From Goleman’s Social Intelligence, pp 120-121:
Unhealthy narcissists typically lack a feeling of self-worth; the result is an inner shakiness that in a leader, for example, means that even as he unfurls inspiring visions, he harbors a vulnerability that closes his ears to criticism. Such leaders avoid even constructive feedback, which they perceive as an attack. Their hypersensitivity to criticism in any form means that narcissistic leaders don’t seek out information widely; rather, they selectively seize on data that supports their views, ignoring disconfirming facts. They don’t listen but prefer to preach and indoctrinate.
An entire organization can be narcissistic. When a critical mass of employees share a narcissistic outlook, the outfit itself takes on those traits, which become standard operating procedures.
Organizational narcissism has clear perils. Pumping up grandiosity, whether it is the boss’s or some false collective self-image held throughout the company, becomes the operating norm. Healthy dissent dies out. And any organization that is cheated of a full grasp of truth loses the ability to respond nimbly to harsh realities.