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

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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 Article Batterbury, Sarah C. E.(2002) 'Evaluating Policy Implementation: The European Union's Small and
Medium Sized Enterprise Policies in Galicia and Sardinia', Regional Studies, 36: 8, 861 876
To link to this Article: DOI: 10.1080/0034340022000012306
URL: http://dx.doi.org/10.1080/0034340022000012306
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Regional Studies, Vol. 36.8, pp. 861876, 2002
Evaluating Policy Implementation: The European

Unions Small and Medium Sized Enterprise
Policies in Galicia and Sardinia
S A R A H C. E . BATT E RBU RY
School of Humanities and Social Sciences, Evaluation Studies, University of Glamorgan/ Prifysgol Morgannwg, Pontypridd,
CF37 1DL, UK. Email: sbatterb@glam.ac.uk
Downloaded By: [Romanian Ministry Consortium] At: 08:54 21 March 2011
(Received June 2000; in revised form February 2002)

B AT T ERBU RY 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 the
institutional performance of the institutional system in its locale. This paper highlights the importance of local conditions for
eVective policy implementation. 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
Structural Funds
EU SM E policies
B AT T ERBU RY S. C. E. (2002) Evaluer la mise en application
dune politique: les politiques de lUe en Galicie et en
Sardaigne en faveur des petites et moyennes entreprises, Reg.
Studies 36, 861876. Evaluer la mise en application dune
politique necessite une estimation de la performance des
institutions sur place. Cet article cherche a` souligner limportance des conditions locales necessaires a` la mise en application
eYcace dune politique. La documentation actuelle, qui
laisse supposer que la culture civique constitue une variable
pre alable au succe`s des institutions, est rejetee. On aYrme
plutot que les politiques doivent mieux repondre aux atouts
locaux et aux formes institutionnelles. Une disparite de la
conception de la politique, du milieu socio-culturel et des
stuctures institutionnelles pourrait entra ner des proble`mes
pour ce qui est de la performance des institutions et des
resultats de la mise en application. Le manque de capacite
institutionnelle risque aussi davoir un eVet nefaste sur la
performance institutionnelle et la capacite de mise en application. Pour une mise en application de politique eYcace, les
politiques et les institutions ont besoin de tirer parti des
atouts du milieu local et de sadapter au climat socio-culturel
qui prevaut. Les diYcultes de mise en application pourraient
se resoudre en autorisant une conception de politique qui
repond mieux aux exigences des zones locales, tout en
renforcant des solutions de controle la` ou` il en resulterait
une amelioration de la capacite de mise en application.
Performance institutionnelle
Evaluation de mise en application
Climat socio-culturel
Socio-cultural environment
B ATT ER BURY S. C. E. (2002) Einschatzung der Durchfuhrung politischer Bestrebungen: politische Richtlinien der
EU bezu glich kleiner und mittlerer Unternehmen in Galicien und Sardinien, Reg. Studies 36, 861876. Eine Einschatzung der Durchfuhrung politischer Bestrebungen schliet die
Beurteilung der institutionellen Leistung des institutionellen
Systems an seinem Ausfuhrungsort ein. Dieser Aufsatz hebt
die Bedeutung ortlicher Verhaltnisse fur eine wirksame
Durchfuhrung politischer Bestrebungen hervor. Aktuelle
diesbezugliche Literatur, die nahelegt, da Ortskultur ein
wesentlicher Vorlaufer fur erfolgreiche institutionelle Leistung sei, wird verworfen. An ihrer Stelle wird die Behauptung aufgestellt, da politische Bestrebungen besser an
ortliche Starken und institutionelle Formen angepat werden
mussen. Politische Planung, gesellschaftlich-kulturelle
Umwelt und institutionelle Strukturen, die schlecht auf
einander abgestimmt sind, konnen auf Probleme stoen,
wo institutionelle Leistung und Durchfuhrungsergebnisse
verlangt werden. Auch ungenugende institutionelle Kapazitat
kann zu Spannungen bei institutioneller Leistung und Durchfuhrungskapazitat fuhren. Wenn Grundsatzbestrebungen und
Institutionen eVektiver werden sollen, mussen sie auf Starken
einer Gegend aufbauen und der vorherrschenden, gesellschaftlich kuturellen Umwelt angepat werden. Probleme
bei der Durchfuhrung lassen sich losen, indem man durch
bessere Anpassung der Grundsatze den Erfordernissen einer
Gegend gerecht wird, doch zugleich behordliche Losungen
stutzt, wo dies die Durchfuhrungskapazitat verbessert.
0034-3404 print/1360-0591 online/02/080861-16 2002 Regional Studies Association

http://www.regional-studies-assoc.ac.uk
Institutional capacity
DOI: 10.1080/0034340022000012306
862
Capacite institutionnelle
Fonds structurels
Politiques de lUe en faveur des Pme
I N T RO D U CT I O N
This paper explores the factors that have shaped the
institutional performance and implementation outcomes of the Structural Funds small and medium
sized enterprise (SME) policies in southern Europe. It
compares the experience of two bene ciary regions
Galicia in Spain and Sardinia in Italy in the period
198898.1 The case studies demonstrate that particular
local and institutional conditions have a direct impact
on policy implementation: they play a key role in
structuring the performance of institutions and programmes. The paper argues that there are three important factors that shape institutional performance and
policy delivery. Firstly, a mis-match between the sociocultural environment and policy design can lead to
problems with policy delivery and goal achievement
where policies are insuYciently tailored to the needs
and strengths of a locality. Secondly, a lack of compatibility between policy implementation requirements and
existing institutional structures is also liable to contribute to problematic (and therefore less eVective) institutional performance and policy implementation.
Thirdly, the wider institutional framework at the European Union (E U) and Member State level also impacts
on eVective policy delivery and institutional performance, as regions are part of a broader partnership and
network within the EU area.2
The paper argues that the compatibility between the
socio-cultural environment and both institutional form
and policy design is a better determinant of institutional
and programme performance than just the degree of
civic culture in a locality. Attention is drawn to the
theoretical limitations of current literature on institutional performance to take account of the importance
of the need for policies and institutions to build on the
strengths of a locality and to be tailored to the prevailing
socio-cultural environment. While this may seem selfevident, diversity in institutional form and practice is
seldom advocated at the policy level.
The paper begins by brie y outlining the implementation diYculties and problems of policy eVectiveness experienced in the two case study regions.
Questions of eVectiveness (more so than questions of
eYciency) also lead us to seek to understand better the
complex interaction between organizational systems
and the environments within which they seek to optimize policy delivery. This is important because the nature
of t between policies and their environment has a
direct relationship with the receptivity for policies and
ultimately their eVectiveness. A second and important
Institutionelle Leistung
Einschatzung der Durchfuhrung
Gesellschaftlich-kulturelle Umwelt
Institutionelle Fahigkeit
Strukturfond
Politik der EU bezuglich kleiner und mittlerer Unternehmen
factor in uencing the degree to which policies can be

