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Article Excerpt
Who or what shapes and drives the policy and operational behavior of the World Bank? The objective of this essay is to lay the conceptual and empirical framework for this special issue. I begin by constructing a synthetic theoretical model--drawing from principal-agent models and sociological institutionalism--to delineate the set of external and internal factors shaping Bank behavior. I then lay the empirical groundwork by exploring the most salient characteristics of the "world's Bank," taking special note of the Bank's relationship with the United States, borrowing states, and nongovernmental organizations. In the second half, I focus on the "Bank's world," investigating the internal bureaucratic politics and culture of the Bank. Specifically, I examine the sources and nature of the Bank's "intellectual culture" (characterized by its economistic, apolitical, and technical rationality), its "operational culture" (portrayed as driven by approval and disbursement imperatives), and the dynamics of bureaucratic politics that pervade the hierarchy of the Bank. KEYWORDS: World Bank, organizational culture, organizational theory, principal-agent, nongovernmental organizations.
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It is ironic. Former US secretary of defense Robert McNamara, who assumed the presidency of the World Bank in 1968, sought to engender an autonomy, authority, and organizational culture that would enable the Bank to rapidly expand its development lending and expertise, and thus ensure the institution's early success. Paul Wolfowitz, the recent US deputy secretary of defense, took the mantle of the Bank in May 2005. Prior to his resignation in May 2007, Wolfowitz sought to overhaul the very culture his predecessor put in place and to renegotiate the Bank's precarious relationship with its varied political masters in order to rein in mission creep and revitalize the Bank's waning effectiveness and legitimacy. The new Bank president, Robert Zoellick, faces similar tasks, even more daunting in the wake of the scandal surrounding Wolfowitz's early departure. Indeed, the president of the World Bank has often been able to mold the institution in his image. Yet over time, as the Bank aged and grew in size, the influence of its leaders has been muted by the push and pull of two factors: the complex politics of the Bank's external environment versus the bureaucratic politics and cultural dynamics of its internal environment. This has led to an enduring puzzle for scholars. What exactly shapes and drives the policy and operational behavior of the World Bank?
The research articles in this special issue of Global Governance seek to explain the dynamic set of factors and subsequent patterns of behavior that we associate with the "world's Bank" and the "Bank's world" and that we use to explain our observations about Bank behavior. Specifically, the articles tackle some of the most salient questions surrounding the Bank: the question of who or what compels the Bank to adopt certain development norms (such as Susan Park's examination of the International Finance Corporation [IFC] and environmental norms), how certain development ideas and policies are produced (Antje Vetterlein's analysis of social policy), and the implementation of espoused values (Judith Teichman's investigation of civil society participation in conditional cash transfer programs in Mexico and Chile).
The purpose of this framework essay is to provide the analytical tools and empirical concepts that will be taken up in the ensuing case studies. I begin by constructing a synthetic theoretical model--drawing from principal-agent models and sociological organizational theory--to delineate the set of external and internal factors shaping Bank behavior. I then lay the empirical groundwork by exploring the most salient characteristics of the "world's Bank," taking special note of the Bank's relationship with the United States, borrowing states, and nongovernmental organizations (NGOs). I then turn to the "Bank's world," investigating the internal bureaucratic politics and culture of the Bank. Specifically, I examine the sources and nature of the Bank's "intellectual culture" (characterized by its economistic, apolitical, and technical rationality), its "operational culture" (portrayed as driven by approval and disbursement imperatives), and its pervasive bureaucratic politics.
Ultimately, I argue that what we identify as the Bank's external political and ideational environment versus its internal culture and bureaucratic politics are not competing variables. Rather, the "world's Bank" and the "Bank's world" are mutually constituted. Distinct bureaucratic characteristics such as the ideologies, norms, language, and routines that are collectively defined as the Bank's culture have emerged as a result of a dynamic interaction over time between the external material and normative environment and the interests and actions of the Bank's management and staff. Once present, dominant elements of that culture shape the way the bureaucratic politics unfolds and, in turn, shapes the way the Bank reacts and interacts with its changing external authorizing and task environment. Because the borders between the internal and external environments are fluid, malleable, and intersubjective, disaggregation can be problematic. Nonetheless, for analytical clarity and the simple objective of getting a grasp on these questions, I seek to disentangle these worlds to derive a distinct set of analytical tools to use in our empirical investigations.
Theorizing International Organization Behavior: Insights from Principal-Agent Models and Sociological Organization Theory
The World Bank presents an interesting challenge for international organization (IO) theory. Conventionally, IO theory is not about IOs as much as it is about the states that create them. Traditional realist and institutionalist theories treat IOs as reflections of state power and interests, as forums of interstate bargaining, or platforms for resolving collective action problems. Early constructivist IO work explains the influence of IOs in propagating norms that shape state identity or behavior. The commonality is an examination of the effects (or lack thereof) of IOs on state interests and behavior. Without ontological acknowledgment of IO agency, incisive questions about IO preferences and behavior rarely arise. Yet these exact questions dominate contemporary empirical work, particularly in the case of World Bank scholarship. (1) And, as demonstrated in the seminal work by Michael Barnett and Martha Finnemore, the field is beginning to reflect this. Theoretical work increasingly assumes IOs to be actors in their own right and tackles head-on the critical evaluation of their relative autonomy, authority, and (mis)behavior. (2)
Two recent "imports" to IO theory offer analytical tools regarding questions of IO agency and behavior that are particularly useful for investigating the driving questions surrounding the World Bank's policies and practices. The first is principal-agent (PA) theory, derived from the discipline of economics and developed richly in studies of public bureaucracies in US politics. The comparative advantage of PA theory is explaining the dynamics among the principal member states (both creditors and borrowers), third-party NGO watchdog organizations, and the Bank as a unified actor. (3) The second is the extension of sociological organization (SO) theory, now largely conflated with a constructivist approach to IOs. SO is particularly suited to examining the normative and ideational sources of external influence shaping the Bank as well as the impact of bureaucratic culture.
Both PA and SO theories offer viable explanations for external and internal variables driving organizational behavior. However, for the sake of brevity and analytical clarity, I focus here exclusively on the perceived comparative advantage of each model, using PA theory to inform the external politics and norms driving the "world's Bank" and SO theory to inform the internal politics and culture shaping the "Bank's world." And while rationalist PA theory might appear ontologically and epistemologically inconsistent with SO theory, empirically the two approaches are powerful complements. Taken within their respective domains of application, (4) together they can illustrate more fully the sum of external and internal influences over the Bank. The objective here is to illustrate their potential synergy in providing a comprehensive analytical toolkit for understanding and explaining the agency and behavior of IOs.
Principal-Agent Models
PA models are designed to examine the delegation of authority and tasks from principals (primarily member states) to agents (IOs). PA theory investigates the conditions under which IOs may attain organizational autonomy, leading to "slack" or "slippage" that enables them as self-interested, rational, and opportunistic actors to shirk member state demands. The driving question is what enables agents to engage in deviant or "errant" behavior, sometimes acting in a manner that appears to blatantly oppose their delegated mandates. IO preferences are largely taken as given: IOs are assumed to have strong preferences for increased organizational autonomy and bureaucratic expansion of mandates and authority. (5) The direction and substance of organizational behavior are functions of the differences ("heterogeneity") between principals' interests and the willingness and ability of these principals to collectively employ available control mechanisms to reward, sanction, or otherwise influence what IOs do.
IOs gain bureaucratic insulation from principal influence and thus opportunities for "slippage" in several ways. First, in agreement with recent...
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