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Evaluating Policy Implementation: The European Union s Small and

Medium Sized Enterprise Policies in Galicia and Sardinia

Sarah C. E. Batterbury

Online publication date: 18 August 2010

To cite this ArticleBatterbury, Sarah C. E.(2002) 'Evaluating Policy Implementation: The European Union's Small andMedium Sized Enterprise Policies in Galicia and Sardinia', Regional Studies, 36: 8, 861 876

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Regional Studies, Vol. 36.8, pp. 861876, 2002

Evaluating Policy Implementation: The European

Unions Small and Medium Sized EnterprisePolicies in Galicia and Sardinia

S A R A H C . E . B A T T E R B U R YSchool of Humanities and Social Sciences, Evaluation Studies, University of Glamorgan/Prifysgol Morgannwg, Pontypridd,

CF37 1DL, UK. Email: [email protected]

(Received June 2000; in revised form February 2002)

B ATTERBURY S. C. E. (2002) Evaluating policy implementation: the European Unions small and medium sized enterprise

policies in Galicia and Sardinia, Reg. Studies 36, 861876. Evaluating policy implementation involves assessment of theinstitutional performance of the institutional system in its locale. This paper highlights the importance of local conditions for

eVective policy i mplementation. Current literature suggesting that civic culture is an essential precursor to successful institutional

performance is rejected, instead it is argued that policies need to be better adapted to local strengths and institutional forms. A

mis-match between the policy design, the socio-cultural environment and the institutional structures can lead to problematic

institutional performance and implementation outcomes. InsuYcient institutional capacity also places strains on institutional

performance and implementation capacity. Policies and institutions need to build on the strengths of a locality and be tailored

to the prevailing socio-cultural environment for eVective policy delivery. Implementation diYculties can be resolved by allowing

policy design to better t the exigencies of local areas, while simultaneously reinforcing regulatory solutions where this can

improve implementation capacity.

Institutional performance Implementation evaluation Socio-cultural environment Institutional capacity

Structural Funds EU SM E policies

B ATTERBURYS. C. E. (2002) Evaluer la mise en application B ATTERBURY S. C. E. (2002) Einschatzung der Durch-

dune politique: les politiques de lUe en Galicie et en fuhrung politischer Bestrebungen: politische Richtlinien der

Sardaigne en faveur des petites et moyennes entreprises, Reg. EU bezuglich kleiner und mittlerer Unternehmen in Gali-Studies 36, 861876. Evaluer la mise en application dune cien und Sardinien,Reg. Studies 36, 861876. Eine Einschat-

politique necessite une estimation de la performance des zung der Durchfuhrung politischer Bestrebungen schliet die

institutions sur place. Cet article cherche a souligner limport- Beurteilung der institutionellen Leistung des institutionellen

ance des conditions locales necessaires ala mise en application Systems an seinem Ausfuhrungsort ein. Dieser Aufsatz hebt

eYcace dune politique. La documentation actuelle, qui die Bedeutung ortlicher Verhaltnisse fur eine wirksame

laisse supposer que la culture civique constitue une variable Durchfuhrung politischer Bestrebungen hervor. Aktuelle

prealable au succes des institutions, est rejetee. On aYrme diesbezugliche Literatur, die nahelegt, da Ortskultur ein

plutot que les politiques doivent mieux repondre aux atouts wesentlicher Vorlaufer fur erfolgreiche institutionelle Leis-locaux et aux formes institutionnelles. Une disparite de la tung sei, wird verworfen. An ihrer Stelle wird die Behaup-

conception de la politique, du milieu socio-culturel et des tung aufgestellt, da politische Bestrebungen besser an

stuctures institutionnelles pourrait entraner des problemes ortliche Starken und institutionelle Formen angepat werden

pour ce qui est de la performance des institutions et des mussen. Politische Planung, gesellschaftlich-kulturelle

resultats de la mise en application. Le manque de capacite Umwelt und institutionelle Strukturen, die schlecht auf

institutionnelle risque aussi davoir un eVet nefaste sur la einander abgestimmt sind, konnen auf Probleme stoen,

performance institutionnelle et la capacitede mise en applica- wo institutionelle Leistung und Durchfuhrungsergebnisse

tion. Pour une mise en application de politique eYcace, les verlangt werden. Auch ungenugende institutionelle Kapazitat

politiques et les institutions ont besoin de tirer parti des kann zu Spannungen bei institutioneller Leistung und Durch-

atouts du milieu local et de sadapter au climat socio-culturel fuhrungskapazita t fuhren. Wenn Grundsatzbestrebungen und

qui prevaut. Les diYcultes de mise en application pourraient Institutionen eVektiver werden sollen, mussen sie auf Starken

se resoudre en autorisant une conception de politique qui einer Gegend aufbauen und der vorherrschenden, gesell-repond mieux aux exigences des zones locales, tout en schaftlich kuturellen Umwelt angepat werden. Probleme

renforcant des solutions de controle la ou il en resulterait bei der Durchfuhrung lassen sich losen, indem man durch

une amelioration de la capacitede mise en application. bessere Anpassung der Grundsatze den Erfordernissen einer

Gegend gerecht wird, doch zugleich behordliche Losungen

Performance institutionnelle stutzt, wo dies die Durchfuhrungskapazita t verbessert.

Evaluation de mise en application Climat socio-culturel

0034-3404 print/1360-0591 online/02/080861-16 2002 Regional Studies Association DOI: 10.1080/0034340022000012306

http://www.regional-studies-assoc.ac.uk

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862 Sarah C. E. Batterbury

Capacite in stitut io nn elle Fon ds structu rels Institution elle Leistu ng E in schatzung der Durchfuhrung

Politiqu es de lUe en faveur des Pme Gesellsch aftlich-kultu relle Umwelt

Institutionelle Fahigkeit Strukturfond

Politik der EU bezuglich kleiner und mittlerer Unternehmen

INT R O DU C T IO N factor inuencing the degree to which policies can beimplemented is based on institutional capacity. Ques-tions of institutional capacity have particular relevanceThis paper explores the factors that have shaped the

institutional performance and implementation out- to eVectiveness because policies designed centrally may

not marry well with institutional strengths in a locality.comes of the Structural Funds small and medium

sized enterprise (S ME) policies in southern Europe. It This can create areas of diYculty for implementation.

Capacity may be enhanced externally by the actions ofcompares the experience of two beneciary regions

Galicia in Spain and Sardinia in Italy in the period the European Union or by actions of the MemberState. These external actors have an important role to198898.1 The case studies demonstrate that particular

local and institutional conditions have a direct impact play in enabling local institutions to operate eVectively.

The degree of eVectiveness in policy implementationon policy implementation: they play a key role in

structuring the performance of institutions and pro- is discussed for the two case studies in the next section.A simple ranking system is used to help clarify thegrammes. The paper argues that there are three impor-

tant factors that shape institutional performance and degree to which implementation outcomes have beenachieved in the case study regions.3policy delivery. Firstly, a mis-match between the socio-

cultural environment and policy design can lead to The main part of the paper emphasizes the impor-

tance of the prevailing socio-cultural environment forproblems with policy delivery and goal achievement

where policies are insuYciently tailored to the needs implementation of policy. Recent research (P U TNAM

et al., 1993) arguing that civil society can determineand strengths of a locality. Secondly, a lack of compati-bility between policy implementation requirements and institutional performance and economic development

fails to address the need for policies and institutions toexisting institutional structures is also liable to contri-

bute to problematic (and therefore less eVective) institu- build on the strengths and distinctiveness of particular

localities and cultures. Thus it is not necessarily thetional performance and policy implementation.Thirdly, the wider institutional framework at the Euro- local civil society that needs to be improved to enable

eVective policy implementation. Rather, policies them-pean Union (EU) and Member State level also impactson eVective policy delivery and institutional perfor- selves need to be designed in a way that will capture

regional and local strengths to ensure eVective deliverymance, as regions are part of a broader partnership and

network within the EU area.2 and realization of desired policy outcomes.

