Diversity in command

Corporate Boards that tap into a diversity of sources for information can be expected to make better decisions. Diversity in a team and a board can, however, also impede team performance, recent work we presented in Management Decision points out.

Measuring the diversity of boards in four different ways, two of which are person-related (age and gender) and two information-based (education and tenure), we analyze which kind of diversity ensures that the firm governed by a board will invest more R&D.

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We find, unexpectedly, that tenure diversity leads to firms being less innovative, while education diversity and gender diversity make firms more innovative. Why? Find out more here.

Dolfsma, W. Midavaine, J. & Aalbers, H.L. (2016). Board Diversity and R&D Investment.Management Decision.

 

Democratic decision making? When online platforms matter (and do not matter)

Based on our experience working with 30 companies in the United States and Europe, we recently concluded that some, but not all, types of decisions benefit from democratization.

Enabled by enterprise social software (ESS), online corporate communities are shaking up the management world by revolutionizing many core organizational activities. Indeed, by creating new channels of interaction among employees, customers and the managerial echelons, ESS solutions such as Yammer, Jive and Chatter are even democratizing the decision-making process. Many prominent companies see this as a good thing

In a recent study published by the Ivey Business Journal, the key to effectively deploying ESS is understanding that online corporate communities offer different value propositions to different types of decisions. The study raises awareness of the perils associated with decision democratization and to help managers identify the conditions in which ESS platforms complement the decision-making process and those conditions in which online communities fall short in making a true contribution to decision making.

Simply put, our research indicates that there is no question that the power of enterprise social software should indeed be exploited for some intra-firm decision making, but that companies need to be very wary of democratizing the strategic decision-making process. Check out the paper in detail for a framework to discuss the optimum role of ESS platform functionality for three different types of decision making: operational, tactical and strategic.

Aalbers, H.L., Whelan, E., Parise, S., & Vialle, C. (2016). The Perils of Democratic Decision Making. Ivey Business Journal, Jan/Feb issue