implemented is based on institutional capacity. Questions of institutional capacity have particular relevance
to eVectiveness because policies designed centrally may
not marry well with institutional strengths in a locality.
This can create areas of di Yculty for implementation.
Capacity may be enhanced externally by the actions of
the European Union or by actions of the Member
State. These external actors have an important role to
play in enabling local institutions to operate eVectively.
The degree of eVectiveness in policy implementation
is discussed for the two case studies in the next section.
A simple ranking system is used to help clarify the
degree to which implementation outcomes have been
achieved in the case study regions.3
The main part of the paper emphasizes the importance of the prevailing socio-cultural environment for
implementation of policy. Recent research (P U T NA M
et al., 1993) arguing that civil society can determine
institutional performance and economic development
fails to address the need for policies and institutions to
build on the strengths and distinctiveness of particular
localities and cultures. Thus it is not necessarily the
local civil society that needs to be improved to enable
eVective policy implementation. Rather, policies themselves need to be designed in a way that will capture
regional and local strengths to ensure eVective delivery
and realization of desired policy outcomes.
The paper also con rms existing research that shows
that insuYcient institutional capacity also places strains
on performance and ultimately implementation capacity.4 The paper concludes by arguing that, ideally,
implementation diYculties need to be resolved by
adapting policies to allow policy design to t better the
exigencies of local areas. The European Commission
has recently moved to recognize the importance of
regional diversity in formulating policy responses. The
White Paper on European Governance now advocates
the following of a less top-down approach (C O M M I S S I O N O F T H E E UR O P EA N C O M M U NI T I E S (C EC),
2001, p. 4). At the same time regulatory solutions need
to be reinforced where this can improve implementation capacity within regions by ensuring eVective external support from the Member State and the EU.
The research aims to make a contribution to improving the policy process by illuminating the dynamics
governing the implementation phase of the policy
cycle. Better understanding of these policy dynamics
enables a clearer de nition of the constraints, opportunities and speci cities of the policy process embedded
in its di Verent regional contexts.
The EUs Small and Medium Sized Enterprise Policies in Galicia and Sardinia
863
I M PL EM EN TAT I O N D I F F I C U LT I E S
A N D PRO B LE M S O F PO L I C Y
EF F EC T I V E NE S S I N T HE CA SE
S T U DY RE G I O NS
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 performance is therefore a major factor that determines the
achievement of desirable policy outcomes.
Questions of policy effectiveness are central to evaluating 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 stakeholders. 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 speci c contexts. These include those that operate at the planning
and evaluation ends of the policy cycle, and the network of organizations that manage front-end delivery.
A number of writers have observed that organizations
are aVected by the environment within which they
operate (T H O M PS O N , 1967; E M ERY, 1969; H A L L ,
1980). We therefore need to understand the external
socio-cultural environmental in uences and organizational dynamics which impact on the eVectiveness of
policy delivery at an inter-organizational level between
networks of institutions and within single institutions.
Power relations also eVect performance and operate at
every level.
The case of the E Us SME policies is interesting
because the policies are embedded within a system of
multi-level governance in which European, national
and regional governments all have a role to play.
Regional and national level partnerships and institutional histories also mediate the policies implementation by drawing in local government structures and
social partners (K E LL EH ER et al., 1998). The multilevel character of the polity is an important feature
shaping the multiplicity of in uences that have a bearing on institutional performance. This creates a complex framework of cross-cutting in uences which
impact on policy and programme delivery, output and
impact.
As part of the Structural Funds, the E U has sought
to promote the growth and development of dynamic
small and medium sized enterprises for the economic
adjustment of regions whose development is lagging
behind, or Objective 1 regions.6 The eVectiveness of
policy implementation has been examined for this
range of policies in the two regions of Galicia and
Sardinia. Figs. 1 and 2 show the distribution of a
number of these policy interventions.7
Fig. 1. Sites of infra-structural measures for SMEs in

Sardinia
Note: Satellites of the Technology Park also proposed for the three
provinces of Nuoro, Oristano and Sassari.
Sources: K IN G , 1975, p. 14, p. 180; R EG I O NE A UTO N O MA
DE L LA S A RDE G NA , 1995; pp. 77-78; ES IT, 1993.
In the case studies, implementation di Yculties were

evident at all levels: European, national and regional.
Implementation obstacles at each level tended to be
related to a number of linked issues: complexity, multiple programmes and fragmented administrations. This
often resulted in delays in approving funds, restricting
the period for implementation signi cantly and making
recourse to extension requests necessary. The Italian
situation in particular was aggravated by the abrupt
ending of a centralized system of regional aid (Intervento
Straordinario) in favour of action at the regional level.
This redirected responsibility to the regional public
administration which was ill-prepared for the new
burdens it faced. The Structural Funds in Italy have
eVectively become a mechanism for regional capacity
building, a task arguably as important as the delivery of
regional assistance itself (G R OT E , 1996).
Tables 1 and 2 classify the SM E policies researched
864
Fig. 2. Sites of infra-structural measures for SMEs in Galicia

Note: Pontevedra and La Coruna are the two coastal provinces
with the highest Socialist Party vote (P SOE) in the period
198898.
Sources: B ATTE R BURY, 1993; X UN TA D E G A L ICI A (n.d.).
into innovative measures, traditional nancial incentives

and infrastructural programmes. DiVerent institutions
and diVerent departments implemented individual
schemes. The degree of implementation eVectiveness
for each scheme is broadly rated along a scale of most
eVective, medium eVectiveness and least eVective. This
is a fairly crude measure re ecting actual output of the
schemes and having regard to the degree to which
the scheme implementation re ected the policy as
designed. DiVerent SM E schemes achieved diVerent
levels of eVectiveness. The relevant explanatory variables determining implementation outcomes are also
set out in each case.
Interestingly we nd some variation between the
eVectiveness in delivery of the diVerent SM E measures
sampled within each region. This di Verence suggests
that the nature of both the individual policies and the
implementing institutions is important in determining
the eVectiveness of policy implementation in speci c
socio-cultural environments. This con rms the hypothesis that it is not the degree of civic culture that
explains institutional performance, but rather the
synergy between institutional form, policy design and

socio-cultural environment.
The Sardinian experience has been one characterized
by considerable implementation delays. This re ects
the implementation capacity of the regional institutions. Over-optimistic planning became victim to capacity problems and the impact of the abolition of the
Intervento Straordinario. Regional clientelistic practices
have also had serious implications for the eVectiveness
of individual measures and schemes. Thus the inability
of centrally designed policies to take account of the
socio-cultural speci cities of the region resulted in
distorted policy outcomes not anticipated in the original design and plans. The interaction between local
socio-cultural norms and policy implementation is discussed in the next section.
The Galician experience is summarized in Table 2.
The Galician case was also characterized by inappropriate planning. This re ected a consultation failure
between the implementing departments about the most
appropriate and needed strategies. This was caused both
by 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 has
access 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 and
co-ordination. Signi cant political manipulation of the
administrative process also impacted on the eVectiveness
of the SM E policies in Galicia. The role of politics in
the administrative process is discussed in more detail in
what follows.
In the next section the question of the importance
of local conditions for policy implementation is considered. Firstly, di Yculties with the current literature
focusing on civic culture as the key to the delivery of
eVective regional development strategies are discussed.
The socio-cultural factors which conditioned institutional performance and implementation outcomes in
the case study regions are then examined. These environmental phenomena impact upon institutional performance at both the interorganizational and internal
organizational levels. This is because broad policy
design and institutional forms have not sought speci cally to build on local advantages, but rather to comply
with the centrally conceived character of E U-wide
Structural Funds policy.
T HE S O CI O -C U LT U R AL
E NV I RO N M EN T A ND I T S I M PACT
O N PO L I C Y I M PL EM EN TAT I O N
The socio-cultural environment may be de ned as the
social and cultural norms that shape institutional and
societal relations in a locality. It refers to the structuring
865
Table 1. Degree of effectiveness in policy implementation of a number of SME schemes in Sardinia in the period 198898
Degree of policy eVectiveness
(1998)
Scheme
classi cation
Innovative
measures
Traditional
nancial
incentives
Medium
Most eVective- Least
eVective
ness
eVective Comment
Measure/scheme
Institution
Applied research
and technology
counters
Consorzio 211
BIC Sardegna2
BIC Sardegna
Global grant
technical assistance
to rms
CORAM 3
Certi cation of
origin and quality
ISOL A4
Commercialization ISOL A
and market
research fairs
Global grant
Consorzio 21
SME Initiative
Participative nance SFI RS5
Factors in uencing
implementation outcomes
Policy design problems