The paper also conrms existing research that showsThe paper argues that the compatibility between the

socio-cultural environment and both institutional form that insuYcient institutional capacity also places strains

on performance and ultimately implementation capa-and policy design is a better determinant of institutionaland programme performance than just the degree of city.4 The paper concludes by arguing that, ideally,

implementation diYculties need to be resolved bycivic culture in a locality. Attention is drawn to the

theoretical limitations of current literature on institu- adapting policies to allow policy design to t better theexigencies of local areas. The European Commissiontional performance to take account of the importance

of the need for policies and institutions to build on the has recently moved to recognize the importance ofregional diversity in formulating policy responses. Thestrengths of a locality and to be tailored to the prevailing

socio-cultural environment. While this may seem self- White Paper on European Governance now advocates

the following of a less top-down approach (C O M M I S -evident, diversity in institutional form and practice is

seldom advocated at the policy level. S I ON O F T H E E U R O P E A N C O M M U N I T I E S (CEC),

2001, p. 4). At the same time regulatory solutions needThe paper begins by briey outlining the imple-

mentation diYculties and problems of policy eVec- to be reinforced where this can improve implementa-tion capacity within regions by ensuring eVective exter-tiveness experienced in the two case study regions.

Questions of eVectiveness (more so than questions of nal support from the Member State and the EU.

The research aims to make a contribution to improv-eY

ciency) also lead us to seek to understand better thecomplex interaction between organizational systems ing the policy process by illuminating the dynamics

governing the implementation phase of the policyand the environments within which they seek to optim-

ize policy delivery. This is important because the nature cycle. Better understanding of these policy dynamicsenables a clearer denition of the constraints, opportu-of t between policies and their environment has a

direct relationship with the receptivity for policies and nities and specicities of the policy process embedded

in its diVerent regional contexts.ultimately their eVectiveness. A second and important

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The EUs Small and Medium Sized Enterprise Policies in Galicia and Sardinia 863

IMPL EMENT A T IO N DIF F IC U L T IES

A N D P R O B L E M S O F P O L I C Y

EF F EC T I V E NE S S I N T H E CA SE

S T U D Y R E G I O N S

The ability of a governance structure to implement

policy is of fundamental importance in the search for

policy success. Even the most optimal policy design

can fall at the hurdle presented by implementation

obstacles.5 It is also diYcult to test policy theory if

implementation is sub-optimal. Institutional perfor-

mance is therefore a major factor that determines the

achievement of desirable policy outcomes.

Questions of policyeffectivenessare central to evaluat-

ing and assessing the added value of policies and

programmes. EVectiveness is often measured in relation

to goal achievement, but is also reliant on delivery

capacity and relevance of particular policies to stake-

holders. Evaluating eVective policy delivery necessarily

entails assessment of the appropriateness of policy

design as well as the institutional performance of a

number of diVerent organizations in their specic con-

texts. These include those that operate at the planning

and evaluation ends of the policy cycle, and the net-

work of organizations that manage front-end delivery.

A number of writers have observed that organizations

are aVected by the environment within which they

operate (TH O M P S O N , 1967; EME R Y, 1969; H A L L,

1980). We therefore need to understand the external

socio-cultural environmental inuences and organiza-

tional dynamics which impact on the eVectiveness of

policy delivery at an inter-organizational level between

networks of institutions and within single institutions.Fig. 1. Sites of infra-structural measures for SM Es in

Power relations also eVect performance and operate atSardinia

every level.Note: Satellites of the Technology Park also proposed for the three

The case of the EUs S ME policies is interestingprovinces of Nuoro, Oristano and Sassari.

because the policies are embedded within a system ofSources: K IN G, 1975, p. 14, p. 180; R E G I O NE A UTO NO M A

multi-level governance in which European, national DELLAS AR D E G NA, 1995; pp. 77-78; ESIT, 1993.and regional governments all have a role to play.

Regional and national level partnerships and institu-

tional histories also mediate the policies implementa- In the case studies, implementation diYculties weretion by drawing in local government structures and evident at all levels: European, national and regional.

social partners (K E L L E H E R et al., 1998). The multi- Implementation obstacles at each level tended to belevel character of the polity is an important feature related to a number of linked issues: complexity, mul-shaping the multiplicity of inuences that have a bear- tiple programmes and fragmented administrations. Thising on institutional performance. This creates a com- often resulted in delays in approving funds, restrictingplex framework of cross-cutting inuences which the period for implementation signicantly and makingimpact on policy and programme delivery, output and recourse to extension requests necessary. The Italianimpact. situation in particular was aggravated by the abrupt

As part of the Structural Funds, the EU has sought ending of a centralized system of regional aid (Interventoto promote the growth and development of dynamic Straordinario) in favour of action at the regional level.

small and medium sized enterprises for the economic This redirected responsibility to the regional publicadjustment of regions whose development is lagging administration which was ill-prepared for the newbehind, or Objective 1 regions.6 The eVectiveness of burdens it faced. The Structural Funds in Italy havepolicy implementation has been examined for this eVectively become a mechanism for regional capacityrange of policies in the two regions of Galicia and building, a task arguably as important as the delivery of

Sardinia. Figs. 1 and 2 show the distribution of a regional assistance itself (GR O TE, 1996).

Tables 1 and 2 classify the SME policies researchednumber of these policy interventions.7

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synergy between institutional form, policy design and

socio-cultural environment.

The Sardinian experience has been one characterizedby considerable implementation delays. This reects

the implementation capacity of the regional institu-

tions. Over-optimistic planning became victim to capa-

city problems and the impact of the abolition of the

Intervento Straordinario. Regional clientelistic practiceshave also had serious implications for the eVectivenessof individual measures and schemes. Thus the inability

of centrally designed policies to take account of the

socio-cultural specicities of the region resulted in

distorted policy outcomes not anticipated in the ori-

ginal design and plans. The interaction between local

socio-cultural norms and policy implementation is dis-cussed in the next section.

The Galician experience is summarized in Table 2.

The Galician case was also characterized by inappropri-

ate planning. This reected a consultation failurebetween the implementing departments about the most

appropriate and needed strategies. This was caused bothby the presence of onerous time pressures and deadlines,

and a general organizational culture in the Galician

regional government in which close adherence to the

approved EU policies was not accorded a high priority.

As an Autonomous Community in Spain, Galicia hasaccess to its own resources, enabling the region to

pursue policy strategies that lie outside the EU rubric.

The highly fragmented nature of the institution was

also a recipe for breakdowns in communication andFig.2. Sites of infra-structural measures for SM Es in Galiciaco-ordination. Signicant political manipulation of the

Note: Pontevedra and La Coruna are the two coastal provincesadministrative process also impacted on the eVectivenesswith the highest Socialist Party vote (PSOE) in the periodof the SME policies in Galicia. The role of politics in198898.the administrative process is discussed in more detail inSources: BATTERBURY, 1993; X UNTA D E G AL I C I A (n.d.).what follows.

In the next section the question of the importance

of local conditions for policy implementation is consid-into innovative measures, traditional nancial incentives

and infrastructural programmes. DiVerent institutions ered. Firstly, diYculties with the current literaturefocusing on civic culture as the key to the delivery ofand diVerent departments implemented individual

schemes. The degree of implementation eVectiveness eVective regional development strategies are discussed.

