1Agencies are task-specific public bodies that “[operate] under more businesslike conditions than core government bureaucracy” (Dan, 2014, p. 223). Using agencies for the provision of public services, implementation of policy, and regulation is a widespread form of organization in public administration systems. Agencies are not a ‘new’ phenomenon (Croatia, e.g., has used agencies since at least 1857, see Koprić & Musa, 2011). Nevertheless, during recent decades, agency models have increasingly spread across the globe in line with international reform agendas (Dan, 2014; Moynihan, 2006; Ofoulhast-Othamot, 2022; Peters, 2011). The present article is concerned with the creation and development of such independent public organizations, a process called agencification. While ‘agencification’ was (or still is) a trend emanating from the Anglo-American and EU context, it has had a substantial impact in the post-communist transitional context (Lehmbruch & Sanikidze, 2014; Moynihan, 2006; Polidano & Hulme, 1999; Randma-Liiv, Nakrošis & Hajnal, 2011). As an example, van Thiel (2011) reports that Estonia, Lithuania, and Romania have charged agencies to take on more tasks than have Western and Central European countries. The model’s rapid spread during a brief period has led to agencification being described as a ‘fashion’ (Pollitt et al., 2005; Talbot, 2004; Trondal, 2014; Waluyo, 2021). Academic interest in agencification, however, has declined since 2010 due to de-agencification and/or consolidation of the agency landscape in several European countries (Randma-Liiv, Nakrošis & Hajnal, 2011; Sześciło, 2020; Waluyo, 2021). In contrast to the ´fashion´ perspective, the present article emphasizes the importance of understanding the role of agencies by applying a process perspective, showing how agencification has happened and what consequences it has for the resultant institutional set-up of public services in the post-Soviet context.
2The aim of the present article is to explore how a specific case of agencification has played out and what this has meant for the institutional set-up of a policy area and its administrative relations, rather than considering the creation of an agency as a goal per se. We do not aim to evaluate the appropriateness of the agency model, but rather to illustrate how, and in what way, the agency has been crucial to arriving at another institutional arrangement. We aim to lay out the path, starting from an agencification initiative, and to review it analytically. To achieve our aim, we have studied the system of debt enforcement in Georgia, focusing on how the role of the primary agency changed during the period 2008-2019, and what this has meant on a system level. Theoretically, we use a framework of gradual institutional change (or stability), and more specifically institutional layering and the interplay between change mechanisms, to analyze the development.
3In the Georgian context, the case country used throughout the paper, agencification refers to creating Legal Entities under Public Law (LEPLs), which are semi-autonomous bodies that perform public functions (Kakhidze, 2018; Lehmbruch, 2012). In debt enforcement, the specific policy area analyzed here, the main LEPL is the National Bureau of Enforcement (NBE), which was detached from the Ministry of Justice in 2008. Institutional change can be expected to occur in the context of Georgia, and because debt enforcement is central to a functional economy, institutions in this area are central to state foundations.
RQ: In what way has Georgia’s debt enforcement system and the NBE’s role developed since the creation of the agency, and how can this process be analyzed in relation to institutional change?
4The research approach used here is to reconstruct an agencification process through careful analysis of a specific case. Agencification plays out differently in different contexts, but research on agencification has mainly covered the Anglo-American and Western world, focusing on improving efficiency (Christensen & Lægreid, 2006; Lehmbruch, 2012; Moynihan, 2006; Ofoulhast-Othamot, 2022; Waluyo, 2021). In the post-communist and post- Soviet context, the aim of agencification has been to balance power between politicians and the administration (Beblavý, 2002; Koprić & Musa, 2011; Sarapuu, 2012). Here agencification often coincides with the construction of foundational state institutions (Randma-Liiv et al., 2011), which is why it is particularly important to relate agencies to their policy context rather than focus only on the agencies themselves.
5We base our description of the system of debt enforcement, and the role of NBE, from 2008 to 2019 on various sources. Using this approach, we cover the perspectives of different stakeholders and go beyond formal regulations and decisions, as informal practices are important to grasping the process (Trondal, 2014; Verhoest et al., 2012b). We show how institutional change mechanisms interplay and discuss what kind of institutional change the present reform process represents, as well as how it may be viewed as stability rather than change. We identify phases in the agencification process, resulting in a stepwise evolution toward a specific type of market and/or network organization of the debt enforcement system, and a changed role for NBE.
6Agencification can refer either to the process of creating agencies or to the spread of agency models. We refer to the former, that is, the creation of task-specific public agencies that “[are] structurally disaggregated from government ministries” and which “[operate] under more businesslike conditions than core government bureaucracy” (Dan, 2014, p. 223). Public agencies work with service delivery, regulation, and policy implementation (Dan, 2014). Three central elements of the “idea of an agency” concern its organizational structure, regulation/de-regulation, and performance (Talbot, 2004). The idea is that agencies should primarily be governed through performance targeting, monitoring, and appraisal rather than through regulation.
7Businesslike conditions mean great autonomy in relation to central government regarding human resource management, finances (budget and revenue), management, policy, law, and relations with customers and other agencies (Beblavý, 2002; van Thiel, 2011; Verhoest et al., 2012b, p. 420). Financial autonomy is considered great when agencies can generate their own revenue, for example by raising fees or imposing earmarked taxes (Bouckaert & Peters, 2004, p. 24; Pollitt et al., 2005, p. 23), and are less dependent on budget funding. Trondal (2014) discusses how more autonomy in one relation (to the government) can lead to more dependence (less autonomy) on other relationships (to clients/customers). While some suggest that autonomy should be the “dependent variable” of agency studies (Bouckaert & Peters, 2004, p.46), our process approach to agencification rather views autonomy as one relevant aspect among others.
