Allocative Failures: Networks and Institutions in International Grantmaking Relationships

Using neo-institutional theory to guide my inquiry, I ask how foundations award international development grants in an institutionally complex environment, and if and how that process contributes to homophily in grantmaking. Employing a qualitative multiple case study method, I show that grants are awarded via interpersonal networks, a meso-level finding that suggests a second, macro-level research question: how are interpersonal networks institutionalized in this context? In my analysis, I contribute to a theoretical understanding of the recursive relationship between networks and institutions: I show how macro-level institutional practices and forms emerge from networks, and how the micro-level character of the network participants themselves ultimately shapes institutional forms. Combined, my results provide a mechanistic, multi-level understanding of the relationship between networks and institutions, as well as of how homophily operates in grantmaking. Because of the potential for social stratification and exclusion based on the structure of the network itself, I argue that such networks should be understood as “allocative failures.”