Journal of Management Studies 34:5 September 1997

0022-2380

INTEGRATING THE CRISIS MANAGEMENT PERSPECTIVE INTO THE

STRATEGIC MANAGEMENT PROCESS*

JOHN F. PREBLE

University of Delaware

ABSTRACT

The ®elds of strategic management and crisis management have been evolving
separately despite their potential for synergistic integration. This paper explicates
how adding crisis management's defensive/preventative capability to strategic
management's o€ensive market positioning orientation can yield a more compre-
hensive approach to the strategic management of organizations. The traditional
strategic management process is reviewed ®rst and then analysed with respect to
the gap that exists in this orientation. Examining the di€erences and similarities
in perspectives between strategic management and crisis management and then
reviewing the crisis management process provides a basis to proceed with a
synthesis of the two ®elds. The paper concludes with the presentation of a new
integrated strategic management process model that pushes forward the bound-
aries of strategic management and internalizes crisis management activities into
that process.

INTRODUCTION

The ®elds of crisis management and strategic management have tended to evolve
over the last several decades, for the most part separately and in a parallel
fashion. Recently, several scholars have attempted to explore the common
ground between these ®elds and have concluded that crisis management and
strategic management are inexorably linked to each other (Mitro€ et al., 1992;
Pauchant and Mitro€, 1992; Smith, 1992). However, the precise nature of these
linkages is just beginning to be speci®ed, integration into the prevailing strategic
management process model has yet to take place, and strategic management
scholars and practitioners are, by and large, not yet embracing this connection.
The purpose of this paper is to show how integrating the crisis management
perspective into the strategic management process can provide organizations with
a defensive capability for preventing crisis developments or lessening their e€ects
if a crisis occurs. This capability is not currently being adequately emphasized in
the strategic management process, which tends to focus on carving out sound

Address for reprints: John F. Preble, Department of Business Administration, University of Delaware,
Newark, DE 19716, USA.

# Blackwell Publishers Ltd 1997. Published by Blackwell Publishers, 108 Cowley Road, Oxford OX4 1JF, UK
and 350 Main Street, Malden, MA 02148, USA.
770 JOHN F. PREBLE

o€ensive strategies in today's highly competitive marketplace. We begin by ®rst

reviewing the traditional strategic management process and examining the gap
that exists in this orientation. Di€erences and similarities between strategic
management (SM) and crisis management (CM) perspectives are discussed next.
This is followed by the presentation of a normative CM process model. The
synthesis between CM and SM is then described, and the paper concludes with
the presentation of a new integrated strategic management process model.

THE STRATEGIC MANAGEMENT PROCESS

The ®eld of strategic management/business policy has been developing over the
past 25 years into a fairly distinct subdiscipline in management studies (Hofer
and Schendel, 1978; Shrivastava, 1987a). However, SM is still evolving as a ®eld
and consequently there is a certain degree of heterogeneity that exists as to the
beliefs of its members (i.e. de®nitions, taxonomies, schools of thought, etc.). For
example, while Mintzberg (1994) is concerned that too little e€ort is being
directed towards ®nding and anointing strategies that are emerging within the
organization, he views strategic planning as a useful device for programming
intended strategies, seeing that they are communicated clearly and used as a
means of control. In spite of the situation just described, a reasonable degree of
consensus does exist on a normative model of the strategic management process.
It is noteworthy that this prescriptive model of strategic management has been
found to be an accurate representation of strategic planners' perceptions of
contemporary practice (Gintner et al., 1985). The model is depicted in ®gure 1
and includes three primary components: strategy formulation, strategy implemen-
tation, and strategy evaluation (control) (David, 1995; Thompson and Strickland,
1995). Strategy formulation is concerned with determining the future direction of
the ®rm and has received considerable attention in the planning literature
(Bourgeois, 1980; Fahey and Christensen, 1986; Hofer and Schendel, 1978;
Miller and Friesen, 1978; Mintzberg, 1978). As the diagram illustrates, strategy
formulation usually includes conducting some form of external audit or scan that
results in the speci®cation of key external opportunities and threats and an
internal audit of the organization's most important strengths and weaknesses
(SWOTs). Also included in this phase is the development of a mission and/or
vision statement and the speci®cation of long-term objectives. Strategy selection
or choice follows the above steps and may be facilitated by using a TOWS
matrix (Weihrich, 1982) to systematically identify relationships between sets of
previously identi®ed SWOTs (e.g. strengths/opportunities, weaknesses/threats) to
create numerous alternative strategies based on these combinations.
Strategy implementation involves the modi®cation of organizational structures
and processes to ensure that planned results (i.e. strategies, long-term objectives)
are obtained (Galbraith and Kazanjian, 1986; Lorange and Murphy, 1984; Nutt,
1986). This phase includes processes such as the establishment of annual goals
and policies, the allocation of resources to obtain objectives, and adjusting moti-
vation and reward systems to better match new strategic thrusts.
Strategy evaluation is concerned primarily with traditional control processes,
which involve the review and feedback of performance to determine if plans,
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Figure 1. A strategic management process model
Source: David, 1995
772 JOHN F. PREBLE