8Numerous attempts have been made to evaluate the effects of agencification on the performance of the public sector. However, such performance is difficult to measure, difficult to isolate from other causal factors, and may refer to activities, outputs, outcomes, or effectiveness (Dan, 2014; Waluyo, 2021). A respectable share of the literature on agencies has looked at how they perform or at how they should be governed. We are also concerned with the consequences of using agencies, but not in terms of performance. The present article focuses on how a specific institutional setup has emanated from the agencification process – i.e., what setup agencification enables and how that process plays out.
9Agencification is an important part of New Public Management (NPM), where it is seen as “a core element” (Moynihan, 2006, p. 1029; Trondal, 2014), but it is also an EU-driven reform agenda (Pollitt & Bouckaert, 2017, p. 28; Verhoest et al., 2012a, p. 3). Even though agencification has not been an explicit aim of general EU policy, it has been highly encouraged in association agreements, and several post-Soviet and post-communist administrative systems have been reformed in conjunction with such agreements (Koprić & Musa, 2011; McKendrick, 2007; Moynihan, 2006; Meyer-Sahling, 2009; Nemec, Merickova & Vozarova, 2011; van Thiel, 2011). Randma-Liiv et al. (2011) suggest that the EU has been a main driver of agencification in several central and east European countries, while NPM has had limited impact. While Anglo-American and continental models of governance are often described as counterparts (see, e.g., Randma-Liiv & Drechsler, 2017), these partly conflicting ideals also converge (Dunn & Miller, 2007; Pollitt & Bouckaert, 2017). Georgia, which is the country context in the present paper, is a prime example of such convergence, as it has adopted policies of agencification, privatization, managerialism, performance monitoring, individual performance appraisal, and marketization, drawing on various international reform packages emanating from the EU, as well as NPM ideas backed by the OECD and other international organizations (Akobia, 2021; Jackson, 2004; Johnsøn et al., 2021; Dolidze et al., 2013; Mikeladze, 2013; Rinnert, 2015). Central NPM principles and ideas coincide with the EU-driven reform agenda, as well as with recipes for ‘good governance’ and similar international standards.
10Agencification research has primarily addressed western Europe and the Anglo-American world (Ofoulhast-Othamot, 2022; Waluyo, 2021), despite the fact that scholars have pointed out the differences between agencification processes in different contexts (Christensen & Lægreid, 2006; Lehmbruch, 2012; Moynihan, 2006). In transitional countries, agencification is mainly considered a means of balancing the distribution of power between politicians and civil servants and of breaking with Soviet and communist centralized political control (agencification being a means of achieving administrative decentralization) (Beblavý, 2002; Koprić & Musa, 2011; Sarapuu, 2012). In addition, Randma-Liiv et al. (2011) point out that agencification in post-Soviet contexts has often occurred in parallel with the construction of foundational state institutions, while post-communist countries that were not previously Soviet republics (e.g., Hungary) already had such institutions in place when communist states were dissolved in Europe. According to Meyer-Sahling (2009), bureaucratic rather than patrimonial administration is one such key institution. Pollitt (2003) shows how, in Latvia, institutions were lacking when agencies were being created. In his view, there was little capacity to govern in ministries, insufficient performance monitoring, no accountability mechanisms, and a lack of funds. He also found it difficult to access any financial information, indicating weak accounting and audit routines. Agencification can also make policy coordination and oversight difficult (Dan, 2014; Koprić & Musa, 2011; Moynihan, 2006; Peters, 2011; Tavits & Annus, 2006), and in the context of developing states lead to a “more fragile and disjointed” state through bureaucratic upheaval, diffusion of accountability, and increased costs (Ofoulhast-Othamot, 2022). The institutional contextualization of agencies, and whether or not agencies contribute to institutional stability, are therefore highly relevant in the context of post-Soviet countries.
11Agencies can hypothetically function as an organizational form for keeping public service provision, regulation, and policy implementation within the public administrative system but outside central government. However, in capitalist democracies it is common for agencies to work with (or against) private or civil society actors to fulfill public responsibilities. Such arrangements are often viewed as networks or markets – terms that host a myriad of arrangements, for example, public-private partnerships or voucher systems (Pierre, 1995; Salamon, 2002; Wang, Xiong, Wu & Zhu, 2018). The overly broad categories of networks and markets represent distinct kinds of mechanisms. Markets are typically based on competition and/or suspicion and operate through contracts and legal enforcement. Networks are instead thought of as more relational, in that they are based on actors complementing each other rather than competing (Ansell & Gash, 2008; Powell, 1990; Rhodes, 1996). In the present article, we use the concepts of markets and networks not to diagnose different setups, but to describe how the development unfolds, emphasizing market mechanisms or network mechanisms at various stages in a process. Because setups are different, the roles of agencies can also shift between setups.
12Some agencies are regulatory bodies (Maggetti, 2009), providing infrastructure for a policy area. Others are expert agencies occupied with knowledge production and analysis, providing information and evaluations for decision-makers. When such information targets practitioners, the agency’s role is one of support from the bottom up, rather than steering or controlling. The types of agencies mentioned are primarily policy oriented, while others are responsible for implementation. Public agencies may produce public services, i.e., offer public services to citizens, businesses, and other organizations (Dan, 2014). Another role of agencies can be to establish closer links between citizens and government, as less ministerial control can shift the culture of a public body toward becoming more user-oriented (Pollitt & Bouckaert, 2017).
