It would be possible.
Would it lead to better management is depending on much, first of all would be how are decisions made? I will merely refer to "design by community" here as one of the detractors.
One thing which would massively increase the chance of such concepts is to include a degree of ownership in the whole stake/sphere covered by each chain. It would add a degree, and also sentiment, of involvement and thus interest in making things works.
A great example for this would be what if your city took care of its own electricity production and distribution rather than relying on the mega utility companies. If your city took back its grid. Additionally to people being able to produce thanks to solar power and sell to the grid, imagine they would also hold a combined (minority) stake in the whole collective, dare I say "co-op"? A stake large enough to be influential but not large enough to decide or delay because of design by community?
In Germany, more than 200 projects/companies have been (re)communalized after they were privatized previously. Even a city as big as Hamburg has "taken back its grid". Another sector which has been taken back by several cities is public transportation.
AFAIK as I know none make use of blockchain (yet) but the use of blockchain (with appropriate smart contracts) would most definitely also lead to lowered operational costs.
I think that a core issue is the philosophy behind it. Most people seem to prefer (even though they complain) centralised authority rather than individual responsibility within community. I know the thinking borders on what many people do not want due to past events but, there is a baby out with the bathwater problem.
That's what management exists for.
Just like the public ownership stake and also dividends would/could be capped (both in total and per citizen), so could be the fees/wages and bonuses for management. That can be included in the code to never exceed x.
An alternative to dividends would be to go the Norwegian model and invest forward thinking in funds in order to eventually further increase the share of each one.
Although I think most would prefer the short term perk of regular dividends.