Groups with a greater pro­por­tion of do­main ex­perts are less likely to al­ter their per­spec­tives as the en­vi­ron­ment changes.

Rotman Management Magazine - - FROM THE EDITOR -

But th­ese boards dif­fer sub­stan­tially in the pro­por­tion of do­main-ex­pert di­rec­tors: while the ma­jor­ity (56 per cent) of the first board is com­posed of so­lar-in­dus­try ex­perts, such di­rec­tors are a mi­nor­ity (22 per cent) in the sec­ond board. Most pre­vi­ous stud­ies on board and ex­ec­u­tive team di­ver­sity have not dis­tin­guished ex­perts from non-ex­perts within a given do­main, and hence can­not an­swer the ques­tion of how do­main ex­perts af­fect a firm’s per­for­mance.

Pre­vi­ous re­search in­di­cates that when the level of de­ci­sion un­cer­tainty is high, three neg­a­tive char­ac­ter­is­tics of do­main-ex­per­tise are more likely to be present and to un­der­mine ef­fec­tive de­ci­sion mak­ing:

De­ci­sion-mak­ing groups with a greater COG­NI­TIVE ENTRENCHMENT. pro­por­tion of do­main ex­perts are less likely to rec­og­nize, in­ter­pret, and in­te­grate new in­for­ma­tion or to al­ter their per­spec­tives as the en­vi­ron­ment changes. In the so­lar en­ergy in­dus­try, for ex­am­ple, man­age­ment teams in which the ma­jor­ity of ex­ec­u­tives were do­main ex­perts were found to be less flex­i­ble than other teams in im­ple­ment­ing tech­no­log­i­cal changes to re­spond to en­vi­ron­men­tal shifts.

Con­sis­tent with this find­ing, schol­ars have high­lighted a ten­dency of in­di­vid­ual do­main ex­perts for ‘cog­ni­tive entrenchment’ — that is, a high de­gree of sta­bil­ity in their fram­ing of prob­lems and is­sues. If do­main ex­perts dom­i­nate the col­lec­tive fram­ing and dis­cus­sion of prob­lems and op­por­tu­ni­ties in a de­ci­sion-mak­ing group, this ten­dency for cog­ni­tive entrenchment can make it more dif­fi­cult for the group to rec­og­nize and flex­i­bly re­act to new in­for­ma­tion.

A greater pro­por­tion of do­main ex­per­tise has OVER-CON­FI­DENCE. also been as­so­ci­ated with a higher level of group over-con­fi­dence.

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