13Policy and implementation roles are sometimes difficult to separate. For example, Lehmbruch (2012, p. 22) argues that agencification has led to a strong position for the protection police in Georgia as both regulator of a market and as a service provider competing in the same market. In a network governance setup, agencies are expected to collaborate with each other and with other actors in a policy area. Scholars have also shown how agencies can represent a kind of window dressing, where their role is to communicate modern and decentralized governance while still being micromanaged by a ministry and politicized through nepotistic recruitment (Koprić & Musa, 2011; Moynihan, 2006; Randma-Liiv et al., 2011; Sześciło, 2020), displaying the symbolic role of agencies. As we know that the Georgian debt enforcement system has shifted, and currently involves both public and private actors, we focus on what roles the primary agency has played in this change process. To help with explaining the transformation, we view the process through an analytical lens of institutional change.
14Drawing on a neo-institutional perspective, institutions are based on regulative, normative, and cultural-cognitive pillars (DiMaggio & Powell, 1991; Scott, 2013). While public administration research has been criticized for overlooking mechanisms that link the past and the present (Meyer-Sahling, 2009), historical institutionalists have proposed some mechanisms that affect institutional development to explain gradual change (Mahoney & Thelen, 2010; Streeck & Thelen, 2005). In the present paper, mechanisms of gradual change are coupled with the institutional pillars to provide a framework that enables an analysis of the interplay between mechanisms and institutions, following Scott’s (2008) suggestion to view institutionalism as a ‘toolbox,’ drawing on various institutionalist trajectories. The addressed mechanisms are: Displacement, referring to actors leaving existing institutions and moving to other institutions; Conversion, addressing the reinterpretation of old rules in light of new goals or purposes; and Drift, meaning that old rules are no longer valid due to new social conditions. Other mechanisms suggested by van der Heijden (2011, p. 11) are “bricolage (‘the rearrangement or recombination of institutional principles and practices in new and creative ways’) and translation (‘the blending of new elements into already existing institutional arrangements’).” Asplén Lundstedt (2004) emphasizes looping, which refers to repeating the same policy problematization through gradually changed (and at the same time reproduced) administrative techniques. These mechanisms are all features of institutional change, but also of reproduction, reflecting the central notion of ‘feed back,’ which means that institutional arrangements are not only the result of politics, but also the cause of policy choices and the institutional arrangements that follow (Pierson, 1993).
15One mechanism particularly suitable for the present paper, layering, refers to adding new rules to old rules (Mahoney & Thelen, 2010) and is sometimes seen as integral to drift and conversion (Capano, 2019). Layering, however, is not delimited to rules; it can also mean adding actors (‘thickening government’), instruments (‘regulatory ratchet’) (van Heijden, 2011), or ideas (Van de Bovenkamp et al., 2014), even covering the cognitive-cultural institutional pillar. Thus far, layering remains in the context of change. But Capano (2019) rejects this, claiming that layering can equally be a mechanism for stability: “the possibility has been forgotten by most scholars using the concept of layering that a ‘gradual’ change (through layering) of an actual institutional structure does not necessarily produce changes in institutional dynamics or in policy outcomes because some types of incremental changes can drive only the reproduction of an actual state” (Capano, 2019, p. 590f). Capano (2019) rather views layering as “a mode of design” – where various layers are at the disposal of institution designers, e.g., decision-makers. Koreh et al. (2019) suggest that the dynamics between various change mechanisms should be highlighted, as each mechanism brings new opportunities for institution designers to use mechanisms. Bringing in the design perspective, Capano (2019) and Koreh et al. (2019) call for increased attention to the agency side of institutions (rule-makers/ policymakers). Institutional change or stability does not merely ‘happen,’ according to them; rather, it is a result of decisions. However, Pouliot (2020) claims that “To equate change with intentional agency is to take a rather limited view on social transformation”. In light of this debate, we use mechanisms of institutional change (and stability) to analyze development in the Georgian debt enforcement system, focusing on the primary agency. As the creation of an agency can be seen as a case of layering, we focus on this mechanism and discuss its interplay with institutions and other mechanisms, our goal being to achieve a better understanding of the agencification process.
16The Georgian public administrative system is an interesting case because it has been regarded as an international role model as regards reforming the public administrative system in line with “western” and “EU” ideals (Akobia, 2021; Lehmbruch & Sanikidze, 2014; Mikeladze, 2013; Rinnert, 2015; Schueth, 2011). Georgia´s public administrative system began to be reformed when Eduard Shevardnadze rose to power in the 1990s (Jackson, 2004), and the reform pace increased greatly during Saakashvili’s presidency (2003-2012). Georgia became increasingly western-oriented and strove for substantial public sector reform during this period, supported by international organizations such as the World Bank (Dolidze et al., 2013; Schueth, 2011). ‘Agencification’ was a main ambition in these reforms. Although independent agencies, Legal Entities of Public Law (LEPLs), were already legally enabled in 1999, with the organizational form starting to be mainly used in the Saakashvili era (Lehmbruch, 2012). LEPLs are responsible for their own budget and are relatively autonomous regarding the production of public services, human resource management, and their internal organization (Lehmbruch & Sanikidze, 2014). The increased budget responsibilities led to increased use of fees, at least in the Ministry of Justice (but fees were previously an institutionalized feature of Soviet administration) (Lehmbruch, 2012). More recently, the organization of agencies has also been a central topic. Both the EU Association Agreement and the Public Administration Reform Roadmap, as well as the OECD, have addressed the notion that agencies’ mandates should be clearer in relation to each other, and that responsibilities are overlapping and unclear (Association Agreement, 2014; Government of Georgia, 2015; Johnsøn et al., 2021). This justifies paying continued academic attention to agencification.
