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

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