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UBC Theses and Dissertations

A study of executives’ perceptions of corporate crises Smart, Carolyne Faith

Abstract

The purpose of this study was to examine crisis management in business enterprises. The study had four objectives: 1) to integrate theories of crisis behaviour into a conceptual model of crisis management providing a basis for empirical research; 2) to test specific hypotheses concerning crisis behaviour, susceptibility to crises, and coping abilities; 3) to develop managerial tools for diagnosing organizational strengths and vulnerabilities in coping with crises; 4) to develop prescriptions for improving abilities to cope with crises and for preventing crises. A conceptual model was developed that provided a framework for studying decision-making and implementation processes during crises. Data on environmental, organizational, and managerial characteristics were collected from senior executives in 94 firms in Canada and the U.S. by means of a structured questionnaire. Thirty hypotheses derived from the crisis model were tested. Environmental predictability and a managerial style reflecting process rather than task orientation were two factors associated with lower than average susceptibility to crisis. A general dimension of coping abilities was identified. Firms that have a high ability to cope with one type of crisis tend to have high abilities to cope with other kinds of crises. In addition to the general dimension the study discovered a specialized dimension of coping abilities. Firms that develop high abilities to deal with continuous threats tend to have poor abilities to deal with discontinuous threats if the general dimension of coping abilities is kept constant. High levels of organizational slack and a decentralized decision-making structure were identified as two major factors relating to the ability to cope with market failures. Diagnostic functions were constructed that predicted vulnerabilities to crisis on the basis of executive and organizational attributes. Discriminant Analysis was used to derive the predictive functions for different types of threatening situations (discontinuous threats and opportunities, market stagnation, declining markets, and cyclical markets). The powers of discrimination for these functions generally were high. Prescriptions were developed for improving crisis coping abilities and for preventing crises. To help reduce crisis susceptibility, for example, improved scanning and monitoring techniques were prescribed to temper the impact of an uncertain environment. Dual organizational structures, one for routine decision-making and one for crisis decision-making were prescribed to improve performance in crises. Other prescriptions were of a type that generally would improve management capabilities, for example, expanding the repertoire of standard operating procedures, increasing the motivation of operating departments, and making procedural modifications in decision-making processes. The dissertation concludes by reviewing the successes and weaknesses of the empirical study, and proposals are made for future research.

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