17In the present article, we analyze debt enforcement policy as our case study because it is under the jurisdiction of the Ministry of Justice, which was heavily reformed, but also because debt enforcement is separate from the Georgian police and protection police previously studied by other scholars. Debt enforcement is a fundamental societal institution that refers to the rules regarding the responsibilities of creditors and debtors and the practices of regulating unpaid debts (Varese, 1997). Debt enforcement comes into play when parties (civilians, corporations, or administrative bodies) disagree over an economic transaction and one of the parties files a claim. Reliance on functioning debt enforcement leads to trustworthy relations between creditors and debtors (D'Erasmo & Boedo, 2012; Djankov, 2008; Hendley, 2004; La Porta, 1997); it is of immense importance for a well-functioning economy and therefore intimately linked with the state’s core functions.
18Waluyo (2021) calls for more studies of the agencification process at the agency level, rather than viewing agencification as an overarching phenomenon from a ‘god mode’ perspective on a national level, a call to which our approach responds. Comparative and descriptive country case studies are important contributions, but they are also static (Randma-Liiv et al., 2011). One reason for studying a specific policy area is that, in many post-communist countries, agencification developed in parallel in specific sectors instead of being an overall reform agenda (Randma-Liiv et al., 2011).
19We approached our research aim using an interpretive policy analysis lens, which is useful when the goal is to understand policy processes (Hoppe, 1999). Interpretive policy analysis makes use of several techniques to generate information (Yanow, 2007). In the present study, we used document studies and interviews as our main techniques for gathering the empirical material. One defining feature of the interpretative approach is that the meaning of a policy is constructed by how actors understand it (Bevir & Rhodes, 2022; Pollitt et al., 2005, p. 16; Wagenaar, 2007), highlighting the importance of conducting interviews.
20Autonomy is a relevant aspect of analyzing agencies and is commonly defined as the “level of formal discretion” (Verhoest et al., 2012a, p. 7), but there is a gap between formal autonomy and the actual degree of freedom (Verhoest et al., 2012b, p. 424). While the agency literature has mainly focused on formal autonomy (Trondal, 2014, p. 547, Verhoest et al., 2012b, p. 424), an interpretative approach allows us to cover informal aspects of autonomy and agencification, as well as to grasp institutional change mechanisms on an informal level. Such aspects are central to understanding agencification in practice (Pollitt et al., 2005, p. 23).
- 1 The Ministry of Justice formally declined to participate in our study.
- 2 Although NBE supplied us with requested public information eight months after the letter of request (...)
21We started by identifying relevant documents. The core documents were: a textbook on debt enforcement in Georgia; project reports from EU twinning projects; reports from a bilateral project with the Swedish Enforcement Authority (SEA); NBE website information; and official NBE documents such as “code of conduct,” a process map, and the enforcement policy. As a first step, we read these documents to prepare for interviews which we conducted in parallel with intensified documentary review. The process was quite open-ended, as we worked using an exploratory approach (Agee, 2009). During our first reading, some more specific empirical questions arose, which we pursued in our further research: What is the role of NBE today? How does the current system work? What are the documents good for? What is the current management style at NBE? How does NBE monitor performance? These questions represented the initial research needed to ask ourselves more analytical questions in the later stages of the research process. At this stage, we developed our understanding of NBE, debt enforcement, and Georgian public administration by studying documents, conducting interviews, and reading relevant previous research. To deepen our understanding, we carried out a second round of analysis of the mentioned documents and read additional documents, but also conducted more interviews to complement the research material. We strategically selected respondents to cover diverse perspectives and interests regarding our research question (Wagenaar, 2011, p. 270), but also to cover different periods, categories of actors, and geographical areas. Interviewees were also selected based on their independence from each other. Both aspects maximized the chances of obtaining independent accounts; we interviewed people in Tbilisi and other regions, people who had changed jobs to other sectors, private debt enforcers, and bank representatives1. Additional documents, such as relevant law and regulatory documents from the Georgian state, NBE budgets, and NBE information material, were also studied as secondary material2. The documents analyzed are presented in Table 1.
Table 1. Documents analyzed.
Document
|
Source
|
NBE information document: How cases are distributed between regions
|
NBE, received via e-mail 2019-06-21
|
NBE budget 2010-2022 (each year separately)
|
NBE, received via e-mail 2019-06-21
|
Law of Georgia on Enforcement Proceedings (1999)
|
Georgian state
|
Textbook on debt enforcement in Georgia: “Review of Enforcement System in Georgia”
|
EU / ENPI / TWINNING
|
Twinning Project Fiche Bestt: “Better Enforcement System Through Twinning”
|
EU / ENPI
|
Partnership between the NBE (Georgia) and the Swedish Enforcement Agency: First phase August 2010-July 2013
|
SEA
|
Final project report, 2010-2013 (Berglund, Patrik)
|
SEA / SIDA
|
Final report for 2013-2015 (Erixon, Greger)
|
SEA / SIDA
|
NBE website information
|
Nbe.gov.ge
|
NBE “Code of conduct”
|
NBE
|
NBE “Process map”
|
NBE
|
Enforcement policy (how enforcement should be conducted)
|
NBE
|
Regulation of the National Bureau of Enforcement
|
Georgian State
|
Instruction on Enforcement Proceedings
|
Georgian State
|
Draft Code on Enforcement Proceedings of Georgia, registration number (07-3/34/10)
|
Georgian State
|
Source: the Authors
22The thirteen (13) interviews we conducted are presented in the table below, with fictional names.
