NARCISSISTIC CEOs AND ORGANIZATIONS
THE CASE OF ELIZABETH HOLMES AND THERANOSby
Roy Maljaars
University of Groningen Faculty of Economics and Business
Research Paper for Pre-MSc IB&M (EBS014A10)
2 ABSTRACT
This paper studies whether narcissism played a role in the case about Elizabeth Holmes and Theranos. By focusing on the characteristics and types of narcissistic leaders and organizations, how a narcissistic leader influences an organization, what the effect of narcissistic leaders is on organizational outcomes and how CEO and organizational narcissism can be measured, the central research question – ‘’Was Theranos CEO Elizabeth Holmes a narcissistic leader and Theranos itself a narcissistic organization?’’— was answered. However, the answer to this question is based on preliminary conclusions, as this paper was only focused on designing a research plan. Not executing it. Nevertheless, Elizabeth Holmes and Theranos can be considered as respectively a narcissistic leader and narcissistic organization, as it was observed both Holmes and Theranos excessively displayed a high number of narcissistic characteristics.
Key words: Narcissism, Narcissistic leaders, Narcissistic organizations, Elizabeth Holmes, Theranos
Research theme: Narcissistic CEOs and Organizations
3 TABLE OF CONTENTS
1. Introduction 4
Initial Motive 4
Problem Description and Analysis 4
Central Research Question 5
Method 5
2. Literature Review 7
Narcissism 7
Narcissistic Leaders 8
Narcissistic Organizations 8
Influence Narcissistic Leaders 9
Effects Narcissistic Leaders 10
Identification, Diagnosis and Measurement 11
Case About Elizabeth Holmes and Theranos 12
Elizabeth Holmes 12
Theranos 14
3. Hypotheses 18
4. Research Plan 19
Sample 19
Measurement and Measures 20
Research Design 21
Analysis 22
5. Analysis, Discussion 24
6. Conclusions and Recommendations 25
Conclusions 25
Recommendations 25
Reflection 26
References 27
4 1. Introduction
Initial Motive
Studies focused on chief executive officers – someone who plays the central role inside a top management team (Rijsenbilt, 2011) – are generally focused on the positive sides of these leaders, which is referred to as good leadership (Higgs, 2009). However, in recent years there has been an increasing demand for research focused on bad leadership. In particular, this research is focused on the extent to which narcissism causes bad leadership (Higgs, 2009).
Problem Description and Analysis
The Narcissistic Personality Disorder (NPD) is included in the Diagnostic and Statistical manual of Mental Disorder (DSM). Since narcissism is considered a personality disorder, one would expect it is a negative trait. However, a degree of narcissism is a requirement for any CEO who wants to want to rise to the top with their company (Kleiner, 2010). In contrast, a too high degree of narcissism can result in disastrous consequences for a company (Rijsenbilt, 2011). The fact that narcissism is related to both good and bad leadership makes it interesting for studies. Especially studies focused on bad leadership experienced an increase after companies like Enron and Tyco collapsed (Higgs, 2009). But a more recent case – which is also linked to narcissism and bad leadership – is one about Elizabeth Holmes and Theranos.
Elizabeth Holmes. Holmes – founder and CEO of Theranos – was described as ‘’The
rising star of Silicon Valley.’’ Back in 2003, Holmes dropped out of Stanford University and single handedly came up with Theranos. Nowadays, Holmes is called a narcissistic leader (Khan, 2017), as she named herself the female Steve Jobs, believed her company was the most important thing humanity ever build (Ramsey, 2019) and is now facing up to 20 years in prison – as she is indicted on multiple counts of wire fraud and conspiracy to commit wire fraud. The mentioned facts – which are related to narcissism – make Holmes an interesting case for this paper.
Theranos. With just one single drop of blood, Theranos claimed it could perform over
5 Central Research Question
In order to investigate the subject about Holmes and Theranos, the following research question is formulated:
Was Theranos CEO Elizabeth Holmes a narcissistic leader and Theranos itself a narcissistic organization?
Research Questions
The CRQ can be split up into several research questions. Main topics that can be deduced out of the central research question are based on theory and the case.
Theory questions
1. What is narcissism?
2. What are the characteristics or symptoms, and types of narcissism? 3. What is a narcissistic leader?
4. What is a narcissistic organization?
5. How does a narcissistic leader influence the organization?
6. What are the (short-term and long-term) effects of this influence?
7. How can a narcissistic leader and narcissistic organization be identified, diagnosed and measured?
Case questions
8. Was the founder and CEO of Theranos, Elizabeth Holmes, a narcissistic leader? 9. Was Theranos a narcissistic organization?
The link between the theory and case questions are based on the fact that knowledge about the theory needs to be conducted in order to systematically apply this theory to the case about Holmes and Theranos.
