Donor heterogeneity and the performance of International Organizations. Evidence from UNDP projects

Scholarship on International Organizations (IOs) has extensively discussed how autonomy influences their performance. While some argue that autonomy increases performance through greater adaptability, others warn that it may increase the risk of agency slack. According to principal-agent theory, one of the main sources of autonomy is heterogeneity among political principals. When principals are divided, they lose the ability to enforce control mechanisms and agents start to slack. However, the specific sources of heterogeneity remain theoretically underspecified and empirically untested. We develop an argument highlighting three sources of heterogeneity and their differing impact on IO performance based on common theories of preferences in international politics: a) heterogeneity in political interests, b) heterogeneity in ideological outlook, and c) heterogeneity in institutional constraints. Subsequently, we test the impact of these three sources of heterogeneity in the context of earmarked funding—a funding modality that leads to numerous principal constellations for the same agent. Our empirical analysis relies on results data from 1,500 development projects run by the United Nations Development Program in more than 100 countries between 2010 and 2020. Our findings have important implications for the literature on IO performance and autonomy by theorizing and testing the various consequences of principal heterogeneity.