Table Of Content

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 Apart from any fair dealing for the purposes of research or private study, or criticism or review, as permitted under the Copyright, Designs and Patents Act, 1988, this publication may be reproduced, stored or transmitted in any form, or by any means, only with the prior permission in writing of the publishers, or in the case of reprographic reproduction, in accordance with the terms of licences issued by the Copyright Licensing Agency. Enquiries concerning reproduction outside those terms should be sent to the publishers. Every effort has been made to trace and acknowledge all the copyright owners of the material reprinted herein. However, if any copyright owners have not been located and contacted at the time of publication, the publishers will be pleased to make the necessary arrangements at the first opportunity. SAGE Publications Ltd 1 Oliver’s Yard 55 City Road London EC1Y 1SP SAGE Publications Inc. 2455 Teller Road Thousand Oaks, California 91320 SAGE Publications India Pvt Ltd B 1/I 1, Mohan Cooperative Industrial Area Mathura Road New Delhi 110 044 SAGE Publications Asia-Pacific Pte Ltd 33 Pekin Street #02-01 Far East Square Singapore 048763 British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library ISBN: 978-1-84787-088-9 (set of three volumes) Library of Congress Control Number: 2007934293 Typeset by Star Compugraphics Private Limited, Delhi Printed on paper from sustainable resources Printed and bound in Zrinski d.d. Croatia 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, however, 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 different 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 organizational crises (Lagadec, 1993; Pauchant & Douville, 1994; Roberts, 1993; Shrivastava, 1993), we illustrate, in this article, alternative views on organizational 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 management 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 organizational crisis and crisis management implied from organizational and management 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 management 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 management 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 perspective 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 management 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 measures 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 individual 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.