Unbounded Irrationality: Risk And Organizational Narcissism At Long Term Capital Management  

Oleh:

Stein, Mark

Jenis: Article from Journal - ilmiah internasional
Dalam koleksi: Human Relations vol. 56 no. 5 (May 2003), page 523–540.
Topik: collapse; irrational; narcissism; organization; psychoanalysis; risk
Fulltext: 523.pdf (121.56KB)

Isi artikel

This article focuses on the near collapse of the highly prestigious hedge-fund Long Term Capital Management (LTCM) in September 1998, causing widespread fears that its demise may lead to global financial meltdown. Explanations pivoting on the idea of bounded rationality – that rationally functioning organizations may collapse because of a lack of information or the capacity to process such information – are found not to apply. The article postulates the irrational functioning of LTCM, and proposes a psychoanalytic theory of organizational narcissism as a means of explanation. This theory comprises well-explored themes of organizational narcissism such as hubris, omnipotence and omniscience, as well as newer themes of contempt, triumph, and the embeddedness of narcissism in the organization’s socio-technical system. The article concludes by examining these ideas in relation to other theories of risk as well as the implications for practice.

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