The socio-cultural factors which conditioned institu-for each scheme is broadly rated along a scale of mosteVective, medium eVectiveness and least eVective. This tional performance and implementation outcomes in

the case study regions are then examined. These envi-is a fairly crude measure reecting actual output of theschemes and having regard to the degree to which ronmental phenomena impact upon institutional per-

formance at both the interorganizational and internalthe scheme implementation reected the policy as

designed. DiVerent SM E schemes achieved diVerent organizational levels. This is because broad policy

design and institutional forms have not sought speci-levels of eVectiveness. The relevant explanatory vari-

ables determining implementation outcomes are also cally to build on local advantages, but rather to comply

with the centrally conceived character of E U-wideset out in each case.Interestingly we nd some variation between the Structural Funds policy.

eVectiveness in delivery of the diVerent S M E measures

sampled within each region. This diV

erence suggests T H E S O C I O - C U LT U R A L that the nature of both the individual policies and theE NV I RO N M EN T A ND I T S IM PA CT

implementing institutions is important in determiningO N P O L I C Y I M P L E M E N T A T I O N

the eVectiveness of policy implementation in specicsocio-cultural environments. This conrms the hypo- The socio-cultural environment may be dened as the

social and cultural norms that shape institutional andthesis that it is not the degree of civic culture that

explains institutional performance, but rather the societal relations in a locality. It refers to the structuring

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Table1. Degree of effectiveness in policy implementation of a number of S M E schemes in Sardinia in the period 198898

Degree of policy eVectiveness

(1998)

Medium

Scheme Most eVective- Least Factors inuencing

classication Measure/scheme Institution eVective ness eVective Comment implementation outcomes

Innovative Applied research Consorzio 21

1

x Over-optimistic

Policy design problemsmeasures and technology planning, no feasibility Institutional capacity

counters studies. Delayed start, problems within the

but a number of rms region but aggravated by

supported changes at Member State

level

BIC Sardegna2

BIC Sardegna x Devaluation of lira Scheme design problems

increased nance associated with location

available. Financial and targeting of

absorption diYculties intervention

followed. Larger Capacity problems

number of rms generated by Member

supported. Has State activities

potential.

Global g rant CORAM3 x Few rms supported Policy design subject to

technical assistance local socio-cultural forces

to rms Scheme design issues,

(targeting and timing) Policy design subject to

local socio-cultural forces

Certication of ISOLA4

x Medium number of Institutional capacity

origin and quality rms supported problems within the

region impacted on

delivery

Commercialization IS OL A x Delayed start Institutional capacity

and market problems within the

research fairs region impacted on

delivery Scheme design diYcult

reception locally

Global grant Consorzio 21 x Medium number of Policy design subject to

rms supported local socio-cultural forces

SME Initiative x Start delayed by 25 Institutional capacity

years by EU problems external to the

region (EU level)

Traditional Participative nance SFI RS5 x Delayed start, Institutional capacity

nancial adversely aVected by problems within the

incentives macro economic region and also generated

interest rate changes. at the Member State level

Expensive Scheme design diYcult

to implement Policy design subject to

local socio-cultural forces Policy design not able to

get round lack of

transparency of scheme

availability to

entrepreneurs

Leasing SFI RS x Medium number of Policy design not able to

r ms support ed g et ro und lack of


availability to

entrepreneurs

Policy design subject tolocal socio-cultural forces

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Table1. Continued


(1998)

Medium



Traditional Incentives to SFI RS x More than 100

Policy design subject tonancial industrial SMEs beneciaries local socio-cultural forces

incentives Policy design not able to

(continued) get round lack of


availability to

entrepreneurs

Infrastructural Pilot artisan centres IS OL A x Delayed construction Institutional capacity

schemes problems in the region Policy design subject to

local socio-cultural strains

Technology park Consorzio 21 x Delayed construction Institutional capacity

problems regionally

Notes: 1. Consortium for the Assistance of Small and Medium Sized Enterprises.

2. BIC Business Innovation Centre provides tutelage and incubators for nascent SMEs.

3. Consortium for the Re-industrialization of Mining Areas.

4. ISOLA Sardinian Institute for the Organization of Artisan Work.

5. SFIRS Financial Society for the Industrial Rebirth of Sardinia.

processes of local cultures as they interact with institu- The t between policy design and the socio-culturalenvironment and between institutional form and thetions and programmes. The socio-cultural environment

is therefore embedded in and dened by locale and is socio-cultural environment is therefore strained by

these national and supranational inuences. The emer-place specic.8 The local receptivity to particular poli-

cies is therefore conditioned by the synergy between gence of a disjuncture between the institutional struc-tures, the policy design and the socio-cultural normsthe policy goals and design, their implementation pro-

cesses, and the local socio-cultural environment within can lead to performance diYculties.The SME policies are particularly illuminative aboutwhich delivery is to be carried out.

The impact of an organizations environment on an the impact of the socio-cultural environment on imple-

mentation. The inter-personal interaction of actors ininstitution consists of a vast array of crosscutting strains

and dynamics that vary contextually through both time this policy arena sheds light on important socio-cultural

structures which condition policy implementation. Theand space. Organizational activity is place specic:

places are important as the loci within which organiza- particular nature of SM E policies (often aimed atproviding one-to-one advice, tutelage, and counselling)tions function and interact with a broader socio-cultural

domain which has both local and global determinants. allows us to understand the micro-dynamics of imple-

mentation and socio-cultural forces at work in specicWe cannot construct a simple linear link betweenoutcome and environmental factors however. In the regional contexts, because the policies are operated

through the delivery of a number of relatively small-case of the SME policies, not only were there multiplelocations, but also a large number of factors within scale projects.administrations which inuenced institutional perfor-

mance. These factors ranged from the whim of anCivic culture

individual to more structural features concerning power

relations and organizational culture determinants. Recent work on institutional performance has focused

on the presence of civil society as a causal factorIn the case studies, the multiple locations withinwhich the SM E policies operated created the potential in explaining institutional performance and ultimately

achievement of economic development (PU T N A Mfor the emergence of a mismatch between the policy

design and the socio-cultural implementation environ- et al., 1993). This paper supports an alternative hypo-thesis: it is the degree of policy and institutional synergyment. Although plans were drawn up locally, theynevertheless followed a rubric which was dened cent- with the implementation environment (rather than the

civic culture in a locality) that is a better determinantrally at the level of the Commission. In addition,although the institutional structures had to function of institutional and programme performance.

This approach is more relativistic. It implies that itwithin the regional context, they were largely legiti-

mated and determined by central government policy. should be possible to work with the prevailing culture

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Table2. Degree of effectiveness in policy implementation of a number of S M E schemes in Galicia in the period198998


(1998)

Medium



Innovative Global grant with IGAPE1 x 3 year delay in approval Institutional capacity

measures provisions to assist by EU, too innovative, problems external to the

SMEs and irregular planning region (E U level)

BIC Galicia (art. BIC Galicia x 133 rms assisted. Has Policy design allowed

B2-601) potential interference from local

political groups and goal

displacement Scheme design problems

associated with location

and targeting of

intervention

Traditional Support for Xunta2

x Vague planning Policy design allowed

nancial industrial activity documentation makes interference from localincentives eVectiveness diYcult political groups and goal

to assess displacement Institutional capacity

inadequate regional

planning, lack of clarity

over EU contribution

Support for rural Xunta x Administered by Institutional capacity at

tourism inexperienced staV the regional level

following political Institutional structures

promotions, but some strained by local and

success in terms of Member State political

outputs culture

Local development Xunta x Vague planning. Policy design allowedand aid for services Money for scheme interference from local

to rms channelled into other political groups and goal

projects displacement Institutional capacity

inadequate regional

planning, lack of clarity

over EU contribution

Infrastructural Creation and Xunta x Reects greater Policy design optimal,

schemes preparation of administrative building on existing sub-

industrial sites experience and capacity national capacity

to deliver infrastructural

projects

Technology park Galician x Location selected on Policy design subject toTechnology Park, political g rounds. Large l ocal socio-cultural forces

Xunta, and BI C rm in SM E

Galicia incubators. But has

potential

Promotion of Xunta x Delayed assistance to Institutional capacity

R&D rms problems at the regional

level

Note: 1. IGAPE Galician Institute for Economic Promotion, a public institution established in 1993 to administer SME schemes.

