Corporate group decisions: A behavioral approach
Article Sidebar
Main Article Content
Abstract
Important organizational decisions are commonly made within groups. Within financial institutions, it is not rare for credit concessions to be decided by committees. In the government sphere, fundamental decisions, such as defining the economy’s primary interest rate, are also made in collegiate. In large private companies, the board of directors is at the top of the organizational hierarchy and has the final word on investment strategies, financing, and mergers and acquisitions. However, the peculiarities of the group decision process are widely ignored in finance literature, which usually considers the group as if it were an individual. For example, studies in the field of behavioral corporate finance emphasize the cognitive processes and biases of the individual decision maker, but pay little attention to how these processes interact to make a group decision (For a literature review, see Baker & Wurgler, 2013). In this essay, I present, in a concise, selective manner, the current state of the emerging multidisciplinary discussion on the decision process in small groups and emphasize its behavioral aspects. First, I cover the advantages and difficulties of the group decision compared with the individual decision. Then, I present recent contributions indicating that the quality of group decisions depends on the context and on how small changes in the decision environment can have important consequences.
Downloads
Metrics
Article Details
A RAE compromete-se a contribuir com a proteção dos direitos intelectuais do autor. Nesse sentido:
- adota a licença Creative Commoms BY (CC-BY) em todos os textos que publica, exceto quando houver indicação de específicos detentores dos direitos autorais e patrimoniais;
- adota software de detecção de similaridades;
- adota ações de combate ao plagio e má conduta ética, alinhada às diretrizes do Committee on Publication Ethics (COPE)
References
Ariely, D., Au, W. T., Bender, R. H., Budescu, D. V., Dietz, C. B., Gu, H., … Zauberman, G. (2000). The effects of averaging subjective probability estimates between and within judges. Journal of Experimental Psychology: Applied, 6(2), 130-147. doi:10.1037//1076-898X.6.2.130
Aydogan, G., Jobst, A., D’Ardenne, K., Müller, N., & Kocher, M. G. (2017). The detrimental effects of oxytocin-induced conformity on dishonesty in competition. Psychological Science, 28(6), 751-759. doi:10.1177/0956797617695100
Bainbridge, S. M. (2002). Why a board? Group decisionmaking in corporate governance. Vanderbilt Law Review, 55(1), 1-55.
Baker, M., & Wurgler, J. (2013). Behavioral corporate finance: An updated survey. In G. M. Constantinides, M. Harris, & R. M. Stulz (Eds.), Handbook of the economics of finance (Vol. 2, pp. 357-424). New York, USA: Elsevier.
Baron, R. S. (2005). So right it’s wrong: Groupthink and the ubiquitous nature of polarized group decision making. In M. Zanna (Ed.), Advances in experimental social psychology (Vol. 37, pp. 219-253). Cambridge, USA: Academic Press.
Bikhchandani, S., Hirshleifer, D., & Welch, I. (1992). A theory of fads, fashion, custom, and cultural change as informational cascades. Journal of Political Economy, 100(5), 992-1026. doi:10.1086/261849
Davis-Stober, C. P., Budescu, D. V., Dana, J., & Broomell, S. B. (2014). When is a crowd wise? Decision, 1(2), 79-101. doi:10.1037/dec0000004
Harvey, S., Currall, S. C., & Hammer, T. H. (2017). Decision diversion in diverse teams: Findings from inside a corporate boardroom. Academy of Management Discoveries, 3(4), 358-381. doi:10.5465/amd.2015.0129
Hastie, R., & Kameda, T. (2005). The robust beauty of majority rules in group decisions. Psychological Review, 112(2), 494-508. doi:10.1037/0033-295X.112.2.494
Homan, A. C., Knippenberg, D. Van, Kleef, G. A. Van, & Dreu, C. K. De. (2007). Bridging faultlines by valuing diversity: Diversity beliefs, information elaboration, and performance in diverse work groups. Journal of Applied Psychology, 92(5), 1189-1199. doi:10.1037/0021-9010.92.5.1189
Janis, I. L. (1972). Victims of groupthink. Boston, USA: Houghton Mifflin.
Kahneman, D., Slovic, P. & Tversky, A. (1982). Judgment under uncertainty: Heuristics and biases. New York, USA: Cambridge University Press.
Kameda, T., Wisdom, T., Toyokawa, W., & Inukai, K. (2012). Is consensusseeking unique to humans: A selective review of animal group decision making and its implications for (human) social psychology. Group Processes and Intergroup Relations, 15(5), 673-689. doi:10.1177/1368430212451863
Larrick, R. P. (2009). Broaden the decision frame to make effective decisions. In E. A. Locke (Ed.), Handbook of principles of organizational behavior (2nd ed.). Chichester, UK: John Wiley & Sons.
Mok, A., & Morris, M. W. (2010). An upside to bicultural identity conflict: Resisting groupthink in cultural ingroups. Journal of Experimental Social Psychology, 46(6), 1114-1117. doi:10.1016/j.jesp.2010.05.020
Nikolova, H., & Lamberton, C. (2016). Men and the middle: Gender differences in dyadic compromise effects. Journal of Consumer Research, 43(3), 355-371. doi:10.1093/jcr/ucw035
Nikolova, H., Lamberton, C., & Coleman, N. V. (2017). Stranger danger: When and why consumer dyads behave less ethically than individuals. Journal of Consumer Research, 45(1), 90-108. doi:10.1093/jcr/ucx108
Ordóñez, L. D., Benson, L., III, & Pittarello, A. (2015). Time-pressure perception and decision making. In G. Keren & G. Wu (Eds.), The Wiley Blackwell handbook of judgment and decision making (pp. 517- 542). Chichester, UK: Wiley-Blackwell.
Raafat, R. M., Chater, N., & Frith, C. (2009). Herding in humans. Trends in Cognitive Sciences, 13(10), 420-428. doi:10.1016/j.tics.2009.08.002
Soll, J. B., Milkman, K. L., & Payne, J. W. (2015). A user’s guide to debiasing. In G. Keren & G. Wu (Eds.), The Wiley Blackwell handbook of judgment and decision making (pp. 924-950). Chichester, UK: Wiley-Blackwell.
Thaler, R. H., & Sunstein, C. R. (2008). Nudge: Improving decisions about health, wealth, and happiness. New Haven, USA: Yale University Press.
Tindale, R. S., & Kluwe, K. (2015). Decision making in groups and organizations. In G. Keren & G. Wu (Eds.), The Wiley Blackwell handbook of judgment and decision making (pp. 849-874). Chichester, UK: Wiley-Blackwell.
Tindale, R. S., Smith, C. M., Dykema-Engblade, A., & Kluwe, K. (2012). Good and bad group performance: Same process – different outcome. Group Processes & Intergroup Relations, 15(5), 603-618. doi:10.1177/1368430212454928
Torchia, M., Calabrò, A., & Morner, M. (2015). Board of directors’ diversity, creativity, and cognitive conflict: The role of board members’ interaction. International Studies of Management & Organization, 45(1), 6-24. doi:10.1080/00208825.2015.1005992
