Crisis Management

376 Pages·2008·2.929 MB·English

by  Arjen Boin (Ed)

Crisis Management
ii contents
SAGE LIBRARY IN BUSINESS & MANAGEMENT
Crisis Management
VOLUME II
Edited by
Arjen Boin
Introduction and editorial arrangement © Arjen Boin 2008
First published 2008
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Contents
VOLUME II
Part II: Challenges of Crisis Management (Continued)
22. Reframing Crisis Management Christine M. Pearson and Judith A. Clair 1
23. Toward a Systemic Crisis Management Strategy: Learning from the
Best Examples in the US, Canada and France Thierry C. Pauchant, 25
Ian I. Mitroff and Patrick Lagadec
24. Disaster Crisis Management: A Summary of Research Findings 45
E.L. Quarantelli
25. Working in Practice but Not in Theory: Theoretical Challenges of
“High-Reliability Organizations” Todd R. LaPorte and 57
Paula M. Consolini
26. State Behavior in International Crisis: A Model Michael Brecher 82
27. Crisis Simulations: Exploring Tomorrow’s Vulnerabilities and Threats 109
Arjen Boin, Celesta Kofman-Bos and Werner Overdijk
28. Bridging the Two Cultures of Risk Analysis Sheila Jasanoff 123
29. Homeland Security Warnings: Lessons Learned and Unlearned 133
Benigno E. Aguirre
30. Blindsided? September 11 and the Origins of Strategic Surprise 142
Charles F. Parker and Eric K. Stern
31. Governing by Looking Back: Historical Analogies and Crisis
Management Annika Brändström, Fredrik Bynander and Paul ’t Hart 168
32. Toxic Fear: The Management of Uncertainty in the Wake of the
Amsterdam Air Crash Arjen Boin, Menno van Duin and Liesbet Heyse 187
33. Some Consequences of Crisis Which Limit the Viability of
Organizations Charles F. Hermann 210
34. Crisis Decision Making: The Centralization Thesis Revisited 225
Paul ’t Hart, Uriel Rosenthal and Alexander Kouzmin
35. Experts and Decision Makers in Crisis Situations Uriel Rosenthal and 250
Paul ’t Hart
36. Designs for Crisis Decision Units Carolyne Smart and Ilan Vertinsky 267
vi contents
37. Indicators of Stress in Policymakers during Foreign Policy Crises 286
Margaret G. Hermann
38. The Nature and Conditions of Panic E.L. Quarantelli 309
39. Organizational Adaptation to Crises: Mechanisms of Coordination
and Structural Change Russell R. Dynes and B.E. Aguirre 320
40. The Bureau-Politics of Crisis Management Uriel Rosenthal, 326
Paul ’t Hart and Alexander Kouzmin
41. Contingent Coordination: Practical and Theoretical Puzzles for 348
Homeland Security Donald F. Kettl
22
Reframing Crisis Management
Christine M. Pearson and Judith A. Clair
Source: Academy of Management Review, 23(1) (1998): 59–76.
During the past dozen years, many scholars have conducted conceptual and
empirical studies on the topic of large-scale organizational crises (e.g.,
Lagadec, 1990, 1993; Mitroff, Pauchant & Shrivastava, 1988; Pearson &
Mitroff, 1993; Perrow, 1984; Roberts, 1990; Schwartz, 1987; Shrivastava, 1993;
Weick, 1988). Understandably, as with many new areas of research, these studies
lack adequate integration with one another (Shrivastava, 1993). The cross-
disciplinary nature of organizational crises particularly has contributed to this lack
of integration (Shrivastava, 1993). Specifi cally, organizational crises inherently are
phenomena for which psychological, social-political, and technological-structural
issues act as important forces in their creation and management (Pauchant &
Douville, 1994). Because the study of organizational crises involves multiple
disciplines, researchers believe that crises must be studied and managed using
a systems approach (Bowonder & Linstone, 1987; Pauchant & Mitroff, 1992).
In other words, researchers believe that psychological, social-political, and
technological-structural issues should be explicitly considered and integrated
when studying and managing organizational crises.
Some scholars, in their studies, explicitly embrace a multidisciplinary approach
(e.g., Fink, Beak, & Taddeo, 1971; Mitroff et al., 1988; Shrivastava, Mitroff,
Miller, & Miglani, 1988; Staw, Sandelands, & Dutton, 1981). Many others, how-
ever, analyze the causes, consequences, and management of organizational crises
from a single disciplinary frame (Shrivastava, 1993). The result is a “Tower of
Babel” effect, where “there are many different disciplinary voices, talking in dif-
ferent languages to different issues and audiences” (Shrivastava, 1993: 33) about
the same topic: organizational crises. We assert that this lack of integration has
kept research on organizational crises at the periphery of management theory.
