In Europe today, the state is being challenged, and this is leading to renewed questioning of the linkages between social regulation and political regulation. Territories, or sub‐national levels (particularly towns and cities), can constitute one level on which different types of regulation are enmeshed and structured, and where a mode of governance is structured. This paper reviews the uses of the concept of governance by those institutionalist or regulationist economists who address the issue of territory, and then proposes an analytical framework — a sociological conception of governance.