Monastic Governance: Forgotten Prospects for Public Institutions

To overcome agency problems, public sector reforms started to introduce businesslike incentive structures to motivate public officials. By neglecting internal behavioral incentives, however, these reforms often do not reach their stated goals. This research analyzes the governance structure of Benedictine monasteries to gain new insights into solving agency problems in public institutions. A comparison is useful because members of both organizational forms, public organizations and monasteries, see themselves as responsible participants in their community and claim to serve the public good. This research studies monastic governance from an economic perspective. Benedictine monasteries in Baden-Wurttemberg, Bavaria, and German-speaking Switzerland have an average lifetime of almost 500 years, and only a quarter of them broke up because of agency problems. The authors argue that they were able to survive for centuries because of an appropriate governance structure, relying strongly on the intrinsic motivation of the members and internal control mechanisms. This governance approach differs in several aspects from current public sector reforms.