Mind bias behind board decision-making

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Abstact

Boards of directors have the duty to govern the firms they are responsible for. When addressing strategic challenges board directors make complex decisions concerning matters that may critically impact the organization’s future, within an increasingly uncertain context. A considerable amount of board misleads decision-making have mind biases as root causes. Because board directors engage in strategic decisions, the potential negative effects of such biases are of utmost importance. World news has shown plenty of wrong decisions in the context of corporate governance. A taxonomy of a selected subset of mind biases is proposed. The identification and awareness of such bias constitute the first layer of protection, however, is not enough, as they rely on unconscious mechanisms, implying that one cannot usually correct own biases. However, by means of group or organizational consciousness, the effects of such biases may be reduced. This work departs from some of the main references in the fields of decision-making and systems analysis, aiming at providing lessons for the board’s actuation.

Keywords: Board Directors, Decision-Making, Mind Bias, Risk, Systems Thinking

JEL Classification: M140, M160, M190

Received: 14.09.2021
Accepted: 22.09.2021

How to cite: Água, P. B., & Correia, A. (2021). Mind bias behind board decision-making. In K. M. Hogan, & A. Kostyuk (Eds.), Corporate governance: Fundamental and challenging issues in scholarly research (pp. 15–20). https://doi.org/10.22495/cgfcisrp2