Method
7 2. Literature Review
Narcissism
Definition and description. Formerly, narcissism was seen as a categorical
phenomenon, where one can be classified as ‘normal’ (absence of narcissism) or abnormal (presence of narcissism) (Rijsenbilt, 2011). More recent literature clarified narcissism as a personality trait, where someone has an extreme love for itself and thinks he is the most important (Duchon & Brake, 2009), However, the DSM-IV provides the most common definition regarding the Narcissistic Personality Disorder (NPD); one can be qualified with NPD when an individual displays – in a variety of situations – a high level of grandiosity, along with an excessive need for admiration and lacks empathy (Rosenthal & Pittinsky, 2006).
Characteristics and types. The DSM-IV-TR can be applied to identify the
characteristics of NPD (Motter, 2009), which are categorized into 9 criteria. To qualify as someone with NPD, one must display at least five of the criteria in a variety of situations (Rosenthal & Pittinsky, 2006). The crucial characteristics from these criteria are (1) grandiosity (2) entitlement, (3) lacks empathy and (4) interpersonal exploitativeness (Motter, 2009). Remaining characteristics are (5) an obsession with fantasies of unlimited power, (6) belief in special status, (7) need excessive admiration, (8) envy and (9) arrogance (APA, 2000). Nevertheless, if someone is content with themselves, maintains good relationships with others and can function well – whilst possessing at least five of the aforementioned characteristics – this would not be considered NPD. However, it is considered NPD when an individual possess at least five of these traits whilst it causes distress or impairment.
8 aspects of narcissism are described as destructive (Maccoby, 2000) (Lubit, 2002) and reactive (De Vries, 2004).
Narcissistic Leaders
Narcissism is an important characteristic concerning leadership, since narcissists have strong capabilities when it comes down to exercise power, manipulating others and the drive to possess power (Lubit, 2002). Narcissistic leaders can display both positive and negative behavior, which are referred to as the bright- and dark side of narcissism (Campbell et al, 2011). Bright side behavior generally occurs during the early stages of the tenure from the narcissistic leader, while dark behavior occurs later.
Bright side behavior. A narcissistic leader has charisma, is highly socially skilled and
a visionary who can inspire a large group of followers, which are required characteristics for effective leadership (Rosenthal & Pittinsky, 2006). Narcissistic leaders linked to bright side behavior; possess strategic intelligence (productive narcissist) (Maccoby, 2000), has a solid self-esteem, which secures the feelings of others (healthy narcissist) (Lubit, 2002) and is capable of using their narcissism effectively and can display empathic ability (constructive narcissist) (De Vries, 2004).
Dark side behavior. Narcissistic leaders linked to dark side behavior; lacks strategic
intelligence (destructive narcissist), has a fragile self-esteem, does not respect other people’s feelings, is interpersonally exploitative (destructive narcissist) and is preoccupied with negative emotions like jealousy and revenge and thinks of themselves as most important (reactive narcissist). The saying ‘absolute power corrupts absolutely’ – meaning whenever an individual experiences power over other people, it makes him/her corrupt (Keltner, 2016) – appears to be true for destructive narcissistic leaders, since this type of leaders use their power for self-serving goals, instead of organizational initiatives (Reina et al., 2014).
Heroic leadership. This type is a similar to narcissistic leadership (Higgs, 2009). The
heroic leader is detached and causes disagreement between managers and the rest of the organization (Mintzberg et al., 2002). More specific information regarding this type of leadership will be provided later.
Narcissistic Organizations
9 healthy narcissistic organization (Duchon & Burns, 2008). The last two types are further elaborated in appendix B.
Arrogant organizational disorder. Godkin & Allcorn (2009) translated arrogant
narcissism – which is closely related to NPD – into the arrogant organizational disorder and designed 11 criteria, whereby seven must be present for diagnosis of arrogant organizational disorder. The criteria are (1) exceptional pride is held for the organization, (2) feelings of entitlement that that support the exploitation of others, (3) envy, (4) history of firings, (5) management by intimidation, (6) fear, (7) magical thinking, (8) scapegoating of others, (9) unpredictable mood, (10) leaders prefer to hide out and (11) destructive internal competition. A more detailed explanation of this criteria is given in appendix B.
Influence Narcissistic Leaders
CEOs are largely responsible for the company’s organizational strategy and performance. The level of influence a CEO displays inside executive teams depends on his personal characteristics, whereby narcissism – since its capacity to exercise power and manipulating others – is an important factor (Rijsenbilt, 2011). However, it became clear there is a bright- and a dark side to narcissistic leadership, which is related to positive and negative characteristics. This contradictory relationship helps explain how narcissistic leaders influence organizations (Rosenthal & Pittinsky, 2006).
Strategy. Higgs (2009) argues narcissistic leaders influence the organization through
their strategic actions; they set ambitious goals, initiate more changes and are more likely to make bold moves. Evidence linking this strategic influence to productive narcissism is little as there is more support linking this impact to destructive narcissism (Higgs, 2009). Secondly, Mintzberg et al. (2002) provide evidence on how heroic leaders shift the strategy of organizations they lead to shareholder value. This influence is known for announcing huge strategies, promising great results and increasing stock prices.
