Steering committee management. Expertise, diversity, and decision-making structures

Abstract

This paper proposes to analyze how the differences in expertise, diversity, and group decision procedures affect the quality of the strategic decision of steering committees. Strategic decisions are difficult to anticipate, and performances of the alternatives are often not observable in their entirety, which prevent researchers from obtaining controlled empirical studies. This paper proposes to analyze the performance of steering committees where managers can err in their decisions using the Intentional Bounded Rationality (IBR). The majority procedure improves the committee’s performance concerning authority when the level of diversity and expertise increases. However, in situations of low expertise, the gains over authority narrow. This work provides guidance in terms of trade-offs between the mentality of managers, their expertise, group decision procedures, and diversity, which in the empirical works are contradictory. This study contributes to current theorizations of committee management using the IBR methodology, which is new and allows quantifying the contribution of the distinct characteristics of the committee.