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Democratic urban management has a significant role in reducing urban problems such as poverty, informal settlement and pollution. Social capital
theory is usually used for studying performance in local governments. But using predefined theories may neglect some important factors such as
subjective meaning and the role of actors in the making of social reality
especially in the context of developing countries. This paper studies the
Iranian city-councils using grounded theory approach. The researchers interviewed 75 informants from councilors and mayors of 13 cities. Data
analysis and theoretical model showed that centralized administration system
and
ambiguous
laws
are
main
factors
contributing
to
"Lack
of
Institutionalization" of councils, and which limit their authority. "Council's members' education" and "quality of state managers' attitudes create the
context that affects the phenomenon. The intervening conditions are "internal and external group relations", "municipalities financial and human
resources", "local attachments", "experiences", and "education".
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Under the conditions described above, councilors adopt two strategies:
"institutionalism"
and
"protectionism". These
strategies,
obviously, are
followed by consequences. These consequences are "anxious", "participation rejection", "hopefulness", and "efficiency". Social capital theory was verified
under the study's findings. Although social capital is useful in explaining the performance, but the lack of institutionalism is considered to be more
important for the council performance in its Iranian context.