Management team (MT). Narcissistic leaders need for domination assures they
surround themselves with lower-status people who have little experience, since they are less likely to disagree. However, narcissistic leaders will also influence the MT by welcoming high-status directors, as they are more likely to influence employees than lower-high-status directors (Chatterjee & Pollock, 2017).
Management style. Narcissistic leaders influence organizations through their
10 taking and seeking sensation. On the productive side, this impulsivity can be useful in high-risk situations, because it involves speed and willingness to take risks. However, this impulsivity is more visible on the destructive side, since these characteristics also means narcissistic leaders will take personal interest over the company’s ones (Campbell et al,. 2011). Moreover, narcissistic leaders influence the process by committing fraud (Rijsenbilt, 2011) and engaging in unsustainable activities (Braun, 2017).
Employees. On the productive side, narcissistic leaders use their social skills to
influence their employees by helping them and creating work group creativity (Campbell et al,. 2011). Their charisma contributes to inspiring employees to progress within the firm (Maccoby, 2000). However, this occurs mostly in situations when it’s convenient to the CEO itself. Therefore, the influence of a narcissistic leader is more visible on the destructive side; they exploit and undercut employees (Lubit, 2002).
Effects Narcissistic Leaders
The influence of a narcissistic leader on the organization has positive and negative effects. The positive effects are often seen in the short term and the negative effects in the long term (Campbell et al., 2011).
Strategy. Higgs (2009) provided empirical evidence that CEO narcissism positively
correlates to strategic dynamism. This strategic dynamism can have a negative effect in the long term. However, Maccoby (2000) states that this negative effect can be minimized when the CEO possesses strategic intelligence. Furthermore, the narcissistic leaders arrogance – in combination with their grandiosity and need for attention – leads them to set high growth targets and larger/overpaid M&A’s. Braun (2017) describes this forward driven and initiating behavior as positive in the short term. However, in the long term the company will suffer from this behavior (Campbell et al., 2011).
Performance. The narcissistic leaders effect on organizational performance depends on
11 makes results in a higher chance of big wins/losses (fluctuating performance) (Higgs, 2009). Lastly, the grandiosity of narcissistic leaders can hurt departments productivity in the long term (Lubit, 2002).
Management style. The narcissistic leaders management style damages internal
organization aspects – like culture and relationships – in the long term (Higgs, 2009). Moreover, their increased fraud propensity results in an unethical climate of the company.
MT. The presence of a narcissistic CEO leads to larger board sizes of organizations and
also more frequent board changes (Rijsenbilt, 2011).
Employees. The short term effect of narcissistic leaders is their ability to influence
others and getting noses in the same direction (Campbell et al., 2011). However, the long term effect is a low morale and motivation of their employees, in combination with unhappiness (O'Reilly et al., 2014). Moreover, narcissistic leaders create a destructive workplace where employees are more focused on surviving and dealing with frustration instead of showing their best work (Lubit, 2002). Furthermore, they ruin the ability of employees of working together productively and drive away the most gifted workers (Higgs, 2009).
Identification, Diagnosis and Measurement
Identification and diagnosis narcissistic leader. The display of at least 5 of the 9
DSM-IV-TR characteristics leads to the qualification of someone with NPD. Therefore, the NPD characteristics can be used for the diagnosis of narcissism present in a CEO.
Measurement narcissistic leader. The Narcissistic Personality Inventory (NPI) can be
used for measurement of the narcissistic CEO. The NPI-40 – which consists of 40 items whereby each item consists of 2 statements; one being a narcissistic and the other being a non-narcissistic – is the most commonly used scale (Campbell & Miller, 2011) and was designed by Raskin and Hall (1979). The NPI-40 is based on the DSM and can serve as a measure to identify the DSM characteristics (Motter, 2009). Moreover, it can be used to determine the amount of narcissistic tendencies an individual has.
12
Identify and diagnosis narcissistic organization. The display of at least 7 of the 11 criteria
from Godkin & Allcorn (2009) leads to the diagnosis of the arrogant organizational disorder. Therefore, these criteria can be used for the diagnosis of narcissism present in an organization.
Measurement narcissistic organization. The Organizational Narcissism Scale (ONS)
can be used for measurement of the narcissistic organization. The ONS – which consists of 34 items whereby each item should be ranked according to the likelihood of it happening – was designed by Hamedoglu and Potas (2012). The ONS is based on Raskin and Terry’s (1988) individual narcissism scale ONS, and includes items from this scale that also find an application on organizations. Moreover, the ONS is based 5 sub-dimensions: Leadership & Authority, self-administration & vanity, anticipation of recognition, grandiosity and exhibitionism.
Case About Elizabeth Holmes and Theranos
The conducted knowledge about narcissistic leadership and organizations will now be systematically applied to the case about Elizabeth Holmes and Theranos, in order to determine whether Elizabeth Holmes can be considered a narcissistic leader and Theranos a narcissistic organization .
