Summary

In the field of crisis management, just very little substantial research has been
done in The Netherlands, and in...
   40% of the respondents are of the opinion that they got extra media
       attention as a consequence of a crisis. The...
From the results of the hypothesis checks could be derived that there is only a
direct relation between the experiences wi...
companies were developing a plan. When crisis management team and crisis
management plan are taken as criteria, the result...
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  1. 1. Summary In the field of crisis management, just very little substantial research has been done in The Netherlands, and in fact in the whole of Europe, into crisis management of companies. This research is limited to a survey of Dutch companies, conducted by the Crisis Research Team and commissioned by the Crisis Control Unit of the Dutch Ministry of Economic Affairs (Bezuyen, 1993). This survey dates from 1993 and investigates how companies think about disruptions, crises and crisis management. The survey didn’t explore, however, in what way companies do actually execute concrete crisis management activities. This research has been started in order to get insight into the way Dutch companies in 2004 think about crises and crisis management, to be able to give an explanation of the different perceptions by companies of the necessity of crisis management and to investigate whether the existing, perceived necessity really leads to actual activities. The research question can be defined as follows: “How do Dutch companies in 2004 think about incidents, crises and crisis management, which variables influence the perceived necessity of crisis management and does this perceived necessity lead to actually spending time and effort on crisis management?” To find an answer to this question a questionnaire has been developed and sent to 1484 Dutch companies with more than 50 employees and that are active in the following industries and sectors: chemistry, mechanical engineering, food, beverages and tobacco, telecommunications and public services. In total 173 surveys have been completed and submitted, which means a response rate of 11.67 percent. The reliability of the completed surveys, however, cannot be proven, which should be taken into account when interpreting the results. The research consists of two parts. The first – explanatory – part describes the results of the survey. The most important conclusions that have been drawn from the first part of the survey are as follows:  95% of the respondents say that they have been confronted with at least one type of incident in the past 5 years. The incident that is mentioned most (two thirds) is ‘market changes’. Other important incidents are criminality, problems with product or production and regulation/deregulation. There seems to be a difference between the large and small companies with respect to the type of incidents they experienced. The characteristics of the sector also affect the type of incident that a company has been confronted with.  80% of the respondents say that they have been confronted with at least one type of crisis in the past 5 years. In half of the cases, this crisis was related to accidents/disasters and problems with product or production. The respondents do not consider every incident as a crisis.
  2. 2.  40% of the respondents are of the opinion that they got extra media attention as a consequence of a crisis. The company’s size and the type of sector played a big role in this. The larger companies are more sensitive to media attention than the smaller companies. Companies in the public services sector and the food, beverages and tobacco industry are more sensitive to media attention than companies in the other 3 sectors. In the case of 35% of the respondents it turned out that there was a decline in turnover after a crisis event. This effect, however, is not dependent upon the sector type or the company’s size.  Generally, companies hardly feel vulnerable. More than three-quarters of the respondents consider the risk of being hit by a crisis within five years small or negligible.  Approximately two thirds of the respondents have a crisis management plan, which is mainly available in writing and particularly pays attention to the alarm scheme, agreements about responsibilities, external information procedures and formal organizational procedures. Half of the respondents revise the crisis management plan after being hit by a crisis, which in the case of three thirds of the respondents leads to improved internal and external communication components and the insertion of more specific instructions and steps. About half of the respondents indicate to have installed a crisis management team. The largest part of the respondents consider controlling and ending the crisis situation, keeping contact with external emergency services and providing information to people involved as an essential task or responsibility of the crisis management team. Almost 60% of the crisis management teams of the respondents are supervised by the company management. Generally, they are rather small. In the theoretical frame we included the assumption by Mitroff, I.I., Pauchant, T.C. and Shrivastava, P. (1988), Pearson and Mitroff (1993), Penrose (2000) and Shrivastava (1993), that a crisis event would be the only incentive for a company to think about crisis management. In this research we assumed that in addition to experiences with crises, crisis expectations, consequences of crises and the influence of recent crisis events also play a role when companies have to determine the perceived necessity of crisis management. Literature in the field of crisis management doesn’t provide any help. In the second part of the survey (chapter 5) this assumption was checked in view of six hypotheses. A second assumption is also checked in this chapter 5: companies that consider it necessary to spend time and effort on crisis management are more likely to actually spend time and effort on crisis management than companies that consider crisis management as less necessary. The main conclusions that have been drawn from the second part of the survey are:
  3. 3. From the results of the hypothesis checks could be derived that there is only a direct relation between the experiences with the crises of harm to reputation, accidents/disasters and problems with product or production. With respect to the relation between crisis expectations and the necessity of crisis management, there is only a direct relation when it concerns the crises of labor relations, accidents/disasters, mergers/takeovers, market changes, problems with product or production and regulation/deregulation. The influence of recent crisis events on the crisis management policy of a company directly relates to the necessity of a company to spend time and effort on crisis management. Companies that are confronted with extra media attention as a consequence of a crisis, do feel more need to spend time and attention on crisis management, while companies that have faced a decline in turnover as a consequence of a crisis, don’t. The regression model, in which all five independent variables are included, shows that the experiences with the crises of accidents/disasters, harm to reputation and problems with product or production play a role in determining the perceived necessity of crisis management. Furthermore, it turns out that also the risk of being confronted by the crises of accidents/disasters and mergers/takeovers in the future, influences the perceived necessity of crisis management. The expectation to be hit by a crisis, however, shows with respect to seven out of twelve crises a significant relationship with previous experiences that companies have had with these crises. On basis of these data it could thus be concluded that the assumption that a crisis experience would be the only incentive for a company to think about crisis management, by Mitroff, I.I., Pauchant, T.C. and Shrivastava, P. (1988), Pearson and Mitroff (1993), Penrose (2000) and Shrivastava (1993), described in the theoretical frame, is not completely correct. For the respondents of this survey the experience of a crisis turns out to be the most important determinant of the perceived necessity, but is, however, not the only one. There is a significant, positive relation between the perceived necessity of crisis management and the extent to which crisis management activities are actually executed, which means that the company spends time and effort on crisis management. Companies with a high-perceived necessity of crisis management seem to convert this necessity in activity. The effect of the moderating variable ‘company characteristics’ is limited to the sector in which the company is active. The relation between the perceived necessity of crisis management and the extent to which crisis management activities are actually executed just seems to exist for companies that are active in the food, beverages and tobacco industry, the mechanical engineering industry, chemical industry and public services sector. To conclude, the research from 1993 by Bezuyen showed that only one third of the Dutch companies considered crisis management that important, that the
  4. 4. companies were developing a plan. When crisis management team and crisis management plan are taken as criteria, the result of this survey is that companies in 2004 are more aware of the necessity to dedicate time and effort to crisis management, as two thirds of the companies turn out to have a crisis management plan and half of them have installed a crisis management team. From these figures can be concluded that crisis management is currently more established than 10 years ago. This does not imply, however, that the mere existence of a crisis management plan and a crisis management team is sufficient. Companies should be actively concerned with crisis management.

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