TCU Neeley Research Highlight - Combining leadership experience, Neeley faculty influence industry and academic leaders through research findings.
March 31, 2024
Ryan Krause, Duncan Faculty Fellow and professor of strategy at TCU Neeley School of Business in partnership with experts explore effective board decision-making, breaking it into three phases—discovery, deliberation, and decision—and introduces "board decision synergy" as a measure of effectiveness. This synergy is achieved when boards manage cognitive and personal biases effectively through diverse information and consensus, though no single configuration guarantees success. (Academy of Management Review, 2024).
Abstract
The board of directors is the highest decision-making group in the organizational hierarchy. Yet, there remains considerable ambiguity as to what constitutes effective board decision-making, and even greater ambiguity as to how to achieve it. We conceptualize the board decision-making process as occurring in three phases—discovery, deliberation, and decision—and we introduce the concept of board decision synergy as a form of effectiveness applicable to this process. Board decision synergy occurs when the board decision-making process reduces the overall influence of cognitive, personal, and group biases on a given decision. We develop a configurational model in which board decision synergy occurs if, and only if, all of the following information-processing outcomes are present: information heterogeneity, information elaboration, and choice consensus. Each information-processing outcome occurs in a specific decision-making phase, and only as the consequence of specific configurations of board cognitive diversity and director empowerment. Though multiple configurations of board cognitive diversity and director empowerment can produce board decision synergy in our model, we find that no configuration is individually sufficient. These insights underscore the complexity of board decision-making as a phenomenon and the potential for theory explaining its effective practice.
