WHAT CORPORATE BOARDS HAVE TO DO WITH STRATEGY: A COGNITIVE PERSPECTIVE*

Traditional research on corporate governance has viewed the contribution of corporate directors to strategy making as limited by their lack of independence or firm‐specific knowledge. To the degree that directors contribute to strategy, most previous research has viewed their role primarily as dealing with the conflict resulting from divergent preferences of agents and principles. The cognitive perspective this paper proposes suggests that directors contribute to dealing with the complexity and uncertainty associated with strategic decisions. It argues that directors possess valuable problem‐solving expertise, which they can apply to a variety of contexts. Directors make their cognitive contributions to strategic decision making by performing along with a firm's managers a set of cognitive tasks: scanning, interpretation and choice.

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