Table 2. Interviews (13)
Purpose / role / perspective
|
Interviewee
|
Date
|
Former employee at NBE
|
Vakhtang
|
2018-09-10
|
Senior manager at NBE
|
Tamaz
|
2018-09-12
|
Private, former NBE, enforcement officer
|
Mzia
|
2018-09-12
|
NBE regional manager
|
Ilia
|
2018-09-24
|
Bank lawyer who uses enforcement services (represents customer perspective)
|
Ketevan
|
2018-09-26
|
Senior manager at NBE
|
Kote
|
2018-09-19
|
Private enforcement officer
|
Merab
|
2019-01-15
|
Lawyer at a local NGO
|
Mariam
|
2018-12-14
|
Financial organization lawyer
|
Irma
|
2018-12-25
|
Private enforcement officer
|
Nugzar
|
2018-12-13
|
Private enforcement officer
|
Demetre
|
2018-12-14
|
Bank lawyer, former employee at NBE
|
Marina
|
2018-12-23
|
Lawyer at a local NGO
|
Omar
|
2018-12-19
|
Source: the Authors
23We asked the interviewees to talk about their work in relation to NBE, as well as about how they think debt enforcement and NBE have changed over time. The interviews were recorded, and the interviewees' statements are confidential concerning their identities. The interviewees’ names were replaced with pseudonyms to prevent their statements being identifiable. We took notes and our interviewees provided additional textual material. We stopped interviewing when saturation occurred – no added information emerged from the final interviews; rather, they complemented other interviewees' perspectives (Guest et al., 2006). We also validated our understanding of the reform process through follow-up questions, summaries of interviewees' accounts, and by comparing interviews with each other. The resulting material was analyzed through close reading and categorization in empirically derived central themes, which established the basic storyline of the development of debt enforcement since 2008 (Grodal et al., 2020; Klein & Myers, 1999; Ryan & Bernard, 2003).
- 3 An almost unchanged draft was presented in 2022.
24This section presents the phases of reform we have identified in our material, starting with the creation of NBE as an independent agency in 2008 and ending with the 2019 draft legislation on debt enforcement3. It is worth noting that the three phases described below have evolved under the governance of two major political parties: the United National Movement (UNM), characterized by a liberal reform agenda from 2003 to 2012, and the Georgian Dream, which pursued a more fragmented political project from 2012 to 2019.
25In 2008, the administrative unit that handled debt enforcement was formally separated from the Ministry of Justice when the National Bureau of Enforcement (NBE) became an LEPL. Before NBE was established, bailiffs had been part of the court structure and were able to enforce court decisions independently. Debt enforcement was transferred from the courts in 2003 when it became an integral structural part of the Ministry of Justice. Subsequent steps were taken to separate the execution of enforcement from the judicial powers, even before NBE, as an LEPL, was set up as part of efforts to combat corruption. Combating corruption was a clear focus of the Saakashvili government (United National Movement Party) which was in power at the time. This reflects friction in the system, which was previously dealt with using methods other than the creation of an agency. The present paper, however, does focus on the agencification process, starting with the creation of the agency.
26As a newly formed LEPL, NBE was meant to transform into a service agency and gained much more autonomy than the corresponding unit had inside the Ministry of Justice. One motivation for this reform was to combat the high level of corruption in the enforcement system, which was a pressing issue, as one former NBE employee explains:
“Corruption was the main problem. Corruption covered every level, from issuing the enforcement paper to getting money from a debtor. Even the heads of departments did not understand how corrupt it all was. Everyone said the system was corrupt, not individuals” (Interviewee Vakhtang).
27In the initial phase, NBE was dependent on funding through the state budget. However, being an agency independent of the Ministry of Justice also made NBE more flexible in managing its own budget (NBE was now able to spend income from service fees as it wished). Resources were distributed internally to fulfill NBE’s objectives, such as developing new services for citizens and businesses. Establishing NBE as an LEPL was an essential prerequisite for having the legal, financial, and institutional flexibility to develop new services. As a result, NBE implemented business-like procedures and set up new services to fulfil the bureau's primary purpose efficiently and to generate additional revenue. Thus, NBE was not only the result of layering (adding a new actor/institution), but was also layered in itself, adding instruments to the debt enforcement system.
28As NBE began building its organization, international partnerships with, for example, the Netherlands and Sweden were established. The language of the reports from this period represent a corporatization of NBE, as aligning with business practices and procedures is emphasized. Corporate culture, customer orientation, social responsibility, and business processes are examples of the concepts used:
“The project has supported the NBE in mapping of the enforcement and bankruptcy processes during 2011 and 2012. The main reasons for undertaking the work of defining these processes both verbally and visually have been to create a uniform description of the processes which consequently can be used in different contexts such as strategic business planning, training of staff and also constitute a platform and baseline for improvement and development of the processes. Furthermore, the process descriptions make it easier to unify routines, procedures, and common practices” (Berglund, 2013, p. 5, see also Erixon, 2015).
29These reports stress changes in administrative practices that NBE needed to make to become more like a modern company, while at the same time legitimizing the agency by aligning with international standards and engaging in twinning activities.
30The aforementioned reforms were followed by the introduction of private debt enforcement services in 2009, layering the institutional setup. According to our interviews, many cases were pending at the time, and the inability to close cases hindered the efficient functioning of the economy. One significant motivation for establishing private enforcement was to increase the overall capacity of the enforcement system (Interviewee Tamaz). Private enforcement officers are under certain restrictions by law, so their responsibilities were, and still are, not equal to those of public enforcers. For instance, private debt enforcers could only take on civil cases at this time.
31The Ministry of Justice held the certification exams for private enforcement officers, while NBE formally issued their licenses and monitored their activities. It was also possible to acquire an enforcer license if one was a judge of general law or civil and administrative law (Law of Georgia on enforcement proceedings, Article 14). The Ministry of Justice controlled the number of private enforcement officers, and thereby the size of the private debt- enforcement industry, through the number of exams it offered (Interview Nugzar).