strategies and objectives are being achieved, with the resulting information being
used to solve problems or take corrective actions (Daft and Macintosh, 1984;
Schendel and Hofer, 1979; Steiner, 1979). Recently, theories of strategic control
have been advanced which emphasize a `feedforward' approach to controlling
strategies that is future-directed and anticipatory in evaluating plans, activities
and results (Goold and Quinn, 1990; Preble, 1992; Schreyogg and Steinmann,
1987). As part of the strategic control process, special alert controls that incorpo-
rate crisis management repertoires, have been suggested as an appropriate
mechanism for an organization to thoroughly, and often rapidly, reconsider a
®rm's basic strategy based on a sudden, unexpected event (Byars et al., 1996;
Pearce and Robinson, 1988; Preble, 1992).
The strategic management process just described was covered sequentially.
However, some scholars, notably Mintzberg (1991), would consider this distinc-
tion (i.e. three phases) as arti®cial and view the three aspects together as strategy
`formation'. None the less, from an analytical point of view the distinction is
considered useful and the approach provides a logical, clear, and straightforward
explanation of the process, which works well for training and pedagogical
purposes. The actual process model is in fact highly interactive, with arrows and
feedback loops appearing throughout ®gure 1.

Strategic Management Process Vulnerability

The objective of the strategic planning process is to design competitive strategies
that enable the ®rm to ®nd a position in the industry environment faced by the
organization (Porter, 1979), and to go beyond current perceptions of the industry
situation to distinguish the enterprise into the future (Hamel and Prahalad,
1993). This aggressive, forward-thinking orientation ignores an arena of potential
problems that could seriously undermine the bene®ts of the SM process. Despite
the successful articulation of planned strategies, numerous ®rms may have paid
insucient attention to considerations such as the following: a company's activ-
ities that could potentially do large-scale harm to the environment (e.g.
Chernobyl); products that have not been examined for their potential negative
side e€ects (e.g. Dow Corning's silicone breast implants) or their vulnerability to
product tampering (e.g. Tylenol capsules); stakeholders who may feel grieved or
disenfranchised from their organization and wish to do it harm (e.g. US postal
workers); or technological processes that have not been subjected to analysis of
worst-case scenarios that can evolve due to human error and technological
failures (e.g. Bhopal). Unfortunately, the situation does not seem to be
improving, as Sullivan (1993) reported that the frequency of chemical plant
accidents is increasing at a high linear rate and the associated costs at an expo-
nential rate.
In short, while the SM process results in strategies that provide a sound o€ense
in the competitive marketplace, it pays inadequate attention to defensive actions
that could act to prevent unwanted, undesirable and unexpected crises from
happening. The occurrence of these types of crises can undermine success in the
marketplace as the ®rm may face multibillion dollar settlement costs, damage to
the corporation's reputation, and ultimately survival may even be threatened. The
potential for these kinds of consequences should act as a major incentive for
executives to embrace the kinds of changes being proposed in this paper. Integrat-
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 INTEGRATING THE CRISIS MANAGEMENT PERSPECTIVE 773

ing the CM perspective into the SM process could strengthen it signi®cantly by

directly shoring up this area of vulnerability. By examining the historical di€er-
ences between SM and CM it is easier to envision the contribution that CM's
perspective could add to SM's orientation. It is to this task that we now turn.

