Groupthink in the Boardroom - The Good, the Bad and the Ugly

Abstract

In this paper, I look at the psychological phenomenon of groupthink in a corporate setting. Group dynamics and the study thereof can significantly contribute to understanding the decision-making in corporate boards of directors. This paper portrays the multiple facets groupthink has. It shows that strong cohesion inside the boardroom does not necessarily entail inaptitude of the board to function well, however, it also demonstrates that groupthink has contributed to the greatest corporate scandals of the last decades. It concludes that groupthink has the ability to significantly impair good corporate governance and as such should be subject to enhanced scrutiny by regulators.

Keywords: groupthink, board of directors, boardroom, corporate governance, governance