32Based on our conducted interviews and reviewed documents, this first phase was regarded as a period of great optimism by all actors. NBE was able to develop and be innovative, and enforcement was modernized by introducing private enforcement services. International cooperation was a central feature, where the Dutch and Swedish enforcement authorities were seen as forerunners, and bilateral agreements arranged. This phase can be characterized as a period during which the role of NBE was transformed from being only an enforcer to also being a service developer. Furthermore, the phase was distinguished by capacity building of the debt enforcement system, where private enforcement officers complemented, and were clearly subordinated to, NBE. However, this was about to change. In 2012, Georgian Dream rose to power, ending the liberal reform era of the United National Movement Party.
33After the previous phase of optimism and NBE corporatization, the debt enforcement system began to settle. The primary source of funding for NBE’s budget was now generated service fees. Although the system became increasingly stable, problems began to arise. The agency had issues with staff turnover because many qualified enforcers chose to become private enforcement officers. They could earn substantially more as private enforcement officers than as NBE employees. There was also competition for customers, and NBE was dissatisfied that almost all big companies preferred the private sector to NBE. Thus, institutional displacement occurred not only through staff leaving, but also through customers leaving, representing two central actor categories. Enforcers moving from NBE to the private sector, as well as the influx of new enforcers to the market, caused private enforcement to grow, taking a fair share of the market after having been a minor and only supplementary phenomenon (no exact figures are available; we rely on the shared view of our interviewees).
34NBE representatives perceived the situation as unequal competition which was beneficial for private enforcers. Further competition between NBE and private enforcement developed, as NBE increasingly depended on fees to fund the agency and its service development activities. The staff were motivated to continue expanding services, but lacked support from managers (Interview Vakhtang). The focus of NBE drifted from service development to generating income, owing to lack of resources. The conditions for employees changed to de-motivating incentive structures. NBE enforcers were previously rewarded with bonuses if they worked efficiently, but this changed when the quality of employees' performances was no longer reflected in their salaries (Interviewee Marina).
35In other words, from the NBE perspective, the bureau was the ‘loser’ in this phase. On the other hand, private enforcement officers felt that their conditions were unfair compared with conditions at NBE. Several respondents described how the Ministry of Justice monitored the private enforcement officers more strictly than they did the NBE enforcers. Private enforcers explained how they were scrutinized in more detail and required to provide more documents to the Ministry, compared with the NBE enforcers. An additional unequal condition was the use of enforcement software which private enforcement officers were required to pay to use even though they could not use all the tools that NBE enforcers used in the same software. Thus, while NBE enforcers were dissatisfied, and suspicious of private enforcers, the private enforcers were also unhappy with the prerequisites for enforcement (Interviewees Mzia, Merab, Nugzar, Demetre).
36On the other hand, a bank lawyer (Interviewee Irma) described how some private enforcers failed to perform their duties. She explained that creditors must thoroughly research the market before hiring private enforcers. Her company established a policy of hiring several enforcement officers, which meant that they recruited several officers simultaneously and distributed cases between them depending on their work experience and competence. The respondent said that the lack of qualifications among private enforcers was a problem and thought licenses should be issued more carefully. In her view, it would be better if the market for private enforcers were open to newcomers as well. Nevertheless, she reported that approximately 99% of her company’s cases were delegated to private enforcement officers because the company preferred a job done poorly to a job not done at all.
“I can’t complain about how unqualified private enforcers operate, since we compare a job that was not performed well (by private enforcement officers) to a job that was not performed at all (by the NBE)” (Interviewee Irma).
37One example of the critique of NBE is a case where Irma’s company filed a claim with NBE in April 2018 and was still waiting for it to be enforced in December 2018. The long wait made it difficult for credit institutions and entailed the risk that their financial stability would deteriorate (Interviewee Irma). Another bank lawyer also said that a system with private enforcers and competition would be preferable to NBE because of the incentives that existed for private enforcers.
“If they do their job well, it will show in their bank account, reputation, everything. A private enforcement officer takes a huge risk if he doesn’t do the job well. And there’s no creditor on earth who doesn’t want a friendly executor who takes and executes cases on time” (Interview Ketevan).
38This phase was characterized by reform inertia at the system level, reflecting the more conservative approach taken by the ruling party and the further institutionalization of rules and regulations already in place. Competition became increasingly established and constituted the organizing mechanism, parallel to increased dissatisfaction with the unequal conditions for public and private enforcement and the suspicion that existed between them. Customers were clearly not happy with the situation, but preferred the increased capacity of the system to solely public enforcement and its slow case processing. The role of NBE changed from being a service developer during the previous phase to a competitor during this phase.
39In this phase, we describe a slightly altered market system that had not yet been formally or legally decided, but which was nonetheless enacted by the involved actors due to proposed legislation concerning a ‘new’ system. The proposed changes were justified by the need both to unify the system, meaning equal treatment of public and private enforcers, and to limit the opportunities for private enforcers to pick and choose the most profitable cases (Draft code). We have found that this draft had vast implications for the organization of debt enforcement, despite not being formally decided. The draft was a vision of the future, shaping how actors made sense of their surroundings and role, and was enacted in anticipatory ways, representing layering in the form of ideas. Below, we present the suggested formal changes regarding the organization of debt enforcement and provide examples of how it had already begun affecting debt enforcement.
40The debt enforcement system was pressured by a staggering number of cases, resulting in changes being made. The number of cases was constantly increasing and the system lacked the capacity to process them, according to private enforcement officers and bank representatives (Interviewees Ketevan, Mzia). Dissatisfaction among all actors (customers, NBE employees, private enforcers) meant that there was friction as well as a joint interest in reforming the debt enforcement system.
41The draft code stipulated a chamber of enforcers including as members all enforcement officers. This body was described as a distinct organization that would take the form of an LEPL, with its own management and chair chosen by the members. The proposed chamber was presented as formally autonomous from NBE and other governmental entities, but still monitored and supported by NBE and accountable to the Ministry. One purpose of the chamber was to function as an accreditation body, while being funded by revenue from membership fees. In this system, NBE remained the enforcer of state-budget-related cases, facilitating technical services, such as case management software and other services, and hosting the enforcement police.
