The purpose of this paper is to propose a framework for effective crisis response.
The methodology involves a qualitative examination of responses by companies that have been judged by analysts to be varyingly effective. Toyota, for instance, had a poor response to its product quality and recall crisis. Singapore Airlines on the other hand, is often cited as an exemplar for an effective response to the crash of its flight SQ 006 in Taiwan.
This research finds that organizations with a strong commitment to doing the right thing for stakeholders and a high readiness are most likely to effectively respond to crises. Organizations lacking in one of the two critical dimensions (commitment to stakeholders and/or readiness), on the other hand, are likely to have ineffective responses with possible post-crisis losses in competitive (e.g. market share) and financial (e.g. penalties) terms.
The case study methodology implies limitations about generalizability. The framework may also be less useful in crises where there is ambiguity about the genesis of the crisis and its implications, such as the disappearance of the Malaysian Airlines’ MH 370 flight.
Since crises are commonplace and can impact any company, the framework can be useful for a wide range of companies.
The proposed framework fills a gap in the understanding about why some companies have effective responses to crises and others do not. Prior literature has often adopted narrower perspectives such as the skills and the personality of the CEO, pre-crisis drills and effective communication strategies post-crisis. This study argues that while these factors are important, they are not sufficiently strategic.
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