Making sense of board effectiveness: a socio-cognitive perspective

Purpose - This paper aims to investigate a team dynamics based approach to assess board effectiveness, namely the interplay between boardroom decision-making processes and the board members' cognitive mental models. Design/methodology/approach - A socio-cognitive perspective is utilized for analyzing board processes and determining board effectiveness. Utilizing the concepts of team mental models and sensemaking, a theoretically grounded model of board effectiveness is developed, wherein the propositions predict the causality and effect of the socio-cognitive and sensemaking processes on board effectiveness. Findings - The proposed model is able to analyze the relationship among the different decision-making processes and members' cognitive models as determinants of board effectiveness, wherein the board's decision making process mediates the board's cognitive model-effectiveness relationship, while the board's cognitive model moderates the decision process-effectiveness relationship. Research limitations/implications - The conceptual model advances a rationale that might explain the mixed or modest findings in literature on the relationship between board demographics, dynamics and effectiveness. Practical implications - The model allows practitioners and policy makers an alternative mechanism to assess board effectiveness, that is able to not only integrate the demographic, diversity and dynamics related measures, but also enables a clear understanding of the cognitive influences on board decision making and effectiveness. Originality/value - The conceptual model encompasses most of the relevant constructs and findings of previous studies and offers a parsimonious yet holistic understanding of the boardroom mechanisms that might determine board effectiveness.