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In this article I interpret 150 years of financial history with a focus on shifts in the role of finance in society. I argue that over time the role of finance has shifted twice from that of servant to that of master of society, and that this process has been driven by sense making through narratives that legitimized and shaped these changes. When finance became a master rent seeking, cultural capture and out-of-control financial innovation resulted in financial and social instability. Finance as a master was the characteristic of finance capitalism from around 1900–1931 and of financialization from around 1980 to today. Finance capitalism and financialization were enabled by a dominant narrative that legitimized the power of finance. The shifts in the role of finance happened when crises undermined the meaning of the existing narrative and created for a new narrative able to make sense of the crisis and point society in a new direction. This sense-making process stabilized when a new narrative was established that could explain the crisis and legitimize and shape a new role for finance. The article is based on my presidential address presented at the Business History Conference's annual meeting in March 2014 in Frankfurt.

In this paper I discuss a dramatic financial collapse and scandal in Denmark in the interwar period. I analyze the asset price bubble from 1914 to 1920 and the subsequent failure in 1922 of Scandinavia's largest bank, the Danish Landmandsbanken, as well as the downfall of its CEO Emil Glückstadt. I discuss the sense-making process, first during the bubble and then following Landmandsbanken's collapse and Glückstadt's fall from power in 1922, and finally until the introduction of a new bank act in 1930. I further argue that such crises and scandals force contemporaries to make sense of the dramatic fall from the top of society of these icons and of their role in the collapse of their banks. I view the sense-making process as centered on the construction of narratives that explain the crisis and enable or constrain institutional response to the crisis. To conclude, I argue that the process of sense-making in the case of Landmandsbanken can be generalized as the way in which society enforces norms and values in cases of dramatic financial crisis and scandal.

In this article, I argue that organizations' historical narratives are a basic and important component of their culture and identity, and that these narratives can be resources as well as constraints. I combine a narrative approach with Joanne Martin's three perspective theory of organizational culture, and using the transformation of Danish savings banks as a case, I demonstrate how a narrative approach can provide a new and better understanding of organizational behaviour and change than mainstream economics and the abundant functionalist organizational culture literature. I demonstrate how, when change was called for by external pressures, the savings banks choice set was constrained by a shared narrative about their historical origins. This narrative, in turn, constituted the identity, image and organizational culture of savings banks and to a high degree restrained learning capabilities, created organizational inertia and delayed the adoption of a new strategy.

Histories of the rising popularity of Danish modern furniture in both Denmark and the United States have traditionally ascribed its success to the inherent beauty of Danish design. This article argues that Danish modern furniture succeeded for two other reasons. First, through the creation of powerful narratives, or stories, that framed the way consumers made sense of this furniture; and, second, through the calculated development of a network of individuals and organizations whose goal was to promote and legitimize these narratives.

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