Elizabeth Holmes
In order to find evidence whether Elizabeth Holmes can be considered a narcissistic leader, the 9 characteristics from the DSM-IV will be used. Therefore, the characteristics will serve as a checklist.
Grandiosity. Grandiosity and a high level of self-importance are characteristics Holmes
displayed. Holmes wanted to democratize the USA health care system and thought the Minilab1 was the most important thing humanity ever build (Huddleston, 2019). Furthermore, at conferences Holmes declared everyone is witnessing a revolution, created by herself and Theranos (The inventor, 2019). Moreover, by giving herself three different titles (CEO, founder and Chairman) – which is an indication of narcissism (Rijsenbilt, 2011) – Holmes seems to think of herself as highly important.
Fantasies of success. Holmes is expected to have preoccupied fantasies. Reason for believing
this is the fact she kept on lying about the technologies of Theranos, even after the first
13 disclosures about the company – regarding fraud – were made. In addition, Holmes dropped out of Stanford aged 19 with the believe she could build a health sciences research company and change the health care system (Fernández, 2019).
Special status. Part of this characteristic is the association with high-status people. In the case
of Holmes, several people called her the next Steve Jobs, something Holmes embraced. By wearing black turtlenecks (see Appendix A) like Jobs often wore, hiring former Apple employees and repeatedly telling she dropped out of college to pursue her dream – something Jobs also did – Holmes wanted to be associated with Jobs (Watt, 2019). Moreover, Theranos its board – solely chosen and appointed by Holmes – mostly consisted of powerful old men, who used to be military leaders and former secretaries of state (Ramsey, 2019).
Excessive admiration. Profound evidence regarding whether Holmes required excessive
admiration cannot be found. However, Holmes often appeared in the media, by doing several TED-talks or appearing on different magazines, like figure 1 (Appendix A) (Dunn et al., 2019). This exposure – which Rijsenbilt (2011) also describes as a determinant of CEO narcissism – could be an indication of Holmes seeking attention and admiration.
Entitlement. Holmes demanded loyalty from all her employees. If employees started asking
questions about Theranos, Holmes applied a silent treatment (Huddleston, 2019). For instance, Holmes used to put together files about her employees that she could use as leverage.
Exploitativeness. Several examples can be found declaring Holmes exploited others for
personal gain. First, Holmes lied to investors to achieve personal gain (Cardenas, 2019). Moreover, Holmes lied to FDA2 inspectors to get approval for Theranos tests (The inventor, 2019). Second, Holmes persuaded investors – by lying – to invest more than 700 million dollars in Theranos (Cohan, 2018). Every investor believed Holmes her story and did not ask for any financial statements (The inventor, 2019). Holmes used a variety of tactics – like making made intimidating eye contact and using an allegedly affected deep voice – to convince investors (Shorey, 2019). Third – and probably the most convincing argument as Rijsenbilt (2011) provided empirical evidence narcissistic leaders have a higher fraud propensity – Holmes is
14 now facing up to 20 years in prison for counts of wire fraud and conspiracy to commit wire fraud, as a result of being a scam and lying all the time (Carreyrou, 2015).
Lacks empathy. An example of Holmes lacking empathy is the way she acted after an employee
of Theranos committed suicide. Instead of expressing sympathy to the widow, Holmes demanded his papers back (Cohan, 2019). Holmes was also known for firing people ruthlessly (Stieg, 2019) and once said: ‘’I don’t care. We can change people in and out.’’
Envy. Profound evidence regarding envious behavior of Holmes cannot be found. However,
when Theranos got FDA approval, Holmes threw a company party that started with the music: ‘’Can’t touch us’’, which could be an indication of envy against other parties (The inventor, 2019).
Arrogance. Erika Cheung – former Theranos employee and one of the whistleblowers which
lead to the investigation against Theranos – explained Holmes had ‘’so much arrogance around her’’ and wanted everything to be her invention and patent (Stieg, 2019).
Summarizing, Elizabeth Holmes can be considered a narcissistic leader. Reason to conclude on this is the fact she excessively displayed seven out of the nine characteristics from the DSM-IV, which is a sufficient amount for the diagnosis NPD. More specified, Holmes can be considered a grandiose narcissistic leader, as she displayed all the characteristics related to the grandiose narcissist.
Theranos
In order to find evidence whether Theranos can be considered a narcissistic organization, the eleven criteria from Godkin and Allcorn (2009) (see appendix B) will be used. Therefore, the criteria will serve as a checklist.
