ORGANIZATIONAL DESIGN AND ADAPTATION IN RESPONSE TO CRISES: THEORY AND PRACTICE.

Abstract

Organizations are occasionally faced with a major technologically based crisis that can be extremely costly. An example is Bhopal. In the aftermath of such a disaster organizations, both the one that suffered and others in the same or similar industries, often re-examine how they are structured. The questions arise, how should organizations be designed to mitigate the effect of such crises, to perform well in a crisis situation, and should the organization change from one design to another when a crisis occurs? We address these questions using a combination of computational analysis and archival data on 69 real organizations faced with crisis. For each case, we contrast the organization's predicted and actual performance in a crisis situation. Given the high level of fit between the simulated and actual data, we then go on to address the hypothetical question, what is likely to have happened if the organization had responded differently to the crisis. This work suggests that the lessons learned by organizations when responding to crisis situations may be exactly the wrong lessons.

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