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

Abstract

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 organization 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 organizational 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.

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