Intergovernmental organizations, institutional schisms, and business environments

The last two decades have been marked by devastating global challenges that threaten the international problem-solving activities of intergovernmental organizations (IGOs), which have guided global interactions for decades. They offer collective actions by member countries, but come with pressures to create and sustain integrative IGO policies implemented by all members. If these globally focused IGO policies (supranational institutions) misalign with related country-focused national policies (national institutions), an institutional schism exists. We study different levels of institutional schisms and their impact on member countries and national/international business environments. Building on institutional theory/new institutional economics and insights from political science, we conceptualize the different levels of schisms based on the strength of a member country’s national institutions and the degree of compliance with IGO-specific national and supranational institutions. The developed concept allows identifying the impact of IGOs on countries and the global business environment, which is critical for policymakers and practitioners alike.