Crisis management in organizations: an exploratory study of factors that affect strategy formation

197 Pages·2017·0.92 MB·English

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LSU Doctoral Dissertations Graduate School
2011
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Tulika Sinha
Louisiana State University and Agricultural and Mechanical College
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Sinha, Tulika, "Crisis management in organizations: an exploratory study of factors that affect strategy
formation and selection" (2011). LSU Doctoral Dissertations. 2843.
https://digitalcommons.lsu.edu/gradschool_dissertations/2843
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CRISIS MANAGEMENT IN ORGANIZATIONS: AN EXPLORATORY STUDY OF
FACTORS THAT AFFECT STRATEGY FORMATION AND SELECTION

A Dissertation

Submitted to the Graduate Faculty of the
Louisiana State University and
Agricultural and Mechanical College
In partial fulfillment of the
requirements for the degree of
Doctor of Philosophy

in

The Manship School of Mass Communication

by
Tulika Sinha
B.Sc., Delhi University, 1995
M.S., Ohio University, 2005
August 2011
DEDICATION

To my parents, Rita and Arun; my son, Jyotiraditya; and my sister, Sonali without whose
boundless patience, support, understanding, and love this dissertation would have been
impossible to complete.
I love you.

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ACKNOWLEDGEMENTS

This dissertation project is the culmination of the efforts of several people. I would like to
acknowledge and thank them for their contribution to this project.
First and foremost, I would like to convey my heartfelt thanks and gratitude to my
committee members, Dr. Margaret DeFleur, Dr. Danny Shipka, Dr. Jinx Broussard, Dr. Thomas
Greckhamer, and Dr. Loretta Pecchioni.
Dr. Margaret DeFleur has been like a mother figure to me at LSU. Her office doors has
always been open for me. Whenever I had an issue, (and I had quite a few!) I would run to her,
and however busy she might have been, she would always find time for my problems and me. I
am ever so indebted to her.
Dr. Shipka has been a great mentor to me. His positive energy and words of
encouragement kept me focused on my dissertation. He has always been available to answer all
my questions and concerns. Thank you.
Dr. Jinx Broussard’s public relations classes have been a constant source of inspiration
for me and I am sure this is true of all her students who have had an opportunity to take classes
with her. She has a wonderful way of connecting theoretical concepts to practical situations,
which has animated all our discussions in class. More importantly, she was there with her wise
suggestions when I was looking for people to interview for this dissertation. Her help has been
invaluable in completing this dissertation. I greatly appreciate all your help.
Dr. Thomas Greckhamer’s strategic management class served as the foundation for this
dissertation. I have had several good discussions with him and his insights have helped me in
refining my hypotheses. I especially value his suggestion in determining an acceptable sample
size. I am very grateful to you for all your help.
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Dr. Loretta Pecchioni has been wonderfully supportive of my academic endeavors at
LSU. She very generously agreed to let me do an independent study under her in health
communication campaigns. I have learned a lot from her. She is a very kind and generous person
and anyone who has met her would attest to that. When the Graduate School had difficulty
finding a Dean’s representative for my committee, as it was the end of spring semester and
beginning of summer, Dr. Pecchioni magnificently stepped in. She did not know, of course,
whose committee she was going to serve on. This speaks volumes about her and I greatly admire
her.
Mr. Dan Borne’ has been my gateway to the chemical world. He assisted me in my data
collection efforts and was available to answer my questions regarding the crisis in chemical
industry. He very kindly agreed to do an interview with me. Thank you.
My heartfelt thanks are also due to Mr. Paul Dauphin and Dr. Cleo Allen for doing
interviews for this study. Mr. Paul Dauphin was on his way back from Houston to New Orleans
when he stopped to do an interview with me. Dr. Cleo Allen did a phone interview as I had
moved out of Baton Rouge. I really appreciate their help in this dissertation study.
I greatly appreciate the support and help of my friends Yasmin, Khaleed, Suping and
Masudul. Thank you all so much. Having them around greatly enriched my experience at LSU.
Thanks are also due to Elizabeth Cadarette and Lynn LeJeune for always having a smile
and promptly attending to all my requests. Thanks for doing such a great job at Manship.
Finally, this dissertation would not be complete without acknowledging the unconditional
support and love of my uncle and aunt, Sudhir and Mamta, whose house in Metairie, La. I call
home. Thank you for everything. I love you both.