2. Xunta Regional Government for the Autonomous Community of Galicia.

in a way which optimizes its strengths rather than choices of political actors to foster economic develop-ment and deliver actual goods in order to maintaindesigning an institutional framework which is disassoci-

ated from the regional context and which is therefore their hegemonic position (ibid., p. 320). This workchallenges us to re-conceptualize our understanding ofsusceptible to clientelist capture. The work of PI AT-

T O N I, 1997, is helpful here. She has noted that it is clientelism as able, in some circumstances, to perform

in a way which is development sustaining (ibid.,possible to nd examples of diVerent styles of clientelistpolitics.9 Virtuous clientelism results from the deliberate p. 329).

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Perhaps the most important study about institutional It would be futile, however, to expect an entire cultural

change before institutional performance can beperformance to be published in recent years is that of

P U T N A M et al., 1993. The authors carried out a improved. Although somewhat relativistic, far greaterprospects for success come from working with pre-longitudinal study of the performance of a large

number of Italian regional institutions, all of which had vailing cultural norms to achieve positive changes,

instead of against them which will result in a longbeen set up in an identical fashion in 1970. They note

that: Civic context matters for the way institutions period of immobility and stagnation.

Major diYculties with the study of P U T N A M et al.,work. By far the most important factor in explaininggood government is the degree to which social and 1993, arise, therefore, from the basic assumptions that

they make. Notions of social stability, education, urban-political life in a region approximates the ideal of the

civic community (p. 120). They write that the design ism, personnel stability or the prevailing party of gov-

ernment are rejected as having little utility in explainingof the institutions cannot explain the performance

which each achieves, because they are all the same. An institutional performance. Social science increasingly

recognizes that social reality is created by an intersectionalternative approach however, would be to explain

performance outcomes in terms of the synergy of a complex network of multiple causal factors; how-ever, this is insuYciently recognized by Putnam et al.achieved with local socio-cultural conditions. This

implies a need for a subtle diVerentiation in both policy in their study. The authors dene civic virtues as

encompassing an active, public-spirited citizenry, byand in institutional form for diVerent places in order

to optimise outcomes. egalitarian political relations, by a social fabric of trustand cooperation (ibid., p. 15). Clientelism, (whichThe thesis of Putnam et al., overlooks the fact

that some aspects of an institutional design may be Putnam et al. identify as prevailing in southern Italy)does, in fact, function on the basis of trust and co-appropriate to one domain and not to another. This

paper suggests that it is not the society which is operation although the relationship is hierarchical and

dyadic instead of horizontal and yet the authors assertto blame for poor institutional performance, but the

institutional design and policy itself which is not best that the south lacks these qualities. G R O TE, 1996, also

contests the suggestion of Putnam et al. that civilsuited for the cultural and environmental domain inwhich it will operate. G R A B H E R and STAR K , 1997, society and co-operation is weak in the south: On the

contrary, co-operation is extremely well-developed,have also indicated the importance of recognizing the

need to adapt institutional design to its environment albeit not in the form of co-operation among autonom-

ous actors in economic markets, but rather, in the forminstead of the environment to the institutional design.They state that: Even if the selected characteristics of of collusion between patrons and clients in dense

networks of political exchange (p. 269).an organizational form were the ttest, they wouldbe so only in regard to a particular economic, political, In terms of the implementation of the SM E policies,

the degree of civil society in the surrounding socio-and cultural context; they would not be the ttest for

a changing or diVerent context (p. 535). cultural environment would not appear to be the most

salient variable in explaining institutional performance.Putnam et al.s approach assumes that their notionsof democracy and civicness are goals to which all While the presence of patronage is signicant, this

varies in impact and form as the result of the extent ofshould aspire. In this context civil society in southernItaly is condemned as lacking in civic virtues and industrialization and the development of modern class

divisions in the locality. Many other factors includingconsequently (according to the logic of Putnam et al.)

having little immediate prospect of improvement of the nature of bureaucracy itself and the dynamics ofpower relations are also critical.10institutional performance or even of economic devel-

opment. They state that: When we use both civictraditions and past socioeconomic development to pre-

Structuring impact of the socio-cultural environment on policydict present socioeconomic development, we discover

implementationthat civics is actually a better predictor of socio-

economic development than is development itself The existence of prevailing socio-cultural clientelist

norms in the case study regions provides a context for(P U TNAM et al., 1993, p. 156).BAGNASC O, 1996, has warned of the dangers of this policy implementation that sits uncomfortably with the

ethos behind the SME policies. In the case of Sardinia,approach. He comments that, it is in danger of being

misunderstood (p. 365). This is particularly important clientelism determines many social interactions where

there are disparities of power and resources at stake.in Italy in the context of the rise of the northernleagues and in the context of a legacy of intolerance of Like other regions in southern Italy, this is essentially a

reection of the islands rural and traditional status,southern Italians by some northern Italian groups.

There are, of course, diYculties with institutional and has tended to contribute to the emergence of afragmented polity in which rent seeking behaviourperformance in southern Italy, and the prevailing

patronclient mentality does not help in achieving requires administrators to secure patron status and rms

to perform as favoured clients.11 In the case of Galicia,optimal performance as we will see in the next section.

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the prevailing clientelist structures are more politically traditionally structured cultures in this part of Europe.

The SM E policies were seen by some as a sourcedened, making it possible for political decisions to

shape the implementation of the policies (location of for the reinforcement of personal power bases; thiscontributed to a multiplication of organizations operat-sites for example), and the performance of individual

institutions (personnel decisions).12 ing at the delivery end of the policy process (see Table

3). Institutional multiplication is also attributable toInevitably, power dynamics are intrinsically linked

into the mechanics of clientelism. Patronage systems the multiplicity of SM E schemes and programmes in

operation, to the sectoral and functional orientation ofare built upon inequalities of power between actors.Institutional performance is thus shaped by the societal initiatives, and to the perceived need to by-pass existing

ineYcient institutions.power within which the institutions are embedded.

