Crisis? What Crisis? Exploring the Cognitive Constraints on Boards of Directors in Times of Uncertainty

Board-level decision-makers often fail to understand that a crisis is imminent and to proactively interpret environmental stimuli through their cognitive schemas. Directors have a selective perception of the environment, resulting in a filtered and narrowed vision of a crisis; this explains why boards often lack proactivity in crisis detection and response. This study draws on qualitative data from interviews with directors, chairs and CEOs of medium-large companies that were in crisis at the time of the interview or had recently tackled a crisis. We identify three main categories of factors that can hinder directors’ cognitive schemas: individual, collective and hybrid constraints. Our research contributes to the cognitive model in a context of uncertainty, exploring the mechanisms underpinning board passivity during a crisis. This study has implications for both boards of directors, who should re-design the ways in which directors respond during crisis situations, and the policymakers who support this process.