and so gain bargaining power with respect to regional authorities.

Indeed, the observed ‘re-centralization’ turn was not just the result of an intentional, though implicit, choice to firmly maintain decision making power at the regional level. As some respondents reported, this evolution came about to address persisting local organizational and institutional weaknesses. In the case of Basilicata and Molise, for instance, regional administrative agencies strove to trigger local actors’ initiative. Bottom-up processes of programming were promoted to empower local authorities and to appreciate territorial specificities. However, as soon as local weak organizational and managerial capacity emerged as a previously unacknowledged implementation barrier, the whole decentralization effort was abandoned altogether. Also in Campania, where the majority of partnerships were locally managed, a lack of legitimate and continuous leadership hampered initial efforts to reach consensus among divergent interests calling for a more centrally guided coordination. Thus, the institutional architecture (as shown in Table 5), which reflected the planned devolution of decision-making capacities at the local level, turned out to be just on paper. In reality, centralized power was held by regional managers. Newly created ad hoc units for steering TIPs were isomorphic institutional/organizational phenomena (Powell and DiMaggio, 1991), which did not substantively alter the intergovernmental power distribution. In some cases, regional agencies did not recognize legitimate implementation capacities that lay with local authorities. In some other cases, local organizational and institutional weaknesses called for regional governments to still exercise both implementation and accountability prerogatives. Improvements in local agencies’ coordination was less the result of decentralization than a two-way dynamic among local authorities themselves and between local authorities and regional agencies. To the extent that TIPs involved decentralization, it revealed something quite different from the unidirectional transfer of power and funding from regional to local that is at the heart of the stylized portrayal of decentralization. Most strikingly, the regional government took power away from local authorities, even though its actions ultimately contributed to strengthening the capacity of local agencies. The result was that, through open antagonism between different levels of government, local public agencies came to learn how to apply EU procedures, which in turn implied a new way to manage local development projects. This evolution shows that, contrary to the widespread rhetoric in favour of decentralization to foster development, improvement of public organizations’ performance turns out to be more the result of a centrally guided decentralized capacity-building effort (Sager, 2010; Scott and Meyer, 1991; Tendler, 1997). The next section turns to highlighting the factors affecting coordination mechanisms.

Discussion: factors affecting coordination mechanisms

There was considerable agreement among interviewees with respect to the factors affecting coordination over time. Efficiency and equity seemed to produce a combined and mutually reinforcing effect on coordination because of some sort of overlap between perceptions of equity (i.e. perceived lack of effort) and perceptions of efficiency (i.e. perceived low output). Both of these perceptions elicited increased formal and centralized coordination. Most interviewees agreed on the potential of policy integration and co-formulation to increase efficiency and consistency across interventions as opposed to monosectoral measures. Yet interviewees also highlighted the paradox of too many sector-driven actions, since the overall perception was that TIPs ended up juxtaposing policy measures rather than integrating them. Interviewees also pointed out the costs associated with the collaborative process as opposed to individual planning. Some reported that the whole process was time consuming and too politicized, with a concrete danger of losing focus and inadvertently favouring opportunistic behaviour. Efficiency considerations in terms of local partnerships’ perceived low productivity changed very little during programme implementation since there was no reliable information on project performance. This called for increasing the adoption of formal procedures and re-centralizing coordination.

By contrast, equity considerations changed significantly over the implementation of the programme. Remarkable differences among interviewees emerged as to whether all parties made an equitable contribution to the TIP or there was just opportunism. Regional managers, who were obviously more experienced with EU procedures, did not feel vulnerable to opportunism by local actors, possibly because they preferred to go into the projects with greater preparation, as reflected in their greater emphasis on more formal mechanisms (standards, plans, and procedures) adopted early in the project. Regional managers used some informal mutual adjustment mechanisms during analysis and design and later during implementation but preferred to have minimal informal mutual adjustment during the intervening development phase. By contrast, local political actors, who had less experience with EU Structural Fund programmes, entered the programme without emphasizing formal coordination mechanisms, as a way to reduce uncertainty too. When local authorities perceived regional administrative agencies as acting unilaterally and other local partners showing opportunistic behaviour, the initial trust building effort resulting from interpersonal relations was undermined. Again, this evolution opened up the space for both more formalized and regionally centralized operations. Interestingly, the differences that emerged between regional and local managers are not consistent with the agency theory argument whereby the principal would be vulnerable to opportunism by the agent. In this case, it was rather the agents (i.e. local authorities) who felt vulnerable as being disempowered by the principal, who did not live up to the initial promises of decentralization.

Uncertainty was another key factor and increased as a result of efficiency and equity problems, leading to unclear specifications or poor documentation. A source of uncertainty was related to the new procedures the regional evaluation units had set up for TIP assessment prior to approval. Local partners were asked to indicate the social costs and benefits, the specific objectives, the expected results, and the operational agreed-upon processes, output and outcome indicators. However, evaluation criteria were not made explicit, creating uncertainty about what type of programme would be approved by the regional government and with what amount of resources. Because of this uncertainty, though, local managers learnt a great deal about regional and EU political priorities, organizational structures and operational procedures. In other terms, uncertainty worked also in favour of fast organizational capacity building through informal mutual adjustment.