Exceptional pride. This criterium is one of the reasons investors invested in Theranos without
15
Entitlement. Part of this entitlement is that it supports exploitativeness of others, including
customers (Godkin & Allcorn, 2009). In order to explain this entitlement, three sides need to be explained; (1) the relationship with investors (2) the Theranos-Walgreens partnership and (3) the relationship with patients. First, Holmes told investors Theranos would generate over $100 million in revenue in 2014. The actual revenue in 2014 turned out to be just $100,000 (Tindera, 2018). Moreover, Theranos presented documents to investors with logos of well-known pharmaceutical companies on it, to make it look like those companies were endorsing Theranos (Tindera, 2018). Second, in 2013 Theranos opened Wellness centers in Walgreens stores where patients could perform blood tests. Theranos didn’t gave Walgreens access to its labs, data and devices. Holmes lied to Walgreens from the start claiming Theranos used the miniLab on patients. Eventually, after a WSJ article – which discovered the fraud of Theranos – Walgreens closed every Wellness center and sued Theranos (Kosoff, 2017). Third, the inaccurate blood tests had a major impact on patients, where some patients changed their lifestyle because of the test results (Alltucker, 2019). Instead of helping these patients, Theranos kept lying (Downing Peck, 2018).
Envy. Part of this envy is the willingness of management to do anything to succeed and win
(Godkin & Allcorn, 2009). This willingness was present at Theranos. When WSJ uncovered the scam Theranos actually was, Holmes refused to give up and denied all the claims from WSJ. Combined, Theranos paid about $300 million on legal fees (The inventor, 2019).
Firings. Theranos had a high-turnover rate as people were often fired (Jurkiewicz, 2019).
Furthermore, Chang states resistance was not tolerated. She once said something about the inaccurate tests, but Theranos its response was; ‘’you are not qualified to make such accusations, just keep working’’ (The inventor, 2019).
Intimidation. This criterium was present at Theranos. First, employees described the culture as
16 watching their employees. Chang stated she would send emails to Holmes expressing her dissatisfaction about the tests, but got answers from Balwani3 (The inventor, 2019).
Fear. This criteria was present at Theranos. First, every employee was obligated to sign a
non-disclosure contract (O’Brien, 2018). Second, anyone who visited Theranos headquarters was also forced to sign such a contract (Hartmans & Leskin, 2020). The mentioned examples are indications Theranos was afraid of the public getting to know the actual truth about their tests.
Magical thinking. Part of this criterium is the danger of confronting management with their
contribution to problems (Godkin & Allcorn, 2009). At Theranos, many employees were insecure and too dangerous to confront management as they were afraid to get fired (Jurkiewicz, 2019).
Scapegoating of others. Profound evidence regarding this criterium cannot be found. However,
one occurred incident could be an indication of scapegoating at Theranos; Recently after WSJ published it first allegations against Theranos, FDA approval was received for Theranos its first test. As a result of this approval, Balwani let all Theranos employees shout: ‘’Fuck you’’, targeted at WSJ (Bilton, 2016).
Unpredictable mood. Tyler Shultz – also one of the whistleblowers – described the mood
among employees as fluctuating. He often had no faith in the project. But then he would talk to Holmes and would get a lot of energy to push through (The inventor, 2019).
Leaders prefer to hide out. At Theranos, Holmes hired security guards to make sure no
employee had access to her or Balwani’s office. Moreover, Holmes had bullet proof glass in her office (The inventor, 2019).
Distressing internal competition. At Theranos, Holmes led teams within a department compete
against each other, in order to design the best solution for their products. As a result of this internal competition, employees felt stressed and therefore resigned or got fired (Ying, 2019).
18 3. Hypotheses
Hypotheses are expected outcomes of the research in this paper. Based on the literature review, two sets of hypotheses are created. The two sets of hypotheses are linked to the 7 DSM-criteria Holmes displayed and to the 10 criteria from Godkin and Allcorn (2009) Theranos displayed. One posited hypothesis regarding Holmes and Theranos is presented below. The remaining hypotheses are presented in appendix C.
Hypothesis 1 Elizabeth Holmes:
H1: Holmes was characterized by a more grandiose sense of self-importance.
H0: Holmes does not exhibit this characteristic
Hypothesis 1 Theranos:
H1: Theranos held exceptional pride for their organization
19 4. Research Plan
Before the research plan will be explained, it should be mentioned the plan will not be executed in this research paper. The data collection will be done by a market research company. The research plan is developed under the assumption perfect conditions will exist, meaning both Elizabeth Holmes and Theranos will fully cooperate and pay for the research.
Sample
Population. This study will employ individual-level data that needs to be retrieved from
former Theranos employees in order to test the posited hypotheses regarding Elizabeth Holmes and Theranos. It is assumed former Theranos employees had weekly contact with Holmes and have a sufficient amount of knowledge about the daily operations of Theranos. Hence, this group is expected to serve as the most suitable population to measure both CEO narcissism and organizational narcissism.
The accessible population of this study consist of all former Theranos employees, which is equal to approximately 800 people (Webber, 2019). Theranos its shutdown in 2018 has ensured all former employees have continued their career elsewhere, or are currently unemployed (Fiegerman & O’Brien, 2019). A recent study by Quartz (2019) – focused on the current employment of Theranos alumni – resulted in 804 LinkedIn accounts; 46 were private, 1 was a Holmes parody account and one person had two accounts. The accessible population regarding the posited hypotheses about Holmes and Theranos will therefore consist of 766 (804 minus 48) Theranos alumni.
