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Decision making dynamics in corporate boards


Battiston, Stefano; Bonabeu, Eric; Weisbuch, Gérard (2003). Decision making dynamics in corporate boards. Physica A: Statistical Mechanics and its Applications, 322:567-582.

Abstract

Members of boards of directors of large corporations who also serve together on an outside board, form the so-called interlock graph of the board and are assumed to have a strong influence on each others’ opinion. We here study how the size and the topology of the interlock graph affect the probability that the board approves a strategy proposed by the Chief Executive Officer. We propose a measure of the impact of the interlock on the decision making, which is found to be a good predictor of the decision dynamics outcome. We present two models of decision making dynamics, and we apply them to the data of the boards of the largest US corporations in 1999.

Abstract

Members of boards of directors of large corporations who also serve together on an outside board, form the so-called interlock graph of the board and are assumed to have a strong influence on each others’ opinion. We here study how the size and the topology of the interlock graph affect the probability that the board approves a strategy proposed by the Chief Executive Officer. We propose a measure of the impact of the interlock on the decision making, which is found to be a good predictor of the decision dynamics outcome. We present two models of decision making dynamics, and we apply them to the data of the boards of the largest US corporations in 1999.

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Additional indexing

Item Type:Journal Article, refereed, original work
Communities & Collections:03 Faculty of Economics > Department of Banking and Finance
Dewey Decimal Classification:330 Economics
Scopus Subject Areas:Physical Sciences > Statistics and Probability
Physical Sciences > Condensed Matter Physics
Scope:Discipline-based scholarship (basic research)
Language:English
Date:1 May 2003
Deposited On:01 Sep 2023 09:13
Last Modified:29 Jun 2024 01:38
Publisher:Elsevier
ISSN:0378-4371
OA Status:Closed
Publisher DOI:https://doi.org/10.1016/S0378-4371(02)01930-1
Other Identification Number:merlin-id:10157