Societal power is inextricably linked to the main char- Both participating entrepreneurs and regional oY-

cials in the semi-autonomous institutions spoke openlyacteristics of the social system. LY ND , 1993, has

observed that this can be a signicant barrier to organ- about the pervasive inuence of clientelism in this area:

izational change: To attempt fundamental change inYou need to understand that here, services and informa-

institutions, of a kind that eVects the basic character oftion provided to individuals or rms are regarded as

organized power in a given society, without changingfavours rendered. This means entrepreneurs expect to pay

the social structure of that society is like trying to drive in kind for support they should be entitled to anyway.a car forward with the gears set in reverse (p. 72). You will probably nd that Mr Xs windows and doors

One of the striking features of clientelism is its are all over the house of Mr Y who has provided himpersistence. We can equate the tenacity of clientelism with business advice and services as part of the SM Ewith the action of an amoeba which ows around its measure he administers. They will describe themselves as

good friends, however. (Interview with a regional oY-prey until it is completely encircled and enclosed withincial, 18 April 1996 own translation from Italian)the amoebas structure. This metaphor reects the

tendency of clientelism to overtake and capture socio-It is diYcult to substantiate these allegations but theeconomic changes so that they begin to function asfrequency of statements of this kind, made by very

patronage systems. A number of writers have observeddiVerent individuals, provided some triangulation forthis tenacious amoebic eVect of clientelism (G R A Z I -the socially constructed reality for the actors in the

A N O, 1973; KH A L A F , 1977; and Z U C K E R M A N, 1977).region.

K H A L A F, 1977, for example, writes that:One rather extreme statement was made by a local

entrepreneur who had been successful in benetingPatronage is not, as some writers have suggested, a transi-ent phenomenon, one which is bound to disappear as from a number of SME schemes:other more secular agencies and institutions emerge to

I dont know what you think, but I think the magistratesoVer alternate avenues for gaining access to privilegehave ruined the Sardinian economy; things worked muchand opportunity. . . . Expressed diVerently, the persistingbetter when we could simply pay bribes to the diVerentinuence of patrons stems from their ability to provideinstitutions in order to be sure of getting a contract. Youservices, goods, and values that no other group has so farsee, well, each institution has, of course, a President of abeen able to match. ( p. 202)particular political persuasion, while the Vice-President

The cases of Galicia and Sardinia demonstrate the may be of a slightly diVerent aYliation. Everyone knowsthis and so they choose their patrons in accordanceimportance of clientelistic socio-cultural structures forwith party political aYliations. (Interview with Sardinianinstitutional performance and the particular contextu-entrepreneur, 16 April 1996 own translation fromally determined form that this has taken in the twointerview records)regions.

While it is diYcult if not impossible to prove this

allegation, many other oYcials and entrepreneurs indi-Sardiniacated by their comments that political inuence in

allocating jobs and selecting SMEs was important. ThisIn Sardinia the broad (and fairly traditional) clientelistic

culture acted as a force for proliferation of institutions provided a picture of a regional system in which

patronage is one signicant mechanism in the distribu-and for constraining the numbers of beneciaries to alimited number of entrepreneurs who participated in tion of resources and inuence. The clientelist system

thus structured the functioning of policy implementa-many separate SME schemes. This outcome may be

understood as an inevitable by-product of the clientelis- tion by inducing institutional multiplication rather thaneVective and transparent delivery. It is not the absencetic structures which were able to capture the Structural

Funds and bring about goal displacement in which of civic culture which produces this impact but the

susceptibility of the policies to clientelist capture.rent-seeking behaviour predominates over a search forthe common good. The Sardinian case is notable The importance of traditional patronclient relations

in Sardinian society at the same time contributed to afor the particularly visible and pervasive nature of

this behaviour, a characteristic shared with other limited number of participants successfully beneting

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Table3. The institutions involved in implementing aspects of the E Us S M E policies in Sardinia, 1988981

Name Role

Presidenza per relazioni con la CEE (Presidency The part of the regional government which is the principal point of contact between

for Relations with the EEC) the regional Giunta and the European Commission

Centro Regionale di Programmazione (Regional Prepares monitoring committee reports and minutes. It has delegated operational

Programming Centre) powers to BIC and Consorzio 21. It undertakes the draft planning for Operational

Programmes

Regional government2

(Department for Tourism, Responsible for managing nancial incentives for the artisan sector (IM P 2.10, NPCIHandicraf ts and Commerce) 3.1 and R O P 199499 2.2.2.1)

BIC Sardegna (EU promoted BIC) Stimulates the birth and development of new innovative SMEs (IMP 2.3) (ROP

199499 2.2.3.1). Manages SEED Capital and EU supported venture capital scheme

Consorzio 21 (Consortium for the Assistance of Provides services for enterprises in Sardinia and the establishment and management of

Small and Medium-sized Enterprises) the Science and Technology Park (RO P 199499 4.6.4.1 & 4.6.4.2). Also the

implementing institution for a global grant and it is responsible for implementing the

Applied Research and Technology Counters measure (IMP 2.4). Consorzio 21

implements with BIC Sardegna the Aid for services to rms measure (ROP 199499

2.2.3.1)

S FI RS (Financial Society for the Industrial Implements: Participative Finance (IMP 2.1), Leasing (IM P 2.2) and, Incentives to

R ebirt h of Sardinia) In du stria l S M Es (R O P 19 9499 2 .2.1 .1). It is al so ho st to CO R A M, and was

involved with SEED capital early on

CO RAM Consortium for the Re- Administers a global grant which gives nancial contributions designed to facilitate theindustrialisation of Mining Areas re-industrialization of former mining areas

I SO LA (Sardinian Institute for the Organization A public body which exists to promote Sardinian artisan products. Involved with

of Artisan Work) administering pi lot craft centres (IMP 2.5), the design and implementation of quality

and origin certication (IMP 2.6), and commercialization and market research

(IMP 2.7)

Sportello AP RE (Agency for the Promotion of Opened on the 25 March 1994 in Consorzio 21, oVering an information service on

European Research) EU R& D programmes

CA SI C (Consortium for the Industrial Responsible for equipping, running and building the three industrial areas of Cagliari

Development Area of Cagliari) (Macchiareddu, Elmas and Sarroch). It is host to BIC Sardegna at Macchiareddu

CRS4 Has a future role to play in oVering technical consultancy services as part of the Science

Park planned for Pula. Their specialist eld is advanced mathematical calculus. CRS4

has already initiated its work and has been able to help client rms notwithstanding the

continued absence of the Science Park

Provincial Councils Pl anning, education and training, industria l e states (N P CI 3 .2)

Chamber of Commerce: Service Centre for the Runs a Eurowindow which provides access to databases on community standards, VAT

Promotion of Enterprises; and Eurowindow rules for import and export etc, and community tenders. Also provides consultancy on

EU environmental legislation

Notes: 1. Own elaboration.

2. Giunta regionale this runs the regional administration and is divided into assessorati or administrative departments of the region

(H IN E, 1993, p. 261). Whereas the administrative functions of the EUs SME actions for industry tend to be delegated to the public

bodies such as SFIRS, Consorzio 21 and so on, those for artisan products are run directly by the Councillors o Yce/Department

responsible for the artisan sector.

