A brief stay in purgatory? Management in Iceland before and after the crash of 2008

• Main Authors: Óladóttir, Ásta Dís, Magnússon, Gylfi
• Format: Article in Journal/Newspaper
• Language: Icelandic
• Published: Research in applied business and economics 2019
• Subjects: Icelandic managers; preference for risk; management strategies; hubris; M10; F21; G31; Íslenskir stjórnendur; áhættusækni; stjórnunarhættir; 2007; hroki og ábyrgðarleysi; Iceland
• Online Access: https://ojs.hi.is/index.php/efnahagsmal/article/view/a.2019.16.2.2

Many Icelandic companies were aggressively managed in the years before the 2008 economic collapse, and their investments kept Iceland at the top of the World Investment Report year after year. “We haven’t finalised a new deal this year; I am getting itchy fingers” was one of the responses observed in the authors’ study before the economic collapse, as Icelandic managers invested more than others and often in larger companies than their own. Ownership of shares in the run-up to the economic collapse was characterised by shareholder leverage. Significant risks meant that owners of listed companies became extremely vulnerable to stock market downturns, as they boldly bet on a rapid increase. This also meant that there was great pressure on those in management, who were required to deliver impressive results in quarterly reports to contribute to an ever-increasing share price. This article investigates whether something has changed since the economic collapse for managers in the Icelandic business sector. The study covered managers in 100 of Iceland’s largest companies. They were asked, amongst other things, whether their methods and the methods of other managers had changed at all since the 2008 economic collapse. There are many studies available on different management styles, methods and characteristics of good management. Studies on the characteristics of and methods employed by Icelandic management in the years before the economic collapse indicated that they had an appetite for risk and were quick to make decisions. Self-confidence was high and managers even appeared impulsive. There was also a lack of long-term policy formulation. This paper examines whether these symptoms are still present today or whether management methods have changed. The analysis shows that managers within the Icelandic business community agree that management methods have changed somewhat and that the fear of mistakes was greater in the business sector right after the economic collapse. Ten years later things are, however, rapidly ...