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The Review of International Organizations

Erschienen in:

01.12.2009

Boards of directors in international organizations: A framework for understanding the dilemmas of institutional design

verfasst von: Leonardo Martinez-Diaz

Erschienen in: The Review of International Organizations | Ausgabe 4/2009

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Abstract

This article develops an analytical framework for studying international organization (IO) boards of directors and applies the framework to a sample of 12 international organizations. It argues that the boards of IOs are asked by their political masters to play four distinct roles: (1) political counterweight, (2) performance police, (3) democratic forum, and (4) strategic thinker. Because there are trade-offs among them, no IO board can play all four roles effectively. Policymakers must therefore choose among them, and they must make choices of institutional design accordingly. The article also shows how in practice, international organizations fall into three governance “models” based on the characteristics of their boards of directors. Each model has a different combination of strengths and weaknesses. The analysis suggests that because trade-offs are inescapable, state actors sometimes willingly surrender a measure of control in order to strengthen other aspects of institutional performance. IO autonomy is often not something that surprises or annoys governments, but rather something that was been built into the institutional design as the result of a conscious trade-off.

Vorheriger Artikel Are international organizations like the Bank for International Settlements unable to die?

Nächster Artikel Controlling coalitions: Social lending at the multilateral development banks

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Among major US companies (S&P500), the average board size is 10.7; among the UK’s top 150 companies, it is 10.8, and among Italian blue-chip companies, the average is 10.7 directors (Spencer Stuart 2006a: 10; 2006b: 5; 2006c: 7). Among the top 50 Japanese companies, average board size is 13 directors (Forbes 2007).

The median board size among the nearly 400 US non-profits participating in a recent survey declined from 17 members in 1994 to 15 in 2004 (BoardSource 2004: 4).

The average board member in an S&P500 firm was 61 years old and in top UK firms, executive directors were 50 and non-executive directors were 57 years old, on average. This suggests work experience of 25–30 years. Directors also tend to stay several years; in top UK firms, the average length of service for non-executive directors as of 2006 was 3.8 years (Spencer Stuart 2006b: 6).

The highest number of meetings reported for an S&P500 corporate board in 2006 was 39.

The shift has been dramatic: in S&P500 firms, the percentage of independent board directors has increased from 27% in 2001 to 81% in 2006. In the UK, some 62% of boards are made up of non-executive directors, nearly all of whom are independent (Spencer Stuart 2006b: 5).

The World Trade Organization (WTO) was not included in the sample because from a governance standpoint, it differs qualitatively from the rest of the organizations studied here. In those organizations, member states delegate significant authority to a board of directors and a CEO. In contrast, the WTO is a “member-driven” organization in which little authority is delegated to the Secretary General and the Secretariat. Instead, nearly all the WTO’s councils and committees—including the General Council, which handles WTO’s day-to-day operations—are plenary committees, which means that decision-making always involves representatives from each of the 150 members.

For an informative history of multilateral development banks, see Kapur and Webb (1994: 229–250).

Four vice-presidents always come from each of the Bank’s four largest shareholders (Germany, France, Italy, and the United Kingdom), and the rest come from specified constituencies, each with its own scheme for regular rotation. In addition, great care is taken to ensure that the nationalities of the Bank’s staff reflect the shares of member countries’ contributions to the Bank’s capital.

Author’s calculations based on data provided by the OECD.

The introduction of DMV in these two organizations is particularly important given the large inequalities in the members’ financial weight. For instance, at the OECD, two members (Japan and the United States) alone provide some 42% of the total contributions that make up the bulk of the organization’s budget. At the EIB, the “big four” (France, Germany, the United Kingdom, and Italy) represent 65% of the Bank’s subscribed capital.

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Titel: Boards of directors in international organizations: A framework for understanding the dilemmas of institutional design
verfasst von: Leonardo Martinez-Diaz
Publikationsdatum: 01.12.2009
Verlag: Springer US
Erschienen in: The Review of International Organizations / Ausgabe 4/2009
Print ISSN: 1559-7431
Elektronische ISSN: 1559-744X
DOI: https://doi.org/10.1007/s11558-009-9061-x

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