Sources: S UL I S (n.d); H IN E, 1993, p. 261; B ATTERBURY, 1996, pp. 3233; IS OL A interview 2 April 1996; C O NSO R ZI O 21, 1994,

pp. 2425; CORAM, 1995, p. 2.

from a large number of SM E measures. While this was daunting for some. Lack of access to credit was also a

signicant factor. Poor policy targeting is also ana benet for the SMEs concerned, it is a matter forsome concern for the European Commission because example of mismatch between environment and policy

design which impacted negatively on policy eVec-it suggests that some potential deserving SMEs may

have been excluded. The clustering of beneciaries was tiveness. This is not the same as an absence of civic

culture.also indicative of strong word of mouth dissemination

of SME actions to potential entrepreneurs. Secondly, the low transparency and confused situa-

tion surrounding the provision of SME measures hasThere are a number of possible explanations for non-participation which include: small numbers of potential been signicant. Entrepreneurs tended to be advised in

a snowball fashion of potentially applicable schemesbeneciaries; poor transparency of the schemes; less

successful clientelist strategies by excluded entrepre- run by others. This in itself is the inevitable con-sequence of the administrative system where multipleneurs; and sub-optimal policy targeting. In Sardinia

there were fewer people interested in becoming new institutions operate to implement diVerent measures of

the S ME policies. Finally, the existence of politicalentrepreneurs as the result of a low level of entrepre-neurial culture in the region and, in the rural areas, a and cultural clientelism cannot be dismissed as an

explanation for this phenomenon. It was certainlygeneral low level of educational achievement. This

made the task of creating an enterprise seem unduly perceived to be important by entrepreneurs and admin-

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istrators alike. The phenomenon of multiple partici- town located in a province which has been aVected

by out-migration and which consistently returned apation by a limited number of rms in the SM E

schemes in Sardinia meant that, on average, the sample majority conservative vote for thePartido Popular. Thearea is traditional and predominantly rural unlike therms interviewed beneted from between three to six

S ME schemes each. coastal strip where the majority of the regions inhabi-

tants live, and where the majority of the regionsThe clientelistic culture in Sardinia appears to have

impacted directly on the administration of the Structural industrialization is located. A regional oYcial com-

mented on the location of the Science Park in OrenseFunds in this locality. The distribution of grants andassistance under the Structural Funds was mediated by in this way:the clientelistic socio-cultural environment within

That was also a political decision because, of course, thewhich the funds came to be administered. The institu-

interior parts of Galicia are much more conservative thantional multiplication and the multiple participation of the coastal areas. It should have been built in Vigo really;entrepreneurs in a number of SME schemes may be its not that clever having the Business Innovation Centrepartly explainable by clientelistic dynamics that pre- in Vigo and the incubators kilometres away in Orense. Wecondition all social interactions in the region. The public do intend now to develop incubators in Vigo also. (Own

translation from Spanish; interview notes, 5 March 1997)administration has also been, in part, staVed by indi-

viduals who were said to have received some patronageBoth local actors in Galicia and oYcials in thein attaining appointments. This has a negative impact on

European Commission stated that political clientelismbureaucratic eYciency as it demoralizes staVwho realize was an important motive in determining the sites ofthat promotion will not come through merit.

SME assistance. A senior oYcial in the region observedWhile the institutional multiplication in Sardiniathat the Minister was born in Orense; thats why the

reected the prevailing clientelistic ethos in the region,Technology Park is located there (interview, 4 March

it is also likely that the multiplication began as a1997). An oYcial in (the former) DG XVI of theresponse to the ineYciency of the regional governmentEuropean Commission, when interviewed about the

in the eld of Structural Fund administration. ThusSME policies in Galicia, stated that:

eVorts were made to by-pass the regional administrationthrough the creation of semi-autonomous institutions Political clientelism also takes place in the regions, which

is a shame. Galicias principle strength lies in the coastalresponsible for implementation. The ineYciency of thearea from Vigo to La Coruna: this is also where you ndpublic administration was undoubtedly contributed tothe voters for the Spanish Socialist Workers Party. Away

by the continuing practice of appointments and promo- from the coast in the interior you nd a strong presencetions being made on grounds other than merit. Theof the Partido Popular. Because of this, the Xunta has

fragmented polity of the region responded to thedone all it can to direct aid to small towns,. . . so, well,

incentive of the Structural Funds by diversication ofthis goes against the main direction of the E U policy.

the patron base and a restriction in the number of But, the Commission cant intervene, its a lot of eVortbeneting clients. This impacted negatively on policy for very little result.13 (Interview with an oYcial inimplementation and eVective delivery. DG XVI, 19 February 1996 own translation from

interview notes)

Galicia It is the mismatch between policy intention and socio-cultural environment that has created the opportunityIn Galicia clientelist structures responded diVerently tofor political manipulation of the intervention. This is

the presence of Structural Fund activity. Clientelism in not caused by a lack of civic culture but by a lack ofGalicia has tended to be more overtly party politicalsynergy between overarching policy design and localand less generally diVused into every aspect of socialsocio-cultural environment.interaction in the region. This led to more overt party

There was also some evidence of more overtpolitical distribution of patronage (as the result ofinstances of party political manipulation in selectingpolitical choices being made about the location ofbeneciaries of the SME policies; the presence of aSM E resources). It also led to reductions in institutionallarge dairy rm occupying a number of SME incub-capacity (as the result of political appointments), leavingators in the Technology Park was an example of this.an inexperienced lower tier of the administration facingThe essential premise of incubators is that they shouldthe task of implementation which they were ill-provide infrastructural support and premises to nascentequipped to undertake.enterprises before they move on to their own establish-

A good example of political interference in the ments. The presence of such a large rm in a numberlocation of SME schemes was the decision to buildof the incubators therefore calls for some explanation.the science and technology park in Orense (see Fig. 2).When questioned about this, an oYcial said that:This decision was one that prioritized the dispersal

of regional aid over the E Us favoured approach of Well, it was a political decision. It is a very importantconcentration of Structural Fund activity. Orense is rm; it employs a lot of people. You see they wanted

to be in the Park, so, well . . . the powers that be decidedone of the regions four provincial capitals: it is a small

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that they wanted them to be there. They arent really occurred in Galicia which we cannot observe in Sardi-taking up space that other SMEs could use because, well, nia. This also helps to explain the observed diVerencesthere are still incubators available, the Park is not full. Of in the degree and type of clientelism in the twocourse, thats probably because it is Orense, its not exactly localities. The coastal zone in Galicia has inevitably leda convenient location unless youre from Orense of

to increased possibilities of unionization, and as tradecourse. (Own translation from Spanish; interview notes

unions constitute horizontal associations they operate5 March 1997)

directly to break the important dyadic links on which

clientelism is based. If we apply P I ATTO NI s, 1997,Unfortunately, no administration can function entirelyfree from political interference of this kind. Of course, denition of clientelism, Galicia has a greater potential

than Sardinia to become a development-sustainingpolitical intervention can be a positive thing in some

instances, and it may be that the presence of this large type of virtuous clientelism as it has both cohesive

patrons and strong opposition unlike the fragmentedrm in the incubators will act as a magnet to draw in

other potential enterprises. polity which characterizes Sardinia.

The prevalence of patronclient relations as a charac-Political intervention can also have negative implica-

tions; eroding the structure of an administration by teristic of the broader socio-cultural environment hasinevitable implications for the performance of themaking political appointments is an example of this.

This is especially so when it has meant that work is implementing institutions. We have seen that the

impact of clientelist structures in society varies signi-being undertaken by novices brought in to ll the posts

of those promoted for their political leanings rather cantly depending on the contextual circumstanceswithin which the polity is embedded. Places and cul-than on the basis of merit. Undoubtedly this has a

negative implication for eYcient bureaucracy, institu- tures are characterized by unique contextually boundfeatures. These specicities require policies and institu-tional performance and eVective implementation. The

capture of SM E policies for meeting the goals and tional structures which are uniquely designed to build

upon the strengths of the socio-cultural system anduses of political clientelism distorts the original policy

intention. It is the disjuncture between policy design avoid pitfalls which facilitate clientelist policy capture.

In more traditional clientelist societies this may implyand socio-cultural environment that enables this tooccur, rather than a general absence of civic culture. a combination of harnessing existing interpersonal net-

works for the dissemination of policy information at theWriters about clientelism have suggested that class

divisions tend to be suppressed by its presence. same time as developing horizontal and co-operative

structures which can re-direct existing trust and co-W ATERBURY, 1977, comments: Patronage networksnot only thwart organization along class lines, but operative strategies into a broader and shared system of

group support.promote privileged, discriminatory access to scarcegoods, at the expense of universalistic criteria. Patron-

age thus lies equally in the path of Weberian universal-

istic bureaucracy and Marxian class consciousnessI N S T I T U T I O N A L C A PA C I T Y

(p. 334).

