Many large companies have a corporate parent and multiple subsidiary units. The financial logic for why these firms exist is so that knowledge and skills that reside in one unit can be used in another unit.

However, research published recently in the Strategic Management Journal, revealed that certain personality traits of executives - specifically narcissism - impedes the desired flow of information.

Narcissism affects people’s desire to be distinctive. It’s correlated with people wanting glory for themselves. The researchers hypothesized that narcissistic business-units would be the ones to say, ‘We don’t want to work with you. We have sufficient skills, knowledge and abilities that we will work independently.’” And that hypothesis was strongly confirmed in the course of the research.

The researchers surveyed business units of a headhunting company in China that helps organizations recruit talent and search for technical personnel. To be truly effective, these units must share knowledge about building talent pools, identifying skills and persuading prospects to accept offers.

The researchers asked business unit heads to rate, among other factors, their own narcissistic traits, the environmental complexity of the local market and their perceived competition with other units. Then, the researchers asked deputies of the unit heads to rate the level of knowledge imported from other units.

Narcissism was measured using the 16-item, self-report Narcissistic Personality Inventory scale, which presents pairs of statements and asks individuals to select the one that best describes them. One illustrative pair consists of, “I like to be the center of attention” versus, “I prefer to blend in with the crowd.”

The study confirmed that unit-head narcissism tended to prevent knowledge sharing. However, that tendency diminished in fast-changing or complex environments because narcissists had an excuse to pursue external ideas. But, when businesses have high inter-unit competition, narcissists are more tempted to distinguish themselves from other units and therefore restrict information sharing.

The research has multiple implications for companies. For example, when filling roles that require knowledge sharing, managers might watch for signs of narcissistic personality traits. Companies could also work to implement an organization and reward structure which explicitly encourages cooperation among current personnel.

The researcher argues that if you create competition rather than cooperation inside an organization, it is likely to mean foregoing some essential knowledge-sharing activities.