Over-optimistic
planning, no feasibility Institutional capacity
studies. Delayed start,
problems within the
but a number of rms
region but aggravated by
supported
changes at Member State
level
Scheme design problems
Devaluation of lira
increased nance
associated with location
available. Financial
and targeting of
absorption diYculties
intervention
Capacity problems
followed. Larger
number of rms
generated by Member
supported. Has
State activities
potential.
Policy design subject to
Few rms supported
local socio-cultural forces
Scheme design issues,
(targeting and timing)
Medium number of
rms supported
problems within the
region impacted on
delivery
Delayed start
problems within the
region impacted on
delivery
Scheme design diYcult
reception locally
Medium number of
rms supported
Start delayed by 25
years by EU
problems external to the
region (E U level)
Delayed start,
adversely aVected by
macro economic
interest rate changes.
Expensive
Leasing
SFI RS
Medium number of
rms supported
problems within the
region and also generated
at the Member State level
Scheme design diYcult
to implement
Policy design not able to
get round lack of
transparency of scheme
availability to
entrepreneurs
get round lack of
availability to
entrepreneurs
866
Table 1. Continued
(1998)
Scheme
classi cation
Measure/scheme
Institution
Traditional
nancial
incentives
(continued)
Incentives to
industrial SMEs
SFI RS
Infrastructural
schemes
Pilot artisan centres ISOL A
Technology park
Notes: 1.
2.
3.
4.
5.
Medium
eVective
ness
eVective Comment
x
Consorzio 21
More than 100

bene ciaries
Delayed construction
Factors in uencing
Delayed construction

get round lack of
availability to
entrepreneurs
problems in the region
local socio-cultural strains
problems regionally
Consortium for the Assistance of Small and Medium Sized Enterprises.

BIC Business Innovation Centre provides tutelage and incubators for nascent SMEs.
Consortium for the Re-industrialization of Mining Areas.
IS OL A Sardinian Institute for the Organization of Artisan Work.
SFIRS Financial Society for the Industrial Rebirth of Sardinia.
processes of local cultures as they interact with institutions and programmes. The socio-cultural environment
is therefore embedded in and de ned by locale and is
place speci c.8 The local receptivity to particular policies is therefore conditioned by the synergy between
the policy goals and design, their implementation processes, and the local socio-cultural environment within
which delivery is to be carried out.
The impact of an organizations environment on an
institution consists of a vast array of crosscutting strains
and dynamics that vary contextually through both time
and space. Organizational activity is place speci c:
places are important as the loci within which organizations function and interact with a broader socio-cultural
domain which has both local and global determinants.
We cannot construct a simple linear link between
outcome and environmental factors however. In the
case of the SM E policies, not only were there multiple
locations, but also a large number of factors within
administrations which in uenced institutional performance. These factors ranged from the whim of an
individual to more structural features concerning power
relations and organizational culture determinants.
In the case studies, the multiple locations within
which the SM E policies operated created the potential
for the emergence of a mismatch between the policy
design and the socio-cultural implementation environment. Although plans were drawn up locally, they
nevertheless followed a rubric which was de ned centrally at the level of the Commission. In addition,
although the institutional structures had to function
within the regional context, they were largely legitimated and determined by central government policy.
The t between policy design and the socio-cultural

environment and between institutional form and the
socio-cultural environment is therefore strained by
these national and supranational in uences. The emergence of a disjuncture between the institutional structures, the policy design and the socio-cultural norms
can lead to performance diYculties.
The SME policies are particularly illuminative about
the impact of the socio-cultural environment on implementation. The inter-personal interaction of actors in
this policy arena sheds light on important socio-cultural
structures which condition policy implementation. The
particular nature of SM E policies (often aimed at
providing one-to-one advice, tutelage, and counselling)
allows us to understand the micro-dynamics of implementation and socio-cultural forces at work in speci c
regional contexts, because the policies are operated
through the delivery of a number of relatively smallscale projects.
Civic culture
Recent work on institutional performance has focused
on the presence of civil society as a causal factor
in explaining institutional performance and ultimately
achievement of economic development (P UT NA M
et al., 1993). This paper supports an alternative hypothesis: it is the degree of policy and institutional synergy
with the implementation environment (rather than the
civic culture in a locality) that is a better determinant
of institutional and programme performance.
This approach is more relativistic. It implies that it
should be possible to work with the prevailing culture
867
Table 2. Degree of effectiveness in policy implementation of a number of SME schemes in Galicia in the period
198998
(1998)
Scheme
classi cation
Innovative
measures
Traditional
nancial
incentives
Measure/scheme
Institution
Global grant with

provisions to assist
SMEs
BIC Galicia (art.
B2-601)
IGAPE1
Support for
industrial activity
Xunta2
BIC Galicia
Medium
eVective
ness
eVective Comment
Factors in uencing
3 year delay in approval Institutional capacity

by EU, too innovative,
problems external to the
and irregular planning
region (E U level)
133 rms assisted. Has Policy design allowed
potential
interference from local
political groups and goal
displacement
Scheme design problems
associated with location
and targeting of
intervention
Vague planning
documentation makes
eVectiveness diYcult
to assess
Support for rural

tourism
Xunta
Local development Xunta

and aid for services
to rms
Infrastructural
schemes
Creation and
preparation of
industrial sites
Xunta
Technology park
Galician
Technology Park,
Xunta, and BIC
Galicia
Promotion of
R&D
Xunta
Administered by
inexperienced staV
following political
promotions, but some
success in terms of
outputs
Vague planning.
Money for scheme
channelled into other
projects
Policy design allowed

displacement
inadequate regional
planning, lack of clarity
over EU contribution
Institutional capacity at
the regional level
Institutional structures
strained by local and
Member State political
culture
Policy design allowed
displacement
inadequate regional
planning, lack of clarity
over EU contribution
Policy design optimal,