This suggestion takes us back to the notion of the EVective policy implementation is also conditioned by

institutional capacity. The capacity of institutions totraditional peasant society in which patrons acted asbrokers for the peasants with the outside world. In deliver policy is shaped by a number of factors including

organizational culture, and the availability of appro-localities where the transition to modern industrialized

societies is indeed incomplete, the development of the priate resources and experience. An organization is alsostrongly inuenced by the prevailing socio-culturalkinds of class divisions observed in capitalist societies is

also less evident. Waterbury notes that, [i]n poorer environment as this impacts on behavioural and culturalnorms of the individuals who form part of that institu-societies patronage helps obscure and disorient class

alignments and to perpetuate the power advantage of tion. In a system of multi-level governance such as that

governing the SM E policies, we nd that capacitythe dominant groups by the conscious cultivation of

vulnerability and dependency (ibid., p. 340). A suppres- varies at diVerent levels of the institutional hierarchy.At the regional level it becomes especially importantsion of traditional class divisions is often symptomatic

of the presence of a clientelist system. It is also argued that institutional forms and practices have some synergywith policy goals to enable eVective delivery.that this is induced by an incomplete industrialization

in both regions. Institutional capacity is increasingly portrayed as

something that needs to be enhanced in developingIn the case of Galicia, a working class strata has,however, developed in the coastal zone between Vigo regions. There is often an implicit assumption that there

is something dysfunctional with existing institutions (orand Ferrol, as this is the location of the regions

industrialized zone (Fig. 2). This area of Galicia also worse with the civic culture of the region) because theinstitutions are incapable of achieving new policy goalsproduces the highest level of voting for the Socialist

party, the PSOE (BATTE R B U R Y, 1993). Accordingly, in the area of economic development and employment

generation. Capacity issues also tend to be most acutewe can conclude that a partial modernization has

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in Europes southern regions which can add to the of political clientelism that directs the distribution of

resources along political lines in the region. In thisnegative image of capacity decit in developing areas.

We know that capacity becomes particularly prob- example the existence of own resources combinedwith particular socio-cultural norms have aVorded thelematic when institutions are required to achieve new

policy goals which they have never previously needed Departments of the Xunta signicant leverage and

power enabling them to prioritize their own objectives.or been expected to accomplish. In many instances this

has been the case with the Structural Funds. Residual Although in a position of authority, the Commission

has not been able to redress this situation.bureaucratic structures and conventions often remainin place impeding administrative innovation and the Institutional capacity also entails appropriate admin-

istrative experience, legal competence, as well as ade-development of new capacity. The emergence of a gap

between new policy innovations and the institutional quate resources. Both regions conrmed the

importance of a prior experience in delivering regionalcapacity to implement these new policies is critical.

Where a historical legacy of dependency on the state, policy for enabling capacity to implement the current

Structural Fund policies.rigid bureaucratic procedures and a new, innovative

policy framework are combined, then the issues of The Sardinian case conrms that a lack of adequateresources, training and experience is fundamental forcapacity become important for policy implementation.

Factors that inuence institutional capacity in the institutional performance and implementation capacity.

Clientelistic appointments of administrators also erodedcase studies are numerous. In particular, the socio-

cultural environment within which institutions func- eVective institutional capacity. In addition, the demiseof the Intervento Straordinario (IS) left the regionaltion has a strong inuence on the performance of the

regional institutions as we have seen. Implementation institutions struggling to cope with the burden of newtasks in a period of scal cutbacks. The centralizedcapacity also varies across the institutional hierarchy.

This is particularly noticeable if we consider, for regional aid system associated with the IS also left a

legacy of historical dependency which was diYcult toexample, the impact of power dynamics on capacity

both centrally within the European Commission, and overcome. In spite of this, the detailed plans for the

SME policies were highly ambitious and innovative.also at the regional level.The European Commission has considerable power Real diYculties in implementing policies for SMEs in

Sardinia were also caused by the need to nd additionalin the SME policy arena as the result of its key role as

guardian of the regulations of the Structural Funds, and sources of revenue in order to co-nance the Structural

Funds. This was made harder by devaluation of theby virtue of its responsibility for programme approvaland for releasing funds. These factors place the Com- Lira that meant that the original nancial allocations

(expressed in EC U) had greater match-fundingmission in a position of authority over the regional(and to a lesser extent) national institutions. In spite of requirements than originally anticipated.14 Institutional

capacity was therefore inuenced by socio-culturalthis, structural features determining power distribution

within the Commission have exerted a disabling inu- norms from within the region as well as the external

actions of the state. The greatest diYculty, however,ence on institutional capacity at this level. The institu-

tional structure of the Commission vests power in the arose as the result of the need to assume the burden of

Structural Fund administration for which the regionalhands of a small number of key individuals who controllarge budgets. This provides structural rewards for the government had no prior experience, procedures or

resources to undertake eVectively.construction of personal empires. It can also induce a

tendency to defend these empires from attempts to The experience in Galicia was very diVerent as theresult of the leverage obtained from access to its ownseize power by other groups. The lengthy delays in

approval of the SM E Initiative for Italy and the global resources. The various Departments in the regionalgovernment tended to regard the nance coming ingrant for Galicia are good examples of this. There was

a breakdown of relations between the former DGs XVI from Brussels as a welcome addition to their existing

projects. The Commission itself admitted that spendingand XX (Financial Control) over the allocation of

operational competencies. This epitomizes a classic the allocated funds was a priority over their correct

expenditure.15 In Galicia, it was easier to roll up thebureaucratic power struggle.

The use of power at lower levels in the administrative Structural Fund S M E money with other investmentsbeing undertaken for regional development in thehierarchy impacted on capacity in a wholly diVerent

way than occurred at the level of the European Com- region. Institutional capacity in Galicia was inuenced

by regional and national political activity determiningmission. In Galicia, for example, it was possible tochannel nance for one of the SM E schemes through staYng within departments. It was also heavily inu-

enced by the constitutional arrangements of the statethe regions own existing projects rather than in accord-

ance with the Commission approved objectives. The that provided own resources to the region. This hadthe impact of redirecting administrative prioritiesregional governments power to act autonomously in

this way derives largely from the existence of its own within the regional government.

It is not diYcult to identify capacity diYculties innon-EU resources. This was also bolstered by the game

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the case studies. However it should be stressed that This paper has challenged the view that the degree

of civic culture in a region is a useful determinantpersonal goals of administrators do often co-exist along-

side policy goals rather than replacing them entirely. and indicator of likely institutional performance andeconomic success. A focus on civic culture as theCapacity to implement policies is aVected by a myriad

of competing forces some of which derive from the problem in a given locale invokes a policy response

that has little chance of being delivered. If we followbroad socio-cultural implementation environment,

while others are rooted in external forces such as the P U T N A M et al., 1993, we might argue that the EU

would have to undertake major socio-cultural changesbehaviour of the European Commission or currencyuctuations. The notion of institutional capacity is in Italy and Spain in order to promote economic

development. Instead, I have argued that policies, pro-complex and involves the intersection of a number of

crosscutting and competing dynamics as we have seen. grammes and institutions need to be better tailored to

local circumstances to build on existing strengths of aOur understanding of institutional capacity needs to be

contextualized if it is to inform our understanding of region. This should break with current practice that

eVectively opens up avenues for clientelistic policyinstitutional performance in this particular policy arena.