42NBE’s role was made smaller in the proposed system and its task of enforcing debt cases was partly or entirely dismantled, as the new LEPL was to be established. This expectation influenced practice:
“For two years, the heads of the organization have been saying that the bureau will not exist shortly. Who would ever want to work in an organization that can be closed at any time? Consequently, there is a mass outflow of employees, and hardly anyone applies for jobs at NBE” (Interviewee Marina).
43So the coming ‘new’ system had vast implications for practice in advance, as the organization (referring to NBE) displaced itself, its recruitment prospects, and its relevance.
44In the draft, increased regulation of private enforcers was suggested because fixed fees were planned and the enforcers were required to take on all kinds of debt enforcement cases. The obligations of private enforcers overlapped NBE’s previous responsibility to take on unprofitable or highly complex cases (Draft Code of Enforcement). This produced more equal conditions between private enforcers and NBE enforcers, according to NBE interviewees (Interviewees Tamaz, Kote). But it also called into question the need for public provision of debt enforcement services.
45Despite greater responsibilities for private enforcers, customers (mainly banks) were skeptical. One bank representative claimed that increased responsibilities also increased the need for regulation:
“I’m strongly against it because private enforcement works well due to the very fact that it regulates itself. Private enforcers are allowed to dedicate as much time and effort as they like to a case. Still, if cases are assigned to them on a mandatory basis, that will require resources, and private enforcers will not be able to prioritize between cases” (Interviewee Ketevan).
46From this perspective, private enforcement functioned best because it was deregulated. Banks were worried that private enforcers would not be able to prioritize banks’ cases in the anticipated system. This mechanism was acknowledged by other actors as well. One NBE employee claimed that “customers choose private enforcers for their flexibility, but they will lose their effectiveness if they’re required to take more cases” (Interviewee Ilia). At the same time as banks emphasized the importance of market mechanisms for optimal efficiency in debt enforcement services, they also acknowledged that private enforcers were unlikely to prioritize unprofitable cases, and the representatives emphasized the risk that certain creditors' rights could be ignored (Interviewees Marina, Ketevan). They therefore still thought that NBE had a role to play in the debt enforcement system.
- 4 There has been no change in the formal status of the proposed reform of Georgia’s debt-enforcement (...)
47NBE was partly dismantled, or at least made substantially smaller, and transformed from competitor to supporting private enforcers in the proposed and enacted system, supplemented by a new agency. In contrast, private actors became increasingly responsible for providing debt enforcement services. NBE was converted into a meta-body, an infrastructure for a market of private enforcers.4
48The role of NBE has shifted over time. The first shift was from provider of debt enforcement services and service developer to competitor and regulator in the second phase. The second shift, with the anticipated proposed system, was from competitor to enabler, whereby NBE supported private enforcement by offering tests and services, the previous core task of debt enforcement having been dismantled. Each phase was triggered by endogenous friction. The agency's creation was triggered by corruption, the marketization was triggered by capacity problems, and the draft code was triggered by both capacity problems and dysfunctional relations between actors. The change in political leadership also contributed to the development, with UNM striving for public sector reform and Georgian Dream focusing on other issues and paying less attention to administrative reform. The three phases are presented in the table below:
Table 3. Changes during the studied reform period.
Reform phase
|
Agencification
2008-2013
|
Marketization 2013-2017
|
Networkization 2017-2019
|
Role of NBE
|
‘The corporation’
|
‘The competitor’
|
‘The market enabler’
|
Main task of NBE
|
Provision (of services)
|
Competition
|
Oversight, supporting the chamber of enforcers
|
Service provision
|
Mainly public
|
Public and private
|
Mainly private
|
Institutional mechanisms
|
Adding actors: the agency NBE, enabling private enforcement.
Adding instruments: developing services
|
Displacement
|
Adding ideas: professional self-regulation
Adding arenas/bodies: professional chamber
|
Central themes
|
Modernization, service development, capacity-building
|
Competition, unequal conditions, suspicion
|
Complementary roles, collaboration between public and private sectors
|
Source: the Authors
49In the first phase, NBE contributed to layering by introducing new instruments (new services) itself. The demand for debt enforcement services then increased as there were more services available for customers/creditors, which in turn contributed to the capacity problems that constituted the friction over further reform. In a contrafactual comparison, if such services had not been developed, there may not have been as much demand for enforcement services and hence not the same level of friction. This illustrates how the layering of instruments ‘feeds back’ into the development that follows.
50The second stage could be labeled a ‘reality check,’ meaning that practical challenges to debt enforcement and NBE (lack of funding and high staff turnover) became apparent. It became more important for NBE to increase its revenue to ensure stable and independent funding. The element of competition and suspicion between actors was decisive to our interpretation that the institutional setup was more of a market than a collaborative network in which relations between actors are more trusting and reciprocal (Ansell & Gash, 2008; Powell, 1990). This also hampered one kind of user orientation, because the user category of private enforcement officers became competitors rather than users. Adding a layer by formally enabling private enforcement in the first phase was not enough in itself to change the character of the system to that of a market. Displacement was also needed to cause enforcers to leave NBE and establish themselves on the private market. This demonstrates the importance of adding several different layers for a shift in the administrative arrangement to occur.