Sampling frame. The listing of the accessible population will serve as the sampling frame
(Trochim, 2020). The listing of the sampling frame can be done by listing the members of the accessible population or spelling out in detail how this population will be contacted. The listing and contacting of the sampling frame is presented in appendix D.
Method. This study aims at producing results that are representative for the entire population.
20 to collect background information from the accessible population. This background information will collect data like: (1) age, (2) function at Theranos, (3) department at Theranos and (4) job tenure at Theranos. By asking these questions sub-groups can be compared.
Representativeness. By taking a census, a true measure of the population will be provided and
no sampling error will occur (Lavrakas, 2008). Moreover, a census is known as a complete enumeration – a complete count of the population – and will improve representativeness (ABS, 2013). However, a census can be subject to non-sampling errors. A non-sampling error that can occur by using an online based survey is non-response. Nevertheless, this will be overcome by applying imputation – which is a technique of inserting values for missing items on a questionnaire (Lavrakas, 2008).
Measurement and Measures
Procedures. In order to test the posited hypotheses about Holmes and Theranos, data
about CEO narcissism and organizational narcissism is needed. Therefore, an online based survey will be conducted in order to collect data about the NPI and ONS. The survey will contain two existing NPI and ONS questionnaires. The accessible population, thus 766 Theranos alumni, will be included in the survey and will therefore all participate. Appendix D explains how a sufficient response rate to the survey will be assured.
Measures
CEO narcissism. The potential narcissism of Elizabeth Holmes will be measured by the
Narcissistic Personality Inventory (NPI) (Raskin & Terry, 1988). The NPI scale, which consists of 40 items, will be used as a measure to identify the DSM-IV criteria. All 766 Theranos alumni will answer the questions about the NPI focused at Holmes. The total NPI-score of Holmes– including the subscales ones – will be determined by calculating the mean of the participants responses. More detailed information about this measure and the measurement is presented in table 1.
Organizational narcissism. The potential narcissism of Theranos will be measured by
21 determined by calculating the mean of the participants responses. More detailed information about this measure and the measurement is presented in table 1.
TABLE 1
Measures and Measurement
Research Design
This quantitative research is focused on answering a descriptive research question, whereby an online based survey – that contains topics of the narcissistic characteristics and symptoms of a CEO and an organization – will be conducted. This is a non-experimental design. A form of a non-experimental design is a one-shot survey design (Trochim, 2020) – whereby a single group of individuals is selected for a single observation, often because they have experienced an important factor (Kelly, 2011). A one-shot survey design is especially a strong design for descriptive research questions. The aim of the one-shot survey design positions this study best and will therefore be followed.
Measures Definition Measurement Example
CEO narcissism NPI-40 (Raskin & Terry, 1988)
Organizational narcissism
The NPI-40 includes 40 items which all cover the components: Authority, Self-Sufficiency, Superiority, Exhibitionism,
Exploitativeness, Vanity and Entitlement.
The Theranos alumni will be presented with 40 statements, in which they will be forced to make a choice. The statements are presented in pairs, with one pair referring to a narcissistic statement, the other not. If the respondent chooses all 40 narcissistic statements, a score of 40 is achieved. The statements are translated and linked to Holmes.
See appendix E Organizational measurement Scale (ONS) (Hamedoglu & Potas, 2012)
The ONS consists of 34 items and it covers the following sub-dimensions: Leadership & Authority (12 items), self-administration & vanity (6 items), anticipation of recognition (7 items), grandiosity (5 items) and exhibitionism (4 items).
The Theranos alumni will be presented with 34 statements, in which they will be forced to scale each questions, based on Likert. It will be used to measure the extent to which Theranos alumni agree or disagree with a particular statement from the ONS. Each statement will be presented based on the likelihood it occurred at Theranos. The Likert scale will range from ‘’definitely not (1)’’ to ‘’definitely (5)’’. Other scaling options in between are: ‘’probably not’’, ‘’possibly’’ and ‘’probably’’. The statements are translated and linked to Holmes.
22 Analysis
Both descriptive and inferential statistics will be used to analyze the results from the online survey. Descriptives like the mean and median will be studied since they form the basis of quantitative analysis (Trochim, 2020). However, inferential statistics are needed to test the hypotheses. The results from the online based survey will be tested on basis of a One-Sample T-test in SPSS. This test is used to determine whether the mean of the census is statistically different from a population mean (KSU, 2020). The One-Sample T-test will be applied to the two variables of interest:
NPI-40. Raskin & Terry (1988) calculated alpha composite reliability scores of .83, .74,
.80 and .90 for the NPI, whereby a maximum NPI-score – equal to 40 – can be obtained by choosing al 40 narcissistic statements. The results of the NPI-40 will therefore consist of interval data, since each statement can result in either +1 or +0. Additionally, the NPI score has three norms, ranging from (Weiten et al., 2014):
- Low score: 0-13.5
- Medium score: 13.5-20.5 - High score: 20.5-40
The average mean NPI-40 score is equal to 15.3 (Statistics Solutions, 2020), meaning that this value is the known population mean. This population mean will be compared to the observed NPI mean of the online survey, by running a One-Sample T-test. In addition, the NPI-40 manual provides instructions for combining individual item scores into several total dimension scores.
