This is the author's final draft of the paper published as International Studies of Management and Organization, 2001, 31 (2), pp.9-27. Further information available on the publisher's website: www.mesharpe.com.Transformation processes are historical times which differ considerably from the normal course of events. As societal and group identities crumble or break down, it becomes difficult for the individual actor to retain a reference structure on which to base rational action. In consequence, actions in transformation phases often seem irrational and confused. The article argues that this perception is incorrect and should be substituted by the concept of mythical thinking as developed by Claude Lévi-Strauss. Mythical thinking is a different, but not inferior mode of thinking which moves to the fore when rational thinking is not an adequate or even possible reaction. Using empirical materials from East-German enterprises, the article shows how the concept can improve the researcher’s understanding of managerial action in transformation times and explain hitherto „irrational“ elements in people’s accounts
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