To understand why quality of government (QoG) varies, scholars have drawn on two theoretical approaches: principal-agent and collective action theories. The literature tends to bifurcate these two theories, and focuses on the national scale and the structural conditions under which collective action and principal-agent problems arise. This article highlights how principal-agent relationships and collective action problems shape the implementation of decentralisation policy in two subnational governments in Papua New Guinea. It is argued that pathways to QoG are contextual, and determined by both principal-agent and collective action relationships. In the case of PNG, these relations are shaped by history, culture and the agency of elites and citizens.