Re ects greater
administrative
building on existing subexperience and capacity national capacity
to deliver infrastructural
projects
Location selected on
political grounds. Large local socio-cultural forces
rm in SM E
incubators. But has
potential
Delayed assistance to
rms
problems at the regional
level
Note: 1. IGAP E 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

designing an institutional framework which is disassociated from the regional context and which is therefore
susceptible to clientelist capture. The work of P I AT T O N I , 1997, is helpful here. She has noted that it is
possible to nd examples of diVerent styles of clientelist
politics.9 Virtuous clientelism results from the deliberate
choices of political actors to foster economic development and deliver actual goods in order to maintain
their hegemonic position (ibid., p. 320). This work
challenges us to re-conceptualize our understanding of
clientelism as able, in some circumstances, to perform
in a way which is development sustaining (ibid.,
p. 329).
868
Perhaps the most important study about institutional

performance to be published in recent years is that of
P U T NA M et al., 1993. The authors carried out a
longitudinal study of the performance of a large
number of Italian regional institutions, all of which had
been set up in an identical fashion in 1970. They note
that: Civic context matters for the way institutions
work. By far the most important factor in explaining
good government is the degree to which social and
political life in a region approximates the ideal of the
civic community (p. 120). They write that the design
of the institutions cannot explain the performance
which each achieves, because they are all the same. An
alternative approach however, would be to explain
performance outcomes in terms of the synergy
achieved with local socio-cultural conditions. This
implies a need for a subtle di Verentiation in both policy
and in institutional form for diVerent places in order
to optimise outcomes.
The thesis of Putnam et al., overlooks the fact
that some aspects of an institutional design may be
appropriate to one domain and not to another. This
paper suggests that it is not the society which is
to blame for poor institutional performance, but the
institutional design and policy itself which is not best
suited for the cultural and environmental domain in
which it will operate. G R A B H ER and S TA R K , 1997,
have also indicated the importance of recognizing the
need to adapt institutional design to its environment
instead of the environment to the institutional design.
They state that: Even if the selected characteristics of
an organizational form were the ttest, they would
be so only in regard to a particular economic, political,
and cultural context; they would not be the ttest for
a changing or diVerent context (p. 535).
Putnam et al.s approach assumes that their notions
of democracy and civicness are goals to which all
should aspire. In this context civil society in southern
Italy is condemned as lacking in civic virtues and
consequently (according to the logic of Putnam et al.)
having little immediate prospect of improvement of
institutional performance or even of economic development. They state that: When we use both civic
traditions and past socioeconomic development to predict present socioeconomic development, we discover
that civics is actually a better predictor of socioeconomic development than is development itself
(P U T NA M et al., 1993, p. 156).
B AG NA S C O, 1996, has warned of the dangers of this
approach. He comments that, it is in danger of being
misunderstood (p. 365). This is particularly important
in Italy in the context of the rise of the northern
leagues and in the context of a legacy of intolerance of
southern Italians by some northern Italian groups.
There are, of course, diYculties with institutional
performance in southern Italy, and the prevailing
patronclient mentality does not help in achieving
optimal performance as we will see in the next section.
It would be futile, however, to expect an entire cultural

change before institutional performance can be
improved. Although somewhat relativistic, far greater
prospects for success come from working with prevailing cultural norms to achieve positive changes,
instead of against them which will result in a long
period of immobility and stagnation.
Major diYculties with the study of P UT NA M et al.,
1993, arise, therefore, from the basic assumptions that
they make. Notions of social stability, education, urbanism, personnel stability or the prevailing party of government are rejected as having little utility in explaining
institutional performance. Social science increasingly
recognizes that social reality is created by an intersection
of a complex network of multiple causal factors; however, this is insuYciently recognized by Putnam et al.
in their study. The authors de ne civic virtues as
encompassing an active, public-spirited citizenry, by
egalitarian political relations, by a social fabric of trust
and cooperation (ibid., p. 15). Clientelism, (which
Putnam et al. identify as prevailing in southern Italy)
does, in fact, function on the basis of trust and cooperation although the relationship is hierarchical and
dyadic instead of horizontal and yet the authors assert
that the south lacks these qualities. G R OT E , 1996, also
contests the suggestion of Putnam et al. that civil
society and co-operation is weak in the south: On the
contrary, co-operation is extremely well-developed,
albeit not in the form of co-operation among autonomous actors in economic markets, but rather, in the form
of collusion between patrons and clients in dense
networks of political exchange (p. 269).
In terms of the implementation of the SM E policies,
the degree of civil society in the surrounding sociocultural environment would not appear to be the most
salient variable in explaining institutional performance.
While the presence of patronage is signi cant, this
varies in impact and form as the result of the extent of
industrialization and the development of modern class
divisions in the locality. Many other factors including
the nature of bureaucracy itself and the dynamics of
power relations are also critical.10
Structuring impact of the socio-cultural environment on policy
implementation
The existence of prevailing socio-cultural clientelist
norms in the case study regions provides a context for
policy implementation that sits uncomfortably with the
ethos behind the SME policies. In the case of Sardinia,
clientelism determines many social interactions where
there are disparities of power and resources at stake.
Like other regions in southern Italy, this is essentially a
re ection of the islands rural and traditional status,
and has tended to contribute to the emergence of a
fragmented polity in which rent seeking behaviour
requires administrators to secure patron status and rms
to perform as favoured clients.11 In the case of Galicia,
the prevailing clientelist structures are more politically
de ned, making it possible for political decisions to
shape the implementation of the policies (location of
sites for example), and the performance of individual
institutions (personnel decisions).12
Inevitably, power dynamics are intrinsically linked
into the mechanics of clientelism. Patronage systems
are built upon inequalities of power between actors.
Institutional performance is thus shaped by the societal
power within which the institutions are embedded.
Societal power is inextricably linked to the main characteristics of the social system. L Y ND , 1993, has
observed that this can be a signi cant barrier to organizational change: To attempt fundamental change in
institutions, of a kind that eVects the basic character of
organized power in a given society, without changing
the social structure of that society is like trying to drive
a car forward with the gears set in reverse (p. 72).
One of the striking features of clientelism is its
persistence. We can equate the tenacity of clientelism
with the action of an amoeba which ows around its
prey until it is completely encircled and enclosed within
the amoebas structure. This metaphor re ects the
tendency of clientelism to overtake and capture socioeconomic changes so that they begin to function as
patronage systems. A number of writers have observed
this tenacious amoebic eVect of clientelism (G R A Z I A NO , 1973; K H A LA F , 1977; and Z UCK E R M A N , 1977).
K H A LA F , 1977, for example, writes that:
Patronage is not, as some writers have suggested, a transient phenomenon, one which is bound to disappear as
other more secular agencies and institutions emerge to
oVer alternate avenues for gaining access to privilege
and opportunity. . . . Expressed diVerently, the persisting
in uence of patrons stems from their ability to provide
services, goods, and values that no other group has so far
been able to match. (p. 202)
The cases of Galicia and Sardinia demonstrate the

importance of clientelistic socio-cultural structures for
institutional performance and the particular contextually determined form that this has taken in the two
regions.
Sardinia
In Sardinia the broad (and fairly traditional) clientelistic
culture acted as a force for proliferation of institutions
and for constraining the numbers of bene ciaries to a
limited number of entrepreneurs who participated in
many separate SME schemes. This outcome may be
understood as an inevitable by-product of the clientelistic structures which were able to capture the Structural
Funds and bring about goal displacement in which
rent-seeking behaviour predominates over a search for
the common good. The Sardinian case is notable
for the particularly visible and pervasive nature of
this behaviour, a characteristic shared with other
869
traditionally structured cultures in this part of Europe.

