This study explores the intriguing case of the “Faroese oil bonanza”, in which a persistent collective belief in the discovery of oil in the subsoil of the Faroe Islands led to the development of a robust oil service sector, even though up until today no commercial amounts of oil have been found. We draw upon performativity theory to examine how the collective oil fantasy evolved from hopeful speculation into a substantive economic force. Our narrative analysis of more than 2,000 news articles as well as 17 expert interviews reveals how collective fantasies about the future can drive organizational change and economic development even when such fantasies are disproven. To theorize our findings, we introduce the concepts of “else-fulfilling prophecies” as well “residual performativity” to explain how debunked fantasies can still produce real-world impacts by fostering conditions for alternative but related developments. Our study advances theoretical understandings of the complex interplay between collective fantasies and corresponding narratives about the future and their performative capacities to shape and alter organizational realities.
