This article suggests that efforts to study decentralization outcomes would benefit from widening the unit of analysis from the local government administration to the local governance system. Many individual local governments, especially in developing countries, lack the human and physical resources to be effective governors by themselves. It is, thus, useful to recognize the linkages between different governance actors. The empirical analysis, based on observations in Bolivia’s forestry sector, finds that the degree of connectivity between the actors in a municipal governance system helps explain why some systems are more effective than others.