The SME policies were seen by some as a source
for the reinforcement of personal power bases; this
contributed to a multiplication of organizations operating at the delivery end of the policy process (see Table
3). Institutional multiplication is also attributable to
the multiplicity of SM E schemes and programmes in
operation, to the sectoral and functional orientation of
initiatives, and to the perceived need to by-pass existing
ineYcient institutions.
Both participating entrepreneurs and regional oYcials in the semi-autonomous institutions spoke openly
about the pervasive in uence of clientelism in this area:
You need to understand that here, services and information provided to individuals or rms are regarded as
favours rendered. This means entrepreneurs expect to pay
in kind for support they should be entitled to anyway.
You will probably nd that Mr Xs windows and doors
are all over the house of Mr Y who has provided him
with business advice and services as part of the SM E
measure he administers. They will describe themselves as
good friends, however. (Interview with a regional oYcial, 18 April 1996 own translation from Italian)
It is diYcult to substantiate these allegations but the

frequency of statements of this kind, made by very
diVerent individuals, provided some triangulation for
the socially constructed reality for the actors in the
region.
One rather extreme statement was made by a local
entrepreneur who had been successful in bene ting
from a number of SME schemes:
I dont know what you think, but I think the magistrates
have ruined the Sardinian economy; things worked much
better when we could simply pay bribes to the diVerent
institutions in order to be sure of getting a contract. You
see, well, each institution has, of course, a President of a
particular political persuasion, while the Vice-President
may be of a slightly diVerent aYliation. Everyone knows
this and so they choose their patrons in accordance
with party political aYliations. (Interview with Sardinian
entrepreneur, 16 April 1996 own translation from
interview records)
While it is diYcult if not impossible to prove this

allegation, many other oYcials and entrepreneurs indicated by their comments that political in uence in
allocating jobs and selecting SMEs was important. This
provided a picture of a regional system in which
patronage is one signi cant mechanism in the distribution of resources and in uence. The clientelist system
thus structured the functioning of policy implementation by inducing institutional multiplication rather than
eVective and transparent delivery. It is not the absence
of civic culture which produces this impact but the
susceptibility of the policies to clientelist capture.
The importance of traditional patronclient relations
in Sardinian society at the same time contributed to a
limited number of participants successfully bene ting
870
Table 3. The institutions involved in implementing aspects of the EUs SME policies in Sardinia, 1988981
Name
Role
Presidenza per relazioni con la CEE (Presidency

for Relations with the EEC)
Centro Regionale di Programmazione (Regional
Programming Centre)
The part of the regional government which is the principal point of contact between
the regional Giunta and the European Commission
Prepares monitoring committee reports and minutes. It has delegated operational
powers to BIC and Consorzio 21. It undertakes the draft planning for Operational
Programmes
Responsible for managing nancial incentives for the artisan sector (I MP 2.10, NPCI
3.1 and ROP 199499 2.2.2.1)
Stimulates the birth and development of new innovative SMEs (I MP 2.3) (ROP
199499 2.2.3.1). Manages SEED Capital and EU supported venture capital scheme
Provides services for enterprises in Sardinia and the establishment and management of
the Science and Technology Park (ROP 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 (I MP 2.4). Consorzio 21
implements with BIC Sardegna the Aid for services to rms measure (ROP 199499
2.2.3.1)
Implements: Participative Finance (I MP 2.1), Leasing (IMP 2.2) and, Incentives to
Industrial SMEs (R OP 199499 2.2.1.1). It is also host to CORAM, and was
involved with SEED capital early on
Administers a global grant which gives nancial contributions designed to facilitate the
re-industrialization of former mining areas
A public body which exists to promote Sardinian artisan products. Involved with
administering pilot craft centres (I MP 2.5), the design and implementation of quality
and origin certi cation (I MP 2.6), and commercialization and market research
(I MP 2.7)
Opened on the 25 March 1994 in Consorzio 21, oVering an information service on
EU R&D programmes
Responsible for equipping, running and building the three industrial areas of Cagliari
(Macchiareddu, Elmas and Sarroch). It is host to BIC Sardegna at Macchiareddu
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
Planning, education and training, industrial estates (NPCI 3.2)
Runs a Eurowindow which provides access to databases on community standards, VAT
rules for import and export etc, and community tenders. Also provides consultancy on
EU environmental legislation
Regional government2 (Department for Tourism,

Handicrafts and Commerce)
B IC Sardegna (E U promoted BIC)
Consorzio 21 (Consortium for the Assistance of
Small and Medium-sized Enterprises)
S FI RS (Financial Society for the Industrial

Rebirth of Sardinia)
CORAM Consortium for the Reindustrialisation of Mining Areas
ISOLA (Sardinian Institute for the Organization
of Artisan Work)
Sportello APRE (Agency for the Promotion of
European Research)
CASIC (Consortium for the Industrial
Development Area of Cagliari)
CRS4
Provincial Councils
Chamber of Commerce: Service Centre for the
Promotion of Enterprises; and Eurowindow
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 oYce/Department
responsible for the artisan sector.
Sources: S U L IS (n.d); H IN E , 1993, p. 261; B ATT ERBURY, 1996, pp. 3233; ISOL A interview 2 April 1996; C O N SO RZI O 21, 1994,
pp. 2425; CORAM, 1995, p. 2.
from a large number of SME measures. While this was

a bene t for the SM Es concerned, it is a matter for
some concern for the European Commission because
it suggests that some potential deserving SMEs may
have been excluded. The clustering of bene ciaries was
also indicative of strong word of mouth dissemination
of SM E actions to potential entrepreneurs.
There are a number of possible explanations for nonparticipation which include: small numbers of potential
bene ciaries; poor transparency of the schemes; less
successful clientelist strategies by excluded entrepreneurs; and sub-optimal policy targeting. In Sardinia
there were fewer people interested in becoming new
entrepreneurs as the result of a low level of entrepreneurial culture in the region and, in the rural areas, a
general low level of educational achievement. This
made the task of creating an enterprise seem unduly
daunting for some. Lack of access to credit was also a

signi cant factor. Poor policy targeting is also an
example of mismatch between environment and policy
design which impacted negatively on policy eVectiveness. This is not the same as an absence of civic
culture.
Secondly, the low transparency and confused situation surrounding the provision of SME measures has
been signi cant. Entrepreneurs tended to be advised in
a snowball fashion of potentially applicable schemes
run by others. This in itself is the inevitable consequence of the administrative system where multiple
institutions operate to implement diVerent measures of
the SME policies. Finally, the existence of political
and cultural clientelism cannot be dismissed as an
explanation for this phenomenon. It was certainly
perceived to be important by entrepreneurs and admin-
871
istrators alike. The phenomenon of multiple participation by a limited number of rms in the SM E
schemes in Sardinia meant that, on average, the sample
rms interviewed bene ted from between three to six
SM E schemes each.
The clientelistic culture in Sardinia appears to have
impacted directly on the administration of the Structural
Funds in this locality. The distribution of grants and
assistance under the Structural Funds was mediated by
the clientelistic socio-cultural environment within
which the funds came to be administered. The institutional multiplication and the multiple participation of
entrepreneurs in a number of SME schemes may be
partly explainable by clientelistic dynamics that precondition all social interactions in the region. The public
administration has also been, in part, staVed by individuals who were said to have received some patronage
in attaining appointments. This has a negative impact on
bureaucratic eYciency as it demoralizes staV who realize
that promotion will not come through merit.
While the institutional multiplication in Sardinia
re ected the prevailing clientelistic ethos in the region,
it is also likely that the multiplication began as a
response to the ineYciency of the regional government
in the eld of Structural Fund administration. Thus
eVorts were made to by-pass the regional administration
through the creation of semi-autonomous institutions
responsible for implementation. The ineYciency of the
public administration was undoubtedly contributed to
by the continuing practice of appointments and promotions being made on grounds other than merit. The
fragmented polity of the region responded to the
incentive of the Structural Funds by diversi cation of
the patron base and a restriction in the number of
bene ting clients. This impacted negatively on policy
implementation and eVective delivery.
town located in a province which has been aVected