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TABLE OF CONTENTS

DEDICATION………………………………………………………………………………….....ii

ACKNOWLEDGEMENTS………………………………………………………………..……..iii

LIST OF TABLES………………………………………………………………………..……...vii

LIST OF FIGURES……………………………………………………………….…………….viii

ABSTRACT……………………………………………………………………………………...ix

CHAPTER
1 INTRODUCTION ……………………………………………………………………….….1
Brief Overview of Strategy within Strategic Management ...…………………………… 3
Brief Overview of Strategy within Public Relations……………….……………………10
Brief Overview of the Chemical Industry ..……………….…………………………..…13
Brief Overview of Organizational Crisis ……………………………………………..…16
Significance of the Study……………………………………..………………………….18

2 THEORETICAL FRAMEWORKS………………………………………………………...19
Situational Crisis Communication Theory……………………………….……………....19
Stakeholder Theory of the Firm…………………………………..……..…………….…22
Strategy…………………………………………………………………………………..26
Strategic Decision-Making Perspectives………………...…………..…………………..27

3 LITERATURE REVIEW…………………………………………………………………..42
Form Crisis Communication…………..…………………………………………………42
Content Crisis Communication…………………………………………………..………44
Corporate Impression Management…………………………………………..………….46
Image Restoration Theory….………………………………………………………..…...47
Crisis Typologies within Strategic Management………..……………………….………48
Hypotheses………………………………..……………………………..……………….50

4 METHODOLOGY………………………………………………………………………....68
Sampling…………………………………………………………………………………70
Limitations of Purposive Sampling………………………………………….…………..73
Sample Size……………………………………….……………………………………..74
Reliability and Validity Measures ………………………………………………….…...75
Survey Instrument……………………………………………………………………….76
Multiple Regression Analysis……………………………..……….…………………….78
In-depth Interviews…………………………..……………………….………………….82
Qualitative Data Analysis…………………………………………..……………………83

5 RESULTS ………………….…………………….…….…………..……………………...85
Results of Regression Analyses….…………….…………………………………......….85
Results of Qualitative Analyses…………………………………………………..……103

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Set of Best Practices…………………………………………………………….…...…123

6 DISCUSSION AND CONCLUSION....…………...….………………………………....137
Key Findings………………………..…………………..............................................................137
Limitations and Direction for Future Research………………………………………….….…...146

REFERENCES…………………………………………………………………………………149

APPENDIX
A SURVEY QUESTIONNAIRE………………………………………………………………160

B OPERATIONALIZATION OF CONSTRUCTS………………………………….. ……….171

C WHEEL OF CRISES………………………………………………………………...………173

D. TYPOLOGY OF CRISIS…………………………………………………………………...174

E. CONSENT FORM ………………………………………………………………………….176

F. INTERVIEW TRANSCRIPT-DAN BORNE'………………………………………………177

VITA……………………………………………………………………………………………187

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LIST OF TABLES

2.1 SCCT Crisis Typology by Crisis Clusters.. …………………………………………………20

2.2 SCCT Crisis Response Strategies………….……………………………………………..….21

2.3 Differences between the Synoptic and Incremental Strategic Decision-Making Process..….28

4.1 Descriptive Analysis of Variables Predicting Strategic Decision.…….………………….…86

4.2 Summary of Regression Analysis of Factors that Predict the Nature of the Crisis.…………90

4.3 Summary of Regression Analysis of Factors that Predict Strategy Formation during a
Crisis…………………………………………………………………………………………93

4.4 Summary of Regression Analysis of Factors that Predict Strategy Selection during a
Crisis……………………………………………………………………………………….. 98

4.5 Complete List of Hypotheses and the Support they Received ………….….……………..104

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LIST OF FIGURES

1. Organizational Crisis Decision-Making Model..……………………………………….129

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ABSTRACT

This study investigated factors that influence the strategic decision-making process,
specifically, strategy formation and selection during a crisis. It accomplished this by integrating
theoretical concepts from both strategic management and crisis communication literature. Key
organizational, environmental, and management factors--comprehensiveness, formalization,
uncertainty, politicization, external corporate environment, crisis responsibility, impact of the
crisis, stakeholder interests, and top management characteristics --were tested for their role in the
strategy formation and selection process using regression analysis.
This study used both quantitative and qualitative research methods. The quantitative
aspect of the research involved conducting online surveys of senior management within the
chemical industry and the qualitative phase of the project involved conducting in-depth interview
with top management within chemical organization.
The findings of this study indicate that decision-making during a crisis follows a logical
incrementalism path and not a linear sequential path as implicit in the crisis communication
literature. Decision-making during a crisis is influenced by a host of factors, most significantly
by uncertainty, politicization, formalization and standardization, financial reporting, stakeholder
interests, external corporate environment, and impact of the crisis. Even though some ready-
made solutions might be available, decision-makers have to consider the organizational context
as much as the content of the strategy to manage the crisis. Development and refinement of the
alternatives have to be done to reach the most satisfactory solution to the problem.
This dissertation develops a model of strategy formation and selection in chemical
organizations. In addition, this dissertation recommends a set of best practices that
communication managers within a chemical organization will be able to adopt to better prepare
for crisis. Other implications and future areas for research are suggested.
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