This paper examines territorial partnerships (TPs) through the prism of neo-institutional theory and governance. As an example, it considers area-based rural partnerships (Local Action Groups—LAGs) situated in the Sub-Carpathian region of Poland. It identifies the mechanisms by which TPs are created and major aspects of their activities. An overview is given of the social-economic factors conditioning the implementation of TPs in the Sub-Carpathian region. The important role of local authorities in establishing and managing the majority of the LAGs under analysis is revealed. The analysis concludes that LAGs are run in a manner typical of representative democracy and that this manner is contrary to the basic tenets of heterarchic governance. However, the partnership model of accomplishing common projects and the positive outcomes of the projects are likely to produce considerable added value in rural communities.