by out-migration and which consistently returned a
majority conservative vote for the Partido Popular. The
area is traditional and predominantly rural unlike the
coastal strip where the majority of the regions inhabitants live, and where the majority of the regions
industrialization is located. A regional oYcial commented on the location of the Science Park in Orense
in this way:
Galicia
It is the mismatch between policy intention and sociocultural environment that has created the opportunity
for political manipulation of the intervention. This is
not caused by a lack of civic culture but by a lack of
synergy between overarching policy design and local
socio-cultural environment.
There was also some evidence of more overt
instances of party political manipulation in selecting
bene ciaries of the SM E policies; the presence of a
large dairy rm occupying a number of SM E incubators in the Technology Park was an example of this.
The essential premise of incubators is that they should
provide infrastructural support and premises to nascent
enterprises before they move on to their own establishments. The presence of such a large rm in a number
of the incubators therefore calls for some explanation.
When questioned about this, an oYcial said that:
In Galicia clientelist structures responded di Verently to

the presence of Structural Fund activity. Clientelism in
Galicia has tended to be more overtly party political
and less generally diVused into every aspect of social
interaction in the region. This led to more overt party
political distribution of patronage (as the result of
political choices being made about the location of
SM E resources). It also led to reductions in institutional
capacity (as the result of political appointments), leaving
an inexperienced lower tier of the administration facing
the task of implementation which they were illequipped to undertake.
A good example of political interference in the
location of SME schemes was the decision to build
the science and technology park in Orense (see Fig. 2).
This decision was one that prioritized the dispersal
of regional aid over the E Us favoured approach of
concentration of Structural Fund activity. Orense is
one of the regions four provincial capitals: it is a small
That was also a political decision because, of course, the

interior parts of Galicia are much more conservative than
the coastal areas. It should have been built in Vigo really;
its not that clever having the Business Innovation Centre
in Vigo and the incubators kilometres away in Orense. We
do intend now to develop incubators in Vigo also. (Own
translation from Spanish; interview notes, 5 March 1997)
Both local actors in Galicia and oYcials in the

European Commission stated that political clientelism
was an important motive in determining the sites of
SME assistance. A senior oYcial in the region observed
that the Minister was born in Orense; thats why the
Technology Park is located there (interview, 4 March
1997). An oYcial in (the former) DG XVI of the
European Commission, when interviewed about the
SME policies in Galicia, stated that:
Political clientelism also takes place in the regions, which
is a shame. Galicias principle strength lies in the coastal
area from Vigo to La Coruna: this is also where you nd
the voters for the Spanish Socialist Workers Party. Away
from the coast in the interior you nd a strong presence
of the Partido Popular. Because of this, the Xunta has
done all it can to direct aid to small towns, . . . so, well,
this goes against the main direction of the EU policy.
But, the Commission cant intervene, its a lot of eVort
for very little result.13 (Interview with an oYcial in
DG XVI, 19 February 1996 own translation from
interview notes)
Well, it was a political decision. It is a very important

rm; it employs a lot of people. You see they wanted
to be in the Park, so, well . . . the powers that be decided
872
that they wanted them to be there. They arent really

taking up space that other SMEs could use because, well,
there are still incubators available, the Park is not full. Of
course, thats probably because it is Orense, its not exactly
a convenient location unless youre from Orense of
course. (Own translation from Spanish; interview notes
5 March 1997)
Unfortunately, no administration can function entirely

free from political interference of this kind. Of course,
political intervention can be a positive thing in some
instances, and it may be that the presence of this large
rm in the incubators will act as a magnet to draw in
other potential enterprises.
Political intervention can also have negative implications; eroding the structure of an administration by
making political appointments is an example of this.
This is especially so when it has meant that work is
being undertaken by novices brought in to ll the posts
of those promoted for their political leanings rather
than on the basis of merit. Undoubtedly this has a
negative implication for eYcient bureaucracy, institutional performance and eVective implementation. The
capture of SME policies for meeting the goals and
uses of political clientelism distorts the original policy
intention. It is the disjuncture between policy design
and socio-cultural environment that enables this to
occur, rather than a general absence of civic culture.
Writers about clientelism have suggested that class
divisions tend to be suppressed by its presence.
W AT E R BU RY, 1977, comments: Patronage networks
not only thwart organization along class lines, but
promote privileged, discriminatory access to scarce
goods, at the expense of universalistic criteria. Patronage thus lies equally in the path of Weberian universalistic bureaucracy and Marxian class consciousness
(p. 334).
This suggestion takes us back to the notion of the
traditional peasant society in which patrons acted as
brokers for the peasants with the outside world. In
localities where the transition to modern industrialized
societies is indeed incomplete, the development of the
kinds of class divisions observed in capitalist societies is
also less evident. Waterbury notes that, [i]n poorer
societies patronage helps obscure and disorient class
alignments and to perpetuate the power advantage of
the dominant groups by the conscious cultivation of
vulnerability and dependency (ibid., p. 340). A suppression of traditional class divisions is often symptomatic
of the presence of a clientelist system. It is also argued
that this is induced by an incomplete industrialization
in both regions.
In the case of Galicia, a working class strata has,
however, developed in the coastal zone between Vigo
and Ferrol, as this is the location of the regions
industrialized zone (Fig. 2). This area of Galicia also
produces the highest level of voting for the Socialist
party, the PSOE (B AT T E R BU RY, 1993). Accordingly,
we can conclude that a partial modernization has
occurred in Galicia which we cannot observe in Sardinia. This also helps to explain the observed di Verences
in the degree and type of clientelism in the two
localities. The coastal zone in Galicia has inevitably led
to increased possibilities of unionization, and as trade
unions constitute horizontal associations they operate
directly to break the important dyadic links on which
clientelism is based. If we apply P I AT T O NI s, 1997,
de nition of clientelism, Galicia has a greater potential
than Sardinia to become a development-sustaining
type of virtuous clientelism as it has both cohesive
patrons and strong opposition unlike the fragmented
polity which characterizes Sardinia.
The prevalence of patronclient relations as a characteristic of the broader socio-cultural environment has
inevitable implications for the performance of the
implementing institutions. We have seen that the
impact of clientelist structures in society varies signi cantly depending on the contextual circumstances
within which the polity is embedded. Places and cultures are characterized by unique contextually bound
features. These speci cities require policies and institutional structures which are uniquely designed to build
upon the strengths of the socio-cultural system and
avoid pitfalls which facilitate clientelist policy capture.
In more traditional clientelist societies this may imply
a combination of harnessing existing interpersonal networks for the dissemination of policy information at the
same time as developing horizontal and co-operative
structures which can re-direct existing trust and cooperative strategies into a broader and shared system of
group support.
I N S T I T U T I O NA L CAPAC I T Y
EVective policy implementation is also conditioned by
institutional capacity. The capacity of institutions to
deliver policy is shaped by a number of factors including
organizational culture, and the availability of appropriate resources and experience. An organization is also
strongly in uenced by the prevailing socio-cultural
environment as this impacts on behavioural and cultural
norms of the individuals who form part of that institution. In a system of multi-level governance such as that
governing the SME policies, we nd that capacity
varies at diVerent levels of the institutional hierarchy.
At the regional level it becomes especially important
that institutional forms and practices have some synergy
with policy goals to enable eVective delivery.
Institutional capacity is increasingly portrayed as
something that needs to be enhanced in developing
regions. There is often an implicit assumption that there
is something dysfunctional with existing institutions (or
worse with the civic culture of the region) because the
institutions are incapable of achieving new policy goals
in the area of economic development and employment
generation. Capacity issues also tend to be most acute
in Europes southern regions which can add to the
negative image of capacity de cit in developing areas.
We know that capacity becomes particularly problematic when institutions are required to achieve new
policy goals which they have never previously needed
or been expected to accomplish. In many instances this
has been the case with the Structural Funds. Residual
bureaucratic structures and conventions often remain
in place impeding administrative innovation and the
development of new capacity. The emergence of a gap
between new policy innovations and the institutional
capacity to implement these new policies is critical.
Where a historical legacy of dependency on the state,
rigid bureaucratic procedures and a new, innovative
policy framework are combined, then the issues of
capacity become important for policy implementation.
Factors that in uence institutional capacity in the
case studies are numerous. In particular, the sociocultural environment within which institutions function has a strong in uence on the performance of the
regional institutions as we have seen. Implementation
capacity also varies across the institutional hierarchy.
This is particularly noticeable if we consider, for
example, the impact of power dynamics on capacity
both centrally within the European Commission, and
also at the regional level.
The European Commission has considerable power
in the SME policy arena as the result of its key role as
guardian of the regulations of the Structural Funds, and
by virtue of its responsibility for programme approval
and for releasing funds. These factors place the Commission in a position of authority over the regional
(and to a lesser extent) national institutions. In spite of
this, structural features determining power distribution
within the Commission have exerted a disabling in uence on institutional capacity at this level. The institutional structure of the Commission vests power in the
hands of a small number of key individuals who control
large budgets. This provides structural rewards for the
construction of personal empires. It can also induce a
tendency to defend these empires from attempts to
seize power by other groups. The lengthy delays in
approval of the SM E Initiative for Italy and the global
grant for Galicia are good examples of this. There was
a breakdown of relations between the former DGs XVI
and XX (Financial Control) over the allocation of
operational competencies. This epitomizes a classic
bureaucratic power struggle.
The use of power at lower levels in the administrative
hierarchy impacted on capacity in a wholly diVerent
way than occurred at the level of the European Commission. In Galicia, for example, it was possible to
channel nance for one of the SM E schemes through
the regions own existing projects rather than in accordance with the Commission approved objectives. The
regional governments power to act autonomously in
this way derives largely from the existence of its own
non-EU resources. This was also bolstered by the game
873
of political clientelism that directs the distribution of