With respect to relational quality, the overall perception was that it improved greatly as the design process unfolded through interpersonal and dense relationships, whereas it begun to fade once the TIP was approved and therefore it was expected to be implemented by regional agencies. Relational quality changed during the course of the project design, with improvements in relational quality through the parties getting better acquaintance with each other, and risking deterioration due to uncertainty in management and implementation responsibility. Thus a more continuous effort at feeding interpersonal relations through informal mutual adjustment at the local level was needed.

Concluding remarks and implications for future research

This paper has applied the conceptual classification of formal and informal types of coordination mechanisms, their costs, and evolutionary patterns to the analysis of local development programmes within contexts with structural socioeconomic constraints. The complexity of institutional interdependency ascertained in the qualitative comparative analysis of cases does not suggest any institutional ready-to-use solution regarding coordination mechanisms in regional and local development programmes that could lead to a total reform of existing administrative arrangements. It rather suggests the inductive approach for each step concerning specific problems. At the same time, the results speak for a certain rehabilitation of centrally guided and differentiated coordination. As the cases have shown, coordination costs can be reduced and conflicts prevented with central decision making backed by local design and management responsibility of programmes.

The analysis conducted thus far suggests that a variety of factors and events may cause changes in coordination mechanisms; in the cases at hand, decentralization was increasingly replaced by centrally guided capacity-building efforts. Furthermore, changes in perceived uncertainty, efficiency, equity and relational quality affect coordination mechanisms and those changes might, in turn, give rise to new coordination modes. Uncertainty and efficiency seemed important throughout the programme design and implementation, although their impact was different. Early in the programme, greater efficiency (e.g. large benefits from cooperation and integrating policy measures) seemed to increase coordination, but, later in the project, coordination increased as a result of perceived reduction in efficiency (e.g. problems with poor performance and lack of information). Uncertainty also changed during the project for several reasons, including learning by participants or poor specifications of procedures developed earlier. Equity considerations seemed not to influence coordination initially, but they became important later, following unilateral actions by regional managers or perceived opportunism by local managers. Relational quality seemed very important throughout, and its effect on coordination seemed consistent over time; initial investments in relational quality reduced coordination, whereas a later decrease in relational quality (which came about with increased centralization) led to greater formal coordination. These statements are somewhat contrary to the current mainstream of administrative science, which opts for an extensive breaking up of hierarchies and establishing horizontal market situations between each administration office. Especially concerning policy coordination, it should be considered that the propagated market mechanisms from political–economic reform models, such as the New Public Management, convey less cooperative but more central acting. Economic efficiency views lead in their own logic to more competition than cooperation, and therefore contradict the coordination between policy fields, as well as between territorial units (Sager, 2010).

This study has several implications for future research. Further research is needed to identify other coordination mechanisms. For example, the stage of the project itself seemed to influence coordination, although its effect was not examined in detail here. Many instances showed informal mutual adjustment (especially through personal visits) to be greater during the early design and late financial reporting and evaluation phases, but less during the middle development and implementation phase. Further research is also needed to examine the extent to which the types of coordination mechanisms identified and their evolution can be generalized to other programmes. These include other Structural Fund programmes, other kinds of institutional and political situations, and administrative procedures that do not involve ad hoc organizational arrangements and in which considerations of equity and relational quality may be considered less important. Another potentially useful area of future research is the empirical exploration of the differences observed between regional and local perspectives. Furthermore, the concepts of uncertainty, efficiency, equity and relational quality also need additional investigation to develop, for instance, measures of these constructs, and then use questionnaire surveys at multiple points in time to examine changes in these three aspects. Finally, future research should examine the complex organizational processes through which coordination mechanisms are adopted or discarded. This research has offered empirical evidence of a preliminary model of the evolution of coordination mechanisms. Future exploration of the evolution of coordination would benefit from such process-based perspectives as organizational learning, and from focusing on cognitive, symbolic and political factors that influence the evolution.

The paper also has several implications for practice. Regional and local executives involved in other EU Structural Fund programmes might benefit from the insights the paper provides, especially in the current times of required budgetary retrenchments due to the sovereign debt crisis. Regional executives may consider giving greater attention to informal mutual adjustment coordination mechanisms early in the project, so that they can develop more collaborative relations with local managers during the implementation phase. Locals should also seek the benefits of expertise with TIPs’ development early in the project and employ prior technical and evaluative skills in the initial negotiation process. Regional executives, on the other hand, should seek ways of preventing uncertainty in operations and the perceived drop in efficiency, equity, or relational quality, which apparently motivates local demand for increased informal mutual adjustment. Investing in relational quality, avoiding actions that may be perceived by the local actors as unilateral, opportunistic or corrupt, and managing expectations so that performance problems do not come as a complete surprise with unintended and wasteful disbursement of financial resources may be some of the tactics that generate and maintain trustful, cooperative, and efficient relationships over time.

Footnotes

Notes

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