A Challenge to Traditional Economic Assumptions: Applying the Social Theory of Communicative Action to Governance in the Third Sector

A major distinguishing feature of third sector organisations (TSOs) compared with business organisations is that their purpose for existence is not to make profit for shareholders, but to promote civil society activities and build social cohesion. This paper asserts that if the purpose and the functional rationality of such organisations are significantly different from business organisations, then it should not be assumed that the approaches to governance in both types of organisations should be the same. Instead, the approaches to governance should be intimately linked to the character of the organisation being governed. Thus, this study is set in a social paradigm, rather than the more normative economic paradigm, and uses Habermas’ theory of communicative action to develop a theoretical base to guide governance processes within TSOs.