resources along political lines in the region. In this
example the existence of own resources combined
with particular socio-cultural norms have aVorded the
Departments of the Xunta signi cant leverage and
power enabling them to prioritize their own objectives.
Although in a position of authority, the Commission
has not been able to redress this situation.
Institutional capacity also entails appropriate administrative experience, legal competence, as well as adequate resources. Both regions con rmed the
importance of a prior experience in delivering regional
policy for enabling capacity to implement the current
Structural Fund policies.
The Sardinian case con rms that a lack of adequate
resources, training and experience is fundamental for
institutional performance and implementation capacity.
Clientelistic appointments of administrators also eroded
eVective institutional capacity. In addition, the demise
of the Intervento Straordinario (IS) left the regional
institutions struggling to cope with the burden of new
tasks in a period of scal cutbacks. The centralized
regional aid system associated with the IS also left a
legacy of historical dependency which was diYcult to
overcome. In spite of this, the detailed plans for the
SME policies were highly ambitious and innovative.
Real diYculties in implementing policies for SMEs in
Sardinia were also caused by the need to nd additional
sources of revenue in order to co- nance the Structural
Funds. This was made harder by devaluation of the
Lira that meant that the original nancial allocations
(expressed in EC U) had greater match-funding
requirements than originally anticipated.14 Institutional
capacity was therefore in uenced by socio-cultural
norms from within the region as well as the external
actions of the state. The greatest di Yculty, however,
arose as the result of the need to assume the burden of
Structural Fund administration for which the regional
government had no prior experience, procedures or
resources to undertake eVectively.
The experience in Galicia was very diVerent as the
result of the leverage obtained from access to its own
resources. The various Departments in the regional
government tended to regard the nance coming in
from Brussels as a welcome addition to their existing
projects. The Commission itself admitted that spending
the allocated funds was a priority over their correct
expenditure.15 In Galicia, it was easier to roll up the
Structural Fund SM E money with other investments
being undertaken for regional development in the
region. Institutional capacity in Galicia was in uenced
by regional and national political activity determining
staYng within departments. It was also heavily in uenced by the constitutional arrangements of the state
that provided own resources to the region. This had
the impact of redirecting administrative priorities
within the regional government.
It is not diYcult to identify capacity diYculties in
874
the case studies. However it should be stressed that

personal goals of administrators do often co-exist alongside policy goals rather than replacing them entirely.
Capacity to implement policies is aVected by a myriad
of competing forces some of which derive from the
broad socio-cultural implementation environment,
while others are rooted in external forces such as the
behaviour of the European Commission or currency
uctuations. The notion of institutional capacity is
complex and involves the intersection of a number of
crosscutting and competing dynamics as we have seen.
Our understanding of institutional capacity needs to be
contextualized if it is to inform our understanding of
institutional performance in this particular policy arena.
Where institutional behaviour concurs with local
socio-cultural norms at the expense of assisting accurate
or eVective policy implementation, it is worth considering the policy design as well as the appropriateness
of the institutional structures for policy delivery.
It is also important that we move away from the
mind-set that attributes blame to institutional systems
which have capacity problems and recognize that capacity building takes time, especially where capacity is
needed to undertake new activities which have never
previously been attempted. This has particular implications in the policy context as it requires that decision
makers, such as the European Commission, reinforce
technical support and recognize that time is needed for
the emergence of new institutional capacity.16 It also
implies that evaluation criteria need to move away
from goal-based impact assessments to more formative
participative evaluation strategies which themselves
stimulate the development of both institutional and
evaluation capacities.
C O NC L US I O NS : I M P LI CAT I O N S F O R
P O LI CY
Throughout this paper the argument has been advanced
that there is a need to understand the implications of
the socio-cultural and political environments for policy
implementation as well as the constraints and opportunities which are integral to the implementing institutions themselves. This entails recognition that the
unique features of a locality are critical in determining
eVectiveness of the implementation of public policy.
Local conditions have a real impact on policy delivery,
although they are themselves shaped by the broader
European political economy. Policies and programmes
whose design achieves a degree of t or synergy with
the socio-cultural implementation environment are
more likely to be eVective and achieve the desired
outcomes. An institutional system that builds on positive aspects of the socio-cultural context is also less
likely be subject to dysfunctional strains which can
eVectively induce goal displacement17 and, in some
circumstances, clientelistic capture of institutions and
programmes.
This paper has challenged the view that the degree