To take a needed step toward a multidisciplinary approach to the study of or-
ganizational crises (Lagadec, 1993; Pauchant & Douville, 1994; Roberts, 1993;
Shrivastava, 1993), we illustrate, in this article, alternative views on organiza-
tional crises when psychological, social-political, and technological-structural
research perspectives are brought to bear. Our discussion of these perspectives
is not meant to be a catalog of all research within each domain; rather, using
perspectives from these domains, we build defi nitions of “organizational crisis” and
“crisis management,” and we develop a comprehensive model of the crisis man-
agement process that refl ects psychological, social-political, and technological-
structural assumptions.
By fusing and expanding on contributions from these three perspectives, our
framework offers opportunities for modeling, testing, and integrating lessons
relevant to crisis management. For those involved in crisis management research, we
2 challenges of crisis management
offer a conceptual framework that strives for comprehensiveness, as well as a
series of propositions grounded in multiple perspectives on organizational crises.
For those most interested in practice, we believe that our framework captures a
systemic, “big picture” approach that would be useful in championing, planning,
and implementing crisis management efforts.
We have organized the article as follows. First, we review defi nitions of organ-
izational crisis and crisis management implied from organizational and manage-
ment theory research. We then discuss research grounded in psychological,
social-political, and technological-structural perspectives as relevant to the topic
of organizational crisis management. Next, we use the assumptions guiding
these three perspectives to propose defi nitions of organizational crisis and crisis
management and to develop a multiple perspective model of the crisis manage-
ment process, as well as research propositions. Finally, we discuss implications
for practice and opportunities for future research.
Defi nitions of Organizational Crisis and Crisis Management
from a Management Theory Perspective
As an introduction to the nature of organizational crises, we provide, in Table 1,
examples of the variety of types of crises that can impact organizations. This
array of types suggests the breadth of organizational vulnerabilities. Although
the types of crises in Table 1 seem to differ substantially, like all organizational
crises, they share a number of common elements.
Table 1: An array of organizational crises
(cid:129) Extortion (cid:129) Bribery
(cid:129) Hostile takeover (cid:129) Information sabotage
(cid:129) Product tampering (cid:129) Workplace bombing
(cid:129) Vehicular fatality (cid:129) Terrorist attack
(cid:129) Copyright infringement (cid:129) Plant explosion
(cid:129) Environmental spill (cid:129) Sexual harassment
(cid:129) Computer tampering (cid:129) Escape of hazardous
(cid:129) Security breach materials
(cid:129) Executive kidnaping (cid:129) Personnel assault
(cid:129) Product/service boycott (cid:129) Assault of customers
(cid:129) Work-related homicide (cid:129) Product recall
(cid:129) Malicious rumor (cid:129) Counterfeiting
(cid:129) Natural disaster that disrupts a major (cid:129) Natural disaster that destroys corporate
product or service headquarters
(cid:129) Natural disaster that destroys (cid:129) Natural disaster that eliminates key
organizational information base stakeholders
Specifi cally, organizational crises are believed (1) to be highly ambiguous
situations where causes and effects are unknown (Dutton, 1986; Quarantelli, 1988);
(2) to have a low probability of occurring but, nevertheless, pose a major threat to
the survival of an organization (Jackson & Dutton, 1987; Shrivastava et al., 1988)
and to organizational stakeholders (Shrivastava, 1987); (3) to offer little time to
respond (Quarantelli, 1988); (4) to sometimes surprise organizational members
(Hermann, 1963); and (5) to present a dilemma in need of decision or judgment that
will result in change for better or worse (Aguilera, 1990; Slaikeu, 1990). We can
consolidate these elements into a defi nition of an “organizational crisis” as viewed
from the perspective of management research to date.
pearson and clair (cid:132) reframing crisis management 3
An organizational crisis is a low-probability, high-impact event that threatens the
viability of the organization and is characterized by ambiguity of cause, effect, and
means of resolution, as well as by a belief that decisions must be made swiftly.
We turn now to the defi nition of crisis management found in the manage-
ment literature. As asserted by Gephart (1984), some researchers advocate a
perspective that crises can be recurrent and nonpreventable (e.g., Perrow, 1984),
whereas others focus on identifying ways to manage or avert organizational
crises (e.g., Meyers, 1986; Pauchant & Mitroff, 1992; Pearson & Mitroff, 1993;
Roberts, 1989). Given the depth and breadth of losses that typically accompany
organizational crises, it is unrealistic to defi ne as effective only those efforts that
pull an organization unscathed through such events. Conversely, simply surviv-
ing a crisis may not be a suffi ciently stringent criterion for success. Between these
two extremes, we suggest the following criteria for effective crisis management.
