CEO selection in intergovernmental organizations: the clash between control and efficiency in governance

Abstract

CEO selection is a crucial governance function influencing and driving the strategic direction of organizations. Extant research has largely assumed that boards are an efficient mechanism vested with the CEO selection function. However, boards are not always delegated with this function. In some organizations, the principals directly select the CEOs to keep effective control over the organization. Drawing on the clashing rationales of control and efficiency, this article identifies the factors influencing the governance choice of whether CEO selection is directly carried out by the principals or channeled through the board. Using a Bayesian logistic regression on a dataset of all global intergovernmental organizations, we find that the substantive character of ownership (i.e., capacity and incentive) matters more than the structure (i.e., diversity and dispersion) in such a governance choice. We also find that organizational characteristics barely have direct and moderating effects on the relationship between ownership structures and the governance choice of CEO selection. Our study has important implications for the literature on CEO selection, and strategic corporate governance research in general.