HOW CAN ORGANIZATIONS SAFEGUARD THEMSELVES AGAINST EXCESSIVE RISK TAKEN BY NARCISSISTIC CEOS

HOW CAN ORGANIZATIONS SAFEGUARD THEMSELVES
AGAINST EXCESSIVE RISK TAKEN BY NARCISSISTIC CEOS

May 2013
(net word count: 3.226)

by

QIAN CHEN
MARK ELSMA
FENNA PIERSEMA
JAN ROELAND
University of Groningen
Faculty of Economics and Business

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TABLE OF CONTENTS

1

INTRODUCTION ............................................................................................................. 3

2

ANALYSIS ......................................................................................................................... 8

3

RECOMMENDATIONS & CONCLUSIONS .............................................................. 13

4

REFERENCES................................................................................................................. 16

APPENDIX A.......................................................................................................................... 20

ABSTRACT
According to several sources, narcissistic CEOs can negatively influence organizational performance and even lower survival chances because narcissistic
CEOs usually engage in higher level of risk-taking behaviors than non-narcissistic
CEOs.
This paper examines the narcissist mechanism and interaction with the environment.
Based on the model we will give recommendations on how to positively influence narcissistic effects on the performance and survival of organizations are also provided by our studies.

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1

INTRODUCTION

In 1998, the once very successful Long-Term Capital Management (LTCM) hedge fund management firm required recapitalization by 16 financial institutions under the supervision of the United States’ Federal Reserve System (Greenspan, 2007: 194). The firm had gone under primarily due to excessive risk-taking behaviour and due to not considering warning signs in the environment as a threat to the company itself, but more as the weakness of others. Both causes come forth from narcissism in the organization.

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