ONS. Hamedoglu & Potas (2012) do not provide a manual on how to indicate scores
per item. Therefore – as was already explained – it is chosen to apply the Likert scale on the
ONS, which consists of ordinal data (answers range from 1-to-5). Furthermore, the ONS is not
provided with a known population mean. Therefore, a hypothetical population mean will be
compared to the observed ONS mean of the online survey, by running a One-Sample T-test.
Table 5 (appendix F) provides an explanation on how the One-Sample T-test will be used to analyze the ONS results from the online survey.
In order to increase representativeness, both NPI and ONS will follow a confidence level of 95% and a significance level of 5%.
23 TABLE 2
Overview Research Activities
What Who Where When How
1 Preparation online based survey (including NPI questionnaire focused at Holmes and ONS questionnaire focused at Theranos) Market research company HQ market research company Beginning of the process Using professional survey software
2 Specify census: listing and contacting Theranos alumni
Market research company HQ market research company After 1 Contacting them on LinkedIn 3 Data collection: sending
online based survey to Theranos alumni (including one reminder) Market research company HQ market research company After 2 (reminder after a week of sending the survey) By email
4 Fill in survey 766 Theranos alumni
Online After 3 Online, by using survey software 5 Analyzing results by performing One-Sample T-Test Market research company HQ market research company After 4 By using SPSS
6 Report writing and presentation
Market research company
24 5. Analysis, Discussion
25 6. Conclusions and Recommendations
Conclusions
Analyzing the concept narcissism, this study has explored whether narcissism played a role in the case about Holmes and Theranos. Drawing from the central research question of this paper — ‘’Was Theranos CEO Elizabeth Holmes a narcissistic leader and Theranos itself a narcissistic organization?’’— it is evident that the results of this paper do not provide a conclusive answer to this question. The reason this paper lacks conclusive findings is due to the fact this paper did not execute a research plan. Therefore, preliminary findings on basis of the literature review are drawn.
By analyzing whether the nine individual narcissistic characteristics – retrieved from the DSM-IV – were present inside Holmes and whether the eleven arrogant organizational disorder characteristics (Godkin & Allcorn, 2009) were present inside Theranos, this paper provided preliminary evidence Holmes and Theranos can be considered as respectively a narcissistic leader and narcissistic organization.
With the display of 8 narcissistic characteristics – given the display of at least 5 out of the 9 characteristics results in the diagnosis of a narcissist (Rosenthal & Pittinsky, 2006) – Holmes displayed high narcissistic behavior. The fact Holmes displayed the characteristics ‘grandiosity’, ‘fantasies of success’, ‘special status’, ‘entitlement’, ‘exploitativeness’, ‘lacks empathy’ and ‘arrogance’ are reasons to conclude Holmes can be considered a narcissistic leader. Moreover, Holmes can be considered a grandiose narcissistic leader, as she displayed all grandiose characteristics.
With the display of 10 narcissistic criteria – given the display of at least 7 out of the 11 criteria results in the diagnosis of arrogant organizational disorder (Godkin & Allcorn, 2009) – Theranos displayed high narcissistic behavior and can be considered a narcissistic organization. The fact that Theranos displayed the criteria ‘exceptional pride’, ‘entitlement’, ‘envy’, ‘firings’, ‘intimidation’, ‘fear’, ‘magical thinking’, ‘unpredictable mood’, ‘leaders prefer to hide out’ and ‘distressing internal competition’ are reasons to conclude Theranos can be considered a narcissistic organization.
Recommendations
26 the implementation of measures – cannot be formulated, since Theranos shut down in 2018. This recommendation is therefore focused on future studies or organizations/other parties interested in this case.
Reflection
A strength of this paper is that it contributes to existing literature on narcissism and its presence inside CEOs and organizations, by differentiating between different types and characteristics of narcissistic leaders and organizations and elaborating on the individual effect of narcissistic leaders on organizations. Additionally, this paper contributes to existing literature on the measurement of narcissism inside individuals and organizations (Raskin & Terry, 1988) (Hamedoglu & Potas, 2012), by differentiating between the NPI and ONS.
27 References
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35 APPENDIX B
TABLE 3
Criteria Arrogant Organizational Disorder (Godkin & Allcorn), 2009
1 Exceptional pride is held for the accomplishments of the organization and great hope is held for the future
2 Exceptional entitlement is held by the organization, which supports exploitativeness of others, including customers
3 Envy and rage arise when the goals of the organization are threatened. A result is that the leader of the organization wants to do anything to succeed. Often triggered by sadism and revenge.
