This report presents the theoretical background of the Stanford Project on Academic Governance. It argues academic organizations differ in major respects from more traditional bureaucracies; hence it is necessary to develop a suitable model of decision-making for use in studying academic governance. The characteristics that set academic organizations apart are described in detail: their goals are ambiguous; they are devoted to client service rather than profit-making; they exhibit a high degree of professionalism; and they are particularly vulnerable to their environment. In light of these characteristics, three models of academic governance are then considered: the bureaucratic and collegial models, and the political model, which is revised and expanded. Although the bureaucratic and collegial models offer valuable insights, the political model is seen as the most satisfactory and complete. A final section analyzes images of leadership and management strategies under each of the three models. (Author)