Crisis management efforts are effective when operations are sustained or resumed
(i.e., the organization is able to maintain or regain the momentum of core activities
necessary for transforming input to output at levels that satisfy the needs of key
customers), organizational and external stakeholder losses are minimized, and
learning occurs so that lessons are transferred to future incidents.
Although researchers have suggested criteria for judging crisis management
effectiveness (Mitroff & Pearson, 1993), differentiating effective from ineffective
crisis management has been more diffi cult in practice. The now infamous Exxon
Valdez incident provides a case in point. Some fi nancial analysts could claim that
Exxon’s efforts were successful in that the fi nancial costs incurred were manageable
for Exxon (Nulty, 1990) and that the costs of fi xing the crisis were less than what
might have been spent in crisis management preparations (such as investing in
double-hulled vessels throughout the fl eet, conducting ongoing fi tness evaluations
for those in command, and endorsing and underwriting extensive preparations for
containment of incidents within Prince William Sound). But, from the perspec-
tive of many who study organizational crises, Exxon failed: warning signals were
ignored; plans and preparations for such an event were substandard, and public
statements made by Exxon’s CEO Rawl riled stakeholders. Media coverage
indicated Exxon’s general unwillingness to learn from the crisis, as might other-
wise have been demonstrated by changes in attitudes or behaviors (Browne, 1989;
Deutsch, 1989; Fortune, 1989; Goodpaster & Delehunt, 1989; Susskind & Field,
1996). Thus, the Exxon case contains elements of success and failure.
As a counterpoint to Exxon’s handling of the Valdez incident, Johnson &
Johnson’s management of Tylenol tampering events were highly successful,
reinforcing the company’s reputation for integrity and trustworthiness (Mitroff,
Pearson, & Harrigan, 1996). But, given the imperfection of human systems, some
plans or procedures during the management of the incidents failed. A perpetrator,
for example, was never identifi ed.
We will discuss further the complexities of judging crisis management success
and failure in practice when we describe our model. Now, using the research cited
above, we offer the following defi nitions of “crisis management” and “crisis manage-
ment effectiveness” that are currently suggested in the organizational literature.
Organizational crisis management is a systematic attempt by organizational
members with external stakeholders to avert crises or to effectively manage those
that do occur.
4 challenges of crisis management
Organizational crisis management effectiveness is evidenced when potential crises
are averted or when key stakeholders believe that the success outcomes of short- and
long-range impacts of crises outweigh the failure outcomes.
These defi nitions can be improved by explicitly capturing perspectives on crises
in the literature from other disciplines. Below, we summarize components derived
from these perspectives, as well as use them to propose a more complete defi nition
of organizational crisis and crisis management.
Psychological, Social-Political, and Technological-Structural
Perspectives on Crisis
Organizational crisis researchers already have incorporated some facets of the
psychological, social-political, and technological-structural perspectives. However,
these perspectives typically have not been considered jointly. Further, there is a
lack of common, explicit agreement about the nature and meaning of crisis even
within each of these three disciplinary perspectives. The following discussion,
therefore, represents our contribution toward a synthesis and interpretation of
the various literature regarding its applicability to the topic of organizational
crisis. We have made diffi cult choices about which perspectives within the various
disciplines to pursue, concentrating our analysis on perspectives that are most
relevant to the management literature. Some of these perspectives have not been
considered by crisis management researchers and, therefore, represent an addi-
tional contribution to the fi eld.
To make our analysis more systematic and to facilitate our cross-comparisons
between and among the three perspectives discussed below, we apply the “4Cs”
framing proposed by Shrivastava (1993). This frame suggests that crisis studies
can focus on four key aspects of crises: “causes,” “consequences,” “caution,” and
“coping.” Causes “include the immediate failures that triggered the crisis, and the
antecedent conditions that allowed failures to occur” (Shrivastava, 1993: 30).
Consequences are the immediate and long-term impacts. Caution includes the meas-
ures taken to prevent or minimize the impact of a potential crisis. Finally, coping
comprises measures taken to respond to a crisis that has already occurred. Through
the 4Cs frame, we highlight the similarities and differences among these views,
and we integrate them into the assumptions of our crisis management model.
Psychological Views on Crisis
[T]he crisis cannot be separated from the viewpoint of the one who is
undergoing it. (Habermas, 1975: 58)
In the crisis management literature, authors typically have adopted cognitive
theories and, to some extent, psychoanalytic theory to explain and predict indi-
vidual forces involved in the creation of an organizational crisis (e.g., Schwartz,
1987; Weick, 1988). Little attention has been paid to the individual experiences of
an organizational crisis once it unfolds. In addition to reviewing perspectives on
individuals’ roles in creating a crisis, we explore an area of psychological research
on “trauma,” which seeks to understand how the individual experiences a crisis. We
present cognitive studies fi rst.