51In the third, partly informal phase, the market was not dismantled, but we see a process of networkization toward a kind of governance arrangement, including a market. The emphasis on collaboration between public and private sectors, instead of competition, is one reason for this analysis. Another reason is the creation of a new LEPL (the chamber), which increased the number of public actors, thereby creating a group of public bodies in the debt- enforcement system. The role of NBE shifted to that of a market enabler expected to support private enforcement officers who were seen as the leading service providers. Moreover, the new role included supporting the creation of the chamber, the aim being professional self-regulation by enforcers, and becoming a meta-regulator (not regulating the market, but regulating the body that is supposed to regulate the market). Lehmbruch (2012, p. 22) argues that the dual role of regulator and competitor reinforced the protection police's position. In contrast, the shifts in NBE’s role have made the agency weaker and smaller, rather than stronger. When/if a professional chamber of enforcers becomes a reality, this would reflect layering not by adding rules, actors, or ideas, but by adding arenas. As the arena is supposed to be an accreditation body, we can see how the normative pillar has shifted its focus. The normative aspect of institutionalizing debt enforcement previously addressed relations to other countries and supra-national bodies. This focus then became taken for granted and the normative features instead addressed managing the actors in the system: the enforcers.
52Looking at the three pillars of institutions, we can see how the regulative pillar has changed and the normative pillar has shifted its focus, but the cognitive-cultural pillar has remained the same, because the ideal of businesslike procedures, market mechanisms, and profit has been consistent. Therefore, we are ambivalent as to whether institutional change actually happened. The logics of the market were further institutionalized through the flexibility of administrative arrangements, representing stability/reproduction rather than change, reflecting a looping in which market-centered ideas were reproduced but altered to fit the contemporary friction, pursuing the overall transition from communism to a market economy (Meyer-Sahling, 2009).
53However, the notion that the administrative arrangements have changed can also be questioned, as a specific kind of re-regulation/re-centralization emerged from de-regulation and autonomy, reflecting the invariably present public administration cycle between agencification/specialization and integration/coordination (Talbot, 2004). NBE enjoyed great autonomy during the first phase, reflected primarily in its having its own budget and mandate to determine its organizational structure and operations. During the second phase, tension built between formal autonomy and the practical degree of freedom, yet having the formal autonomy to generate one’s own budget is only freedom when funds are actually generated. When revenue drops, the remaining resources are not sufficient to fund autonomous practices such as incentives for staff and development of services. Dissatisfied employees were the result both of the market system (through competition and suspicion) and of NBE (through demotivating incentives and relatively low pay). The latter was a consequence of lack of funds. Financial autonomy can thereby hinder usage of formal autonomy regarding operations. Re-regulation then occurred in phase three through specialization of, and control over, NBE’s tasks, decreasing its autonomy and drawing it closer to the Ministry. NBE was closer to the Ministry because the agency was expected to control the new body (the chamber), which in turn was described as ‘autonomous’. In this way, the administrative cycle between autonomy and control can also be seen as looping, rather than as change.
54Based on our research, the changes in Georgian debt enforcement were not the result of a coherent reform agenda. In retrospect, the process that began with agencification has resulted in a market system, moving toward a governance network, including a market, at the end of the studied period. The process has been part of a wider trend of marketization, rather than constituting a trend of its own. The market brought about suspicion between public and private actors, which remained despite the effort to design a more collaborative system in the third phase. Some view marketization as state withdrawal (e.g., Wegren, 2000), but there is extensive research indicating that a strong institutional setting is needed for a market to function (Vogel, 1996; Brunsson & Jutterström, 2018). Thus, in our view, marketization is hardly the same as state withdrawal, but requires state agencies for support and regulation. Rather than evaluating a process of marketization as state withdrawal or presence, we therefore understand marketization and networkization as reproduction of institutions.
55Superficial change seems to hinder the radical institutional change that in some countries has led to fragmentation and thereby to a weaker, disjointed state (Ofoulhast-Othamot, 2022). For this reason, perhaps superficial change is what is needed in the post-Soviet context, as several scholars have called for stability in institutions, particularly in this context (Randma-Liiv et al., 2011), not least to support the ongoing transition from communism. Here, we show the interplay between mechanisms of institutional change, how lock-in effects are created through institutional design choices made by actors adding layers, and the consistency of a market logic in what superficially seems like institutional change, but which mainly refers to the regulative pillar. However, stability in institutions is not a neutrally good thing per se; it is only good institutions that are desirable. The question of whether the institution of ‘the market’, as something taken for granted, should be seen as good, and as a goal per se, is to be decided through democratic procedures. Therefore, the values that agencification may institutionalize deserve to be publicly discussed in more explicit ways.
56The present article has responded to calls for studying agencies at the agency level and from a process perspective, in contrast to overview snapshot studies which cover an agency landscape. The present empirical contribution therefore shows what agencification can lead to, highlighting factors that have shaped the development. Scholars should pursue their interest in agencies, rather than stop studying them because of de-agencification or consolidation (Randma-Liiv, Nakrošis & Hajnal, 2011; Sześciło, 2020; Waluyo, 2021). The concept of de-agencification risks downplaying the role of agencies, while our study portrays an agency that was hardly consolidated. We wish to claim that agencies are relevant even if disregarded, as they play a vital role in the development of a policy area. We also claim that agencies constitute the ongoing reproduction of institutional norms and assumptions, rather than a consolidated form for public organization.
57As our major contribution, we wish to stress the importance of analyzing agencies in a policy and institutional context. Autonomy is an important aspect of analyzing agencies, but not necessarily the ‘dependent variable’. We show that agencification is not an independent reform process, but that it is part of larger changes over longer timespans. Agencification was a crucial step in the overall development toward marketization, economic decentralization, and networkization in the case of Georgian debt enforcement. Our case shows that agencies play a significant role in the further institutionalization of pro-market attitudes, a development that needs to be made explicit so that policymakers and the public can deliberate on the deeper meaning of creating agencies.