Double Trouble: Sibling Rivalry and Twin Organizations in the 2008 Credit Crisis

Published date01 April 2015
Date01 April 2015
DOIhttp://doi.org/10.1111/1467-8551.12072
Double Trouble: Sibling Rivalry and Twin
Organizations in the 2008 Credit Crisis
Mark Stein
School of Management, 604 Ken Edwards Building, University of Leicester,
University Road, Leicester LE1 7RH, UK
Email: ms553@le.ac.uk
The purpose of this paper is to introduce and explore the novel idea of highly similar ‘twin
organizations’. Drawing on psychoanalytic theory in his formulation, the author argues
that the closeness of organizational identities in twin organizations may lead to increased
rivalry, narcissism and a tendency for greater risk-taking and vulnerability. Four of the
biggest casualties of the 2008 credit crisis – two UK banks (HBOS and RBS) and two
large US financial institutions (Fannie Mae and Freddie Mac) – are used to illustrate this
conceptual development. The contribution of this paper is fivefold. First, this paper
contributes the theoretical innovation of the idea of twin organizations to the organiza-
tion studies literature. Second, it casts a fresh light on four of the organizations that got
most deeply into trouble in the credit crisis. Third, it contributes to other areas of
organizational scholarship, specifically the theory of risk and the theory of organiza-
tional identity. Fourth, this paper acts as a warning by identifying similar phenomena in
the ongoing Eurozone crisis, and fifth, it contributes to the understanding of risk-
management practice and organizational consultancy.
Introduction
This paper makes a new contribution to the field
of organization studies by proposing and explor-
ing the idea of highly similar ‘twin organiza-
tions’. At the core of the paper lies the idea that
twin organizations may find that each other’s
very existence constitutes an assault on their own
pride and unique sense of identity, and, in
responding to this, may be impelled towards nar-
cissism and to establish identities that expose
them to unnecessary risk. The theoretical inno-
vation of the concept of twin organizations is
illustrated by reference to certain of the organi-
zations that got most deeply into trouble in the
2008 credit crisis. As well as contributing a new
idea to organization studies, and also a new angle
on some of the largest casualties in the 2008
credit crisis, this paper makes a contribution to
the theory of organizational risk, because it sug-
gests that the ‘incubation period’ (Turner, 1976;
Turner and Pidgeon, 1997) of risk in such organi-
zations reaches back as far as the act of their
creation, which, together with more recent
events, may propel them towards collapse.
Further, by proposing that – in trying to create
unique and special identities – twin organizations
may be inclined to engage in high-risk behaviour,
this paper contributes to the theory of organiza-
tional identity. This paper also makes a contri-
bution by examining prima facie evidence that
similar problems have played a role in the Euro-
zone crisis. Finally, this paper has practical
implications for those engaged in risk-
management practice, and also for those consult-
ing to organizations.
The author would like to thank Angela Foster, William
Halton, Antje Netzer-Stein, Branka Pecotic and Lionel
Stapley for their comments on earlier drafts of this paper.
He is also very grateful to Ross Lazar for many conver-
sations around these matters, and to Professor Monika
Kostera and the reviewers for their helpful feedback. The
responsibility for the ideas expressed in this paper is
entirely the author’s.
© 2014 British Academy of Management. Published by John Wiley & Sons Ltd, 9600 Garsington Road, Oxford OX4
2DQ, UK and 350 Main Street, Malden, MA, 02148, USA.
British Journal of Management, Vol. 26, 182–196 (2015)
DOI: 10.1111/1467-8551.12072

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