of civic culture in a region is a useful determinant
and indicator of likely institutional performance and
economic success. A focus on civic culture as the
problem in a given locale invokes a policy response
that has little chance of being delivered. If we follow
P UT NA M et al., 1993, we might argue that the EU
would have to undertake major socio-cultural changes
in Italy and Spain in order to promote economic
development. Instead, I have argued that policies, programmes and institutions need to be better tailored to
local circumstances to build on existing strengths of a
region. This should break with current practice that
eVectively opens up avenues for clientelistic policy
capture,
goal
displacement and programme
dysfunction.
In this regard, the work of P I AT TO N I , 1997, provides examples of virtuous clientelism that can actually
induce or permit economic development. This nding
is at odds with the conclusions of P UT NA M et al.,
1993, who suggested, famously, that it is strong civil
society that helps boost development potential for a
region. The two arguments are very diVerent. The
view that clientelism can, in some circumstances, yield
positive outcomes is encouraging as it suggests that
policies and institutions aiming for synergy with the
strengths of the local socio-cultural environment may
be more acceptable than has previously been recognized. This is not, of course, the same as advocating
that the EU support clientelistic practices.
The paper indicates that the Commission needs to
adapt better its Structural Fund policies to suit the
characteristics of particular regions having diverse cultures and norms. At the same time, it should reinforce
regulatory solutions where this can improve implementation capacity. By focusing on effective policy
implementation in evaluating policy delivery we ensure
that the evaluation criteria we use highlight best practice in terms of optimal policy design (implementable
solutions) and institutional form best suited to the
speci c intervention contexts. A policy has little validity if it cannot be implemented. It therefore needs to
work with local areas and local cultural norms to build
productively on existing regional strengths. Encouragingly the Commission has recently proposed opening up the policy-making process to get more people
and organisations involved in shaping and delivering
EU policy (CEC, 2001, p. 3).
While a number of diYculties in the implementation
process have been identi ed, some of the achievements
of the EU have been impressive. This is especially the
case when we take into consideration the scale of
Structural Fund intervention and the wide-ranging
nature of the SME policies. Regional institutions are
being in uenced by contact with the European Commission in the day-to-day activities of Structural Fund
administration. T O M M EL , 1997, has observed in her
analysis of the EU: it can be said, rst, that the system
has improved in its institutional structure. This did not

occur through the implementation of a grand design
but through an incremental, piecemeal process of realising minor steps of change (p.14).
We might extend this analysis to recognize that a
slow evolutionary change of cultural practices and
administrative delivery capacity has also been occurring
at the regional level as a result of the exigencies
of Structural Fund implementation. What we cannot
expect, however, is a uniform response or rate of
adaptation. Places have diVerent starting conditions,
diVerent strengths, di Verent ways of working and
diVerent constraints to change. These have to be
addressed or worked around rather than attempting to
ignore the diversity of the contextual response to the
availability of substantial E U funding. This is the key
challenge facing the policy makers and implementers
of the next generation of the Structural Funds.
Acknowledgements This paper comes out of doctoral
research undertaken at the Sussex European Institute of the
University of Sussex (B AT T ERBU RY, 1998). Thanks are due
to Mick Dunford and Russell King for comments and
assistance during the course of the research. The author also
acknowledges the nancial support of the Geography Subject
Group of the University of Sussex during this period. Thanks
are also due to Sandra Lea and Hazel Lintott for administrative and cartographic support, to Simon Batterbury for nal
comments, and to three anonymous referees for their helpful
comments and suggestions. Particular thanks are extended
to Mick Dunford for constructive comments and editorial
feedback on consecutive drafts of this paper.
6.
7.
8.
9.
10.
11.
12.
13.
NOT E S
1. The paper draws on grounded theoretical insights
emerging from a period of participant observation in
the European Commission and comparative case study
research undertaken in Sardinia and Galicia.
2. Thanks to the editors for assistance with clarifying this
framework.
3. Thanks to an anonymous referee for suggesting this.
4. Institutional capacity refers to the degree to which an
institution is equipped with the necessary resources,
know-how, culture, power and legal competence which
will allow it to pursue a course of optimal policy
implementation.
5. While the focus of this section is on policy implementation and delivery, it remains the case that policy design
14.
15.
16.
17.
875
appropriate to the socio-cultural environment is essential

for eVective policy delivery and the realization of desired
policy outcomes. The need for policies to be shaped to
re ect local speci cities is explored in greater detail in
the main part of the paper.
Objective 1 regions are de ned as having less than or
equal to 75% of the EUs average GDP /capita.
The EUs SME policies are classi ed as being predominantly infrastructural, innovative (e.g. Business Innovation Centres and incubators), or more traditional
nancial incentives. Innovative measures and traditional
nancial incentives tend to apply across the whole region
(B AT T ERBU RY, 1998).
Civil society should be seen as just one aspect of the
broader socio-cultural environment. Additional features
comprise the cultural norms which condition social
interactions, trust relations, conventions, power relations
and norms which mediate access to resources.
P IAT TO N I , 1997, nds examples of clientelism in Italy
that can be described as virtuous, challenged, vicious
and ineVective.
P IAT TO N I , 1997, p. 337, has found that the combination
of stable and cohesive local political classes and a
compact and sizeable opposition are most likely to yield
a development-sustaining type of clientelism.
The fragmented nature of the polity would de ne Sardinia as in a state of ineVective clientelism rather than
virtuous clientelism if we apply P IAT TO N I s, 1997,
analysis.
Galicia is much closer to an example of virtuous clientelism (P I AT T O NI , 1997). The collective will of the ruling
party the Partido Popular vies for dominance against
a strong opposition represented by the Socialist Party
(P SOE).
Partido Popular (PP): the right wing party now in power
in Spain. Spanish Socialist Workers Party (P SOE): the
former party of government in the 1980s and early
1990s. Xunta: regional government of Galicia.
The Sardinian regional government has estimated that
all nancial estimations in lira had to be increased
by approximately 20% (R EGI O N E A U TO N O M A D EL LA
S AR D EG NA , 1993, p. 1).
Telephone interview with an oYcial from D G XVI on
16 April 1997. Con rmed again by an oYcial of DG
XV I speaking in front of a public audience visit by
an oYcial of D G XVI to the University of Sussex,
21 April 1997.
The importance of technical support was recognized in
the planned reforms of the Structural Funds (CEC,
1998a, 1998b, 1998c, 1998d, 1998e, 1998f ).
Where the means of achieving a policy outcome
becomes more important than the end goal itself.
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Evaluating Policy Implementation: The European Union's Small and

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

Evaluating Policy Implementation: The European

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(Received June 2000; in revised form February 2002)

0034-3404 print/1360-0591 online/02/080861-16 2002 Regional Studies Association

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factor in uencing the degree to which policies can be

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Fig. 1. Sites of infra-structural measures for SMEs in

In the case studies, implementation di Yculties were

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Fig. 2. Sites of infra-structural measures for SMEs in Galicia

into innovative measures, traditional nancial incentives

synergy between institutional form, policy design and

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Participative nance SFI RS5

Policy design problems

Pilot artisan centres ISOL A

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More than 100

Policy design subject to

Consortium for the Assistance of Small and Medium Sized Enterprises.

The t between policy design and the socio-cultural

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Global grant with

3 year delay in approval Institutional capacity

Support for rural

Local development Xunta

Policy design allowed

Policy design optimal,

in a way which optimizes its strengths rather than

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Perhaps the most important study about institutional

It would be futile, however, to expect an entire cultural

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The cases of Galicia and Sardinia demonstrate the

traditionally structured cultures in this part of Europe.

It is diYcult to substantiate these allegations but the

While it is diYcult if not impossible to prove this

Presidenza per relazioni con la CEE (Presidency

Regional government2 (Department for Tourism,

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S FI RS (Financial Society for the Industrial

Notes: 1. Own elaboration.

from a large number of SME measures. While this was

daunting for some. Lack of access to credit was also a

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town located in a province which has been aVected

In Galicia clientelist structures responded di Verently to

That was also a political decision because, of course, the

Both local actors in Galicia and oYcials in the

Well, it was a political decision. It is a very important

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that they wanted them to be there. They arent really

Unfortunately, no administration can function entirely

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of political clientelism that directs the distribution of

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

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