When Reporting Undermines Performance: The Costs of Politically Constrained Organizational Autonomy in Foreign Aid Implementation

Abstract

Bureaucracies with field operations that cannot be easily supervised and monitored by managers are caught between two sources of dysfunction that may harm performance. The first source of dysfunction is straightforward: field workers can use operating slack and asymmetric information to their own advantage, thwarting an organization's objectives. The second source of dysfunction is often overlooked: attempts to limit workers’ autonomy may have deleterious effects, curbing agents’ ability to respond efficaciously to the environment. I find that the parliaments and executive boards to whom International Development Organizations (IDOs) are accountable differentially constrain IDO organizational autonomy, which in turn affects management's control of field agents. Tight management control of field agents has negative effects, particularly in more unpredictable environments. Attempts by politicians to constrain organizations in an effort to improve performance can sometimes be self-undermining, having net effects opposite those intended.

Delegation of implementation in project aid

“…In sum, when the asymmetry of information is more salient and the World Bank chooses a local implementing partner, the informational advantages may overcome the costs due to loss of control. These results complement the analysis by Honig ( 2019 ), who finds that tight management control of field agents may have a negative effect, particularly in more unpredictable environments.…”

A Race to the Top? The Aid Transparency Index and the Social Power of Global Performance Indicators

“…27. Buntaine 2016Honig 2018Honig , 2019 28. This observation was offered by a senior staff member of the US House Foreign Affairs Committee (interview, September 2014) and confirmed by several senior officials working on transparency reforms at USAID, MCC and the World Bank (interviews in Washington, DC, September 2014, February 2015, and October 2015).…”

Information, power, and location: World Bank staff decentralization and aid project success

“…Allowing specific information to be used in decision‐making processes “requires decentralizing many decision rights in both the economy and firms” (Jensen & Meckling, , p. 1), or devolving control to the field. Being able to make use of the contextual information they can gather locally can allow field staff to make decisions their superiors would not have made, with benefits for organizational performance (Aghion & Tirole, ; Campbell, ; Honig, ; Stein, ).…”

“…A given project's rating is intended to incorporate a project's relevance, effectiveness, efficiency, sustainability, and impact, and maps onto a broader OECD Development Assistance Committee standard (OECD, ). These ratings have been used extensively in the literature on donor effectiveness, which generally takes these ratings as a noisy but valid measure of project performance (Buntaine, ; Denizer et al, ; Dreher et al, ; Geli et al, ; Honig, ) . The World Bank's Independent Evaluation Group (IEG) maintains a public database of projects evaluations.…”

“…This is not to suggest that ratings are unbiased, or not subject to “grade inflation.” However inasmuch as this article focuses on interproject comparisons, the threat to validity here is not bias but rather heterogeneous bias that covaries with the key independent variables; otherwise this bias will in expectation aid noise and thus reduce statistical power, rather than leading to, for example, spurious findings. See for example, Honig and Kilby & Michaelowa for a fuller discussion of World Bank, and donor project ratings, more broadly.…”