4 History of firings, whereby resistance is seen as a threat. 5 Management by intimidation.
6 Internal feelings of the organization is known by fear.
7 Filtered information flows through the organization and magical thinking is present. 8 Organization frequently scapegoats others.
9 Unpredictable sense of mood within the organization.
10 The leaders of the organization prefer to hide out in their offices. 11 Distressing internal competition.
Other Forms Narcissistic Organization
Extreme narcissistic organization. An extreme narcissistic organizations is (1) highly
absorbed with itself, (2) not capable of ethical and moral behavior and will only implement ethical programs to show the world how modern they are, (3) will do anything to cope with conflict and stress and (4) is not able to act in a justable way because they are only focused on their own anxieties (Duchon & Brake, 2009). Two types of the extreme narcissistic organization can be differentiated; high self-esteem narcissistic organization – which are known for the persuasion they deserve to be successful – and the low self-esteem narcissistic organization – which are known for the persuasion they do not deserve to be successful (Duchon & Brake, 2009).
Healthy narcissistic organization. These kind of organizations are self-confident and
36 APPENDIX C
Hypotheses Elizabeth Holmes
Hypothesis 2:
H1: Holmes was pre-occupied with fantasies of unlimited power and success
H0: Holmes does not exhibit this characteristic
Hypothesis 3:
H1: Holmes believed in a special status
H0: Holmes does not exhibit this characteristic
Hypothesis 4:
H1: Holmes behaviour was characterized by interpersonal exploitativeness
H0: Holmes does not exhibit this characteristic
Hypothesis 5:
H1: Holmes behaviour was characterized by expectations of entitlement
H0: Holmes does not exhibit this characteristic
Hypothesis 6:
H1: Holmes lacked empathy
H0: Holmes does not exhibit this characteristic
Hypothesis 7:
H1: Holmes behaviour was characterized by arrogance
H0: Holmes does not exhibit this characteristic
Hypotheses Theranos
Hypothesis 2:
H1: Theranos behaviour was characterized by feelings of entitlement
37 Hypothesis 3:
H1: Theranos way of working is characterized by envy and rage
H0: Theranos does not exhibit this characteristic
Hypothesis 4:
H1: Theranos has a history of firings
H0: Theranos does not exhibit this characteristic
Hypothesis 5:
H1: Theranos its management way of working is characterized by intimidation
H0: Theranos does not exhibit this characteristic
Hypothesis 6:
H1: Theranos internal processes were suppressed by fear
H0: Theranos does not exhibit this characteristic
Hypothesis 7:
H1: Theranos way of working is characterized by magical thinking
H0: Theranos does not exhibit this characteristic
Hypothesis 8:
H1: The sense of mood within Theranos is unpredictable
H0: Theranos does not exhibit this characteristic
Hypothesis 9:
H1: Theranos its management preferred to hide out
H0: Theranos does not exhibit this characteristic
Hypothesis 10:
H1: Theranos experienced a distressing internal competition
38 APPENDIX D
Contact, listing, response sampling frame
A numerous part of the Theranos alumni can be listed, using the research by Quartz (2019). Table 4 presents the listing of former Theranos employees. The remainder of the former employees can be contacted trough LinkedIn (Webber, 2019).
Surveys on the topic of narcissism can be subject to severe social desirability bias. However, since the census consists of solely former employees, it is expected that the respondents no longer feel any moral obligation towards Elizabeth Holmes or Theranos and will therefore answer questions fairly. Moreover, in order to improve the accuracy of the response rates, the Theranos alumni will be granted the possibility of an anonymous survey (Murdoch et al., 2014).
TABLE 4
Listing Theranos Alumni
Current company Theranos alumni Number of Theranos alumni
Apple 20
Roche 20
Cepheid 14
Alphabet 11
Facebook 11
Thermo Fisher Scientific 10
Amazon 8 Iora Health 8 Microsoft 8 BD 6 Verb Surgical 6 Illumina 5
Maricopa Integrated Health Systems 5
Tesla 5
Uber 5
Other companies 419
Self-employed 36
Currently unemployed 59 Currently working at Theranos (according to LinkedIn)
110
39 APPENDIX E
Example Questions Online Based Survey
NPI. ‘’Elizabeth Holmes really liked to be the center of attention at Theranos’’ vs ‘’Elizabeth
Holmes felt uncomfortable to be the center of attention at Theranos’’
40 APPENDIX F
One-Sample T-test ONS
TABLE 5
One-Sample T-Test ONS
Measure Hypothesized population mean Observed census mean
ONS As was explained in table 1, the outcomes of the answers of the ONS questionnaire are numbered 1-to-5. This means the minimum score is equal to 34 (34 items x 1) and the maximum score is equal to 170 (34 x 5). The average score is equal to a respondent choosing the neutral answer 34 times (34 x 3= 102 ). Therefore, the hypothesized population mean will be equal to 102, suggesting any score above this population mean leads to the suggestion of a narcissistic organization. Moreover, a distinction can be made for the sub
dimensions of the ONS, by calculating the hypothesized population mean for the sub-dimensions.