Where institutional behaviour concurs with local capture, goal displacement and programmedysfunction.socio-cultural nor ms at the expense of assisting accurate

or eVective policy implementation, it is worth con- In this regard, the work of PI A T T O N I, 1997, pro-

vides examples of virtuous clientelism that can actuallysidering the policy design as well as the appropriateness

of the institutional structures for policy delivery. induce or permit economic development. This ndingis at odds with the conclusions of P U TNAM et al.,It is also important that we move away from the

mind-set that attributes blame to institutional systems 1993, who suggested, famously, that it is strong civilsociety that helps boost development potential for awhich have capacity problems and recognize that capa-

city building takes time, especially where capacity is region. The two arguments are very diVerent. The

view that clientelism can, in some circumstances, yieldneeded to undertake new activities which have never

previously been attempted. This has particular implica- positive outcomes is encouraging as it suggests that

policies and institutions aiming for synergy with thetions in the policy context as it requires that decisionmakers, such as the European Commission, reinforce strengths of the local socio-cultural environment may

be more acceptable than has previously been recog-technical support and recognize that time is needed for

the emergence of new institutional capacity.16 It also nized. This is not, of course, the same as advocating

that the EU support clientelistic practices.implies that evaluation criteria need to move awayfrom goal-based impact assessments to more formative The paper indicates that the Commission needs to

adapt better its Structural Fund policies to suit theparticipative evaluation strategies which themselvesstimulate the development of both institutional and characteristics of particular regions having diverse cul-

tures and norms. At the same time, it should reinforceevaluation capacities.

regulatory solutions where this can improve imple-

mentation capacity. By focusing on effective policyC O N C L U S I O N S : I M P L I C A T I O N S F O R

implementation in evaluating policy delivery we ensureP O L I C Y

that the evaluation criteria we use highlight best prac-tice in terms of optimal policy design (implementableThroughout this paper the argument has been advanced

that there is a need to understand the implications of solutions) and institutional form best suited to the

specic intervention contexts. A policy has little valid-the socio-cultural and political environments for policyimplementation as well as the constraints and opportu- ity if it cannot be implemented. It therefore needs to

work with local areas and local cultural norms to buildnities which are integral to the implementing institu-tions themselves. This entails recognition that the productively on existing regional strengths. Encour-

agingly the Commission has recently proposed open-unique features of a locality are critical in determining

eVectiveness of the implementation of public policy. ing up the policy-making process to get more people

and organisations involved in shaping and deliveringLocal conditions have a real impact on policy delivery,

although they are themselves shaped by the broader EU policy (CEC, 2001, p. 3).

While a number of diYculties in the implementationEuropean political economy. Policies and programmeswhose design achieves a degree of t or synergy with process have been identied, some of the achievements

of the EU have been impressive. This is especially thethe socio-cultural implementation environment are

more likely to be eV

ective and achieve the desired case when we take into consideration the scale ofStructural Fund intervention and the wide-rangingoutcomes. An institutional system that builds on posi-

tive aspects of the socio-cultural context is also less nature of the SM E policies. Regional institutions are

being inuenced by contact with the European Com-likely be subject to dysfunctional strains which caneVectively induce goal displacement

17 and, in some mission in the day-to-day activities of Structural Fund

administration. TOM M E L , 1997, has observed in hercircumstances, clientelistic capture of institutions and

programmes. analysis of the EU: it can be said, rst, that the system

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appropriate to the socio-cultural environment is essentialhas improved in its institutional structure. This did notfor eVective policy delivery and the realization of desiredoccur through the implementation of a grand designpolicy outcomes. The need for policies to be shaped tobut through an incremental, piecemeal process of realis-reect local specicities is explored in greater detail ining minor steps of change (p.14).the main part of the paper.

We might extend this analysis to recognize that a6. Objective 1 regions are dened as having less than or

slow evolutionary change of cultural practices andequal to 75% of the EUs average GDP/capita.

administrative delivery capacity has also been occurring 7. The E Us S ME policies are classied as being predomi-

at the regional level as a result of the exigencies nantly infrastructural, innovative (e.g. Business Innova-of Structural Fund implementation. What we cannot tion Centres and incubators), or more traditionalexpect, however, is a uniform response or rate of nancial incentives. Innovative measures and traditional

nancial incentives tend to apply across the whole regionadaptation. Places have diVerent starting conditions,(BATTERBURY, 1998).diVerent strengths, diVerent ways of working and

8. Civil society should be seen as just one aspect of thediVerent constraints to change. These have to bebroader socio-cultural environment. Additional featuresaddressed or worked around rather than attempting tocomprise the cultural norms which condition socialignore the diversity of the contextual response to theinteractions, trust relations, conventions, power relations

availability of substantial EU funding. This is the keyand norms which mediate access to resources.

challenge facing the policy makers and implementers9. P IATTONI, 1997, nds examples of clientelism in Italy

of the next generation of the Structural Funds. that can be described as virtuous, challenged, vicious

and ineVective.10. P IATTONI, 1997, p. 337, has found that the combination

Acknowledgements This paper comes out of doctoral of stable and cohesive local political classes and aresearch undertaken at the Sussex European Institute of the compact a nd sizeable opposition are most likely to yieldUniversity of Sussex (B ATTERBURY, 1998). Thanks are due a development-sustaining type of clientelism.to Mick Dunford and Russell King for comments and 11. The fragmented nature of the polity would dene Sardi-assistance during the course of the research. The author also nia as in a state of ineVective clientelism rather thanacknowledges the nancial support of the Geography Subject virtuous clientelism if we apply P IATTONIs, 1997,Group of the University of Sussex during this period. Tha nks analysis.are also due to Sandra Lea and Hazel Lintott for administra- 12. Galicia is much closer to an example of virtuous clientel-tive and cartographic support, to Simon Batterbury for nal ism (P IATTONI, 1997). The collective will of the rulingcomments, and to three anonymous referees for their helpful party the Partido Popular vies for dominance against

comments and suggestions. Particular thanks are extended a strong opposition represented by the Socialist Partyto Mick Dunford for constructive comments and editorial (PSOE).feedback on consecutive drafts of this paper. 13. Partido Popular (PP): the right wing party now in power

in Spain. Spanish Socialist Workers Party (PSOE): the

former party of government in the 1980s and earlyN O T E S

1990s. Xunta: regional government of Galicia.

14. The Sardinian regional government has estimated that1. The paper draws on grounded theoretical insights

emerging from a period of participant observation in all nancial estimations in lira had to be increased

by approximately 20% (R E G I O N E A U T O N O M A D E L L Athe European Commission and comparative case study

research undertaken in Sardinia and Galicia. SARDEGNA , 1993, p. 1).

15. Telephone interview with an oYcial from DG XVI on2. Thanks to the editors for assistance with clarifying this

framework. 16 April 1997. Conrmed again by an oYcial of DG

XVI speaking in front of a public audience visit by3. Thanks to an anonymous referee for suggesting this.4. Institutional capacity refers to the degree to which an an oYcial of DG XV I to the University of Sussex,

21 April 1997.institution is equipped with the necessary resources,

know-how, culture, power and legal competence which 16. The importance of technical support was recognized in

the planned reforms of the Structural Funds (CEC,will allow it to pursue a course of optimal policy

implementation. 1998a, 1998b, 1998c, 1998d, 1998e, 1998f ).

17. Where the means of achieving a policy outcome5. While the focus of this section is on policy implementa-

tion and delivery, it remains the case that policy design becomes more important than the end goal itself.

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European Union's Small and Medium Sized Enterprise Policies in Galicia and Sardinia

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