CRISIS MANAGEMENT AND STRATEGIC MANAGEMENT DIFFERENCES

Strategic management is concerned with the formulation, implementation and

evaluation of strategies designed to achieve organizational objectives (David,
1995). Crisis management deals with attempts to identify and predict areas of
potential crises, the development of actions and measures designed to prevent
crises from occurring or from an incident evolving into a crisis, and minimizing
the e€ects or disruption from a crisis that could not be prevented (Wilson, 1992).
The parallel development of the two ®elds can be explained when we consider
that SM and CM researchers and practitioners have di€ered historically on the
following dimensions: educational backgrounds and subsequent careers; stake-
holder perspectives; adherence to dominant paradigms; cultural (norms and
beliefs) orientations; goal structures; environmental perspectives; and systems
viewpoints.
While CM and SM are both ®elds that by their nature are multidisciplinary,
the disciplines represented in each are frequently di€erent. Individuals working
and conducting research in CM frequently come from the areas of economics,
sociology, psychology, political science, public administration, public relations,
environmental science, chemical engineering, computer science and communica-
tion. Strategic management's proponents, on the other hand, have typically been
trained in business policy, general management, business and its environment,
management, international business and organizational behaviour. Each disci-
pline brings its own perspective to bear on these two ®elds that are still relatively
new and emerging. For example, Pauchant and Mitro€ (1992) observe that econ-
omists view crises in terms of negative movements in macroeconomic variables
caused by governmental policy failures; sociologists attribute crises to social
inequalities, an increase in `utilitarian individualism', the decline of family and
community, etc.; psychologists consider a crisis the breakdown of an individual's
identity or his or her subjective sense of self and meaning; and management
science de®nes a crisis in terms of a restricted number of e€ects and call for
more mechanisms of control and security management.
Terminological confusion abounds in this milieu with the words disaster, cata-
strophe, jolt, problem, threat and turning point all having been used interchange-
ably in the literature with the term crisis (Reilly, 1993). Further, while crisis
management is considered in this paper and elsewhere (Pauchant and Mitro€,
1992) to be strategic in nature and has been de®ned earlier as encompassing all
phases of that process, in the emergency management literature crisis manage-
ment deals squarely with the tactical decisions and actions at the height of the
emergency period of a disaster (Drabek and Hoetmer, 1991; Quarantelli, 1988).
These same authors see preparedness planning as strategic as in organizing for
an emergency response before an event (Drabek and Hoetmer, 1991), or as in
developing an overall approach to a problem or objective (Quarantelli, 1988).
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774 JOHN F. PREBLE

Obviously, these di€erences are suggestive of some of the diculties of communi-

cating across the di€erent disciplines that are currently participating in these two
®elds.
Professionals in the ®elds of CM or SM have been subject to extensive educa-
tional and organizational socialization e€orts (Schein, 1968). This socialization
tends to result in a clear and stable set of attitudes, beliefs, values and behaviours
(i.e. cultural orientation) being associated with a particular discipline or within an
organization. For example, while strategic management researchers and practi-
tioners adhere to an open systems view that includes the external environment,
CM proponents use an even wider lens in advocating the use of a total systems
viewpoint (Mitro€ et al., 1992). CM's perspective includes consideration of both
the productive and destructive potential of organizations, the reliability of
multiple systems, and the interaction e€ects of tightly coupled, complex new
technologies (Perrow, 1984). One consequence of this perspective is a serious
interest in CM inquiries on: how organizations can threaten their external envir-
onment and ecosystem; how humans respond to disasters (Drabek, 1986); and
how `sustainable corporations' can be created and maintained (Shrivastava,
1993). However, SM's practitioners tend to focus more on how the environment
creates opportunities and threats for the ®rm and on how to create and sustain
`competitive advantage' (Porter, 1980). While ®nancial performance is the
primary goal of SM, CM's proponents add quality, safety, and reliability to the
goal structure of the ®rm. The ®eld of SM considers shareholders, employees,
suppliers, ®nanciers, government agencies, and customers to be its major stake-
holders. CM advocates broaden this constituency base to include unborn future
generations (Pauchant and Mitro€, 1992), special-interest groups (e.g. ecologists),
local politicians, competitors (Mitro€ et al., 1996), and even terrorists (e.g. World
Trade Center) and psychopaths (e.g. Tylenol) (Mitro€ and Kilman, 1984).
With the above discussion in mind, it becomes clear why the ®elds of CM and
SM have been evolving separately thus far. However, it is precisely these di€er-
ences in perspectives and orientations that provide the integration opportunity.
Fortunately, CM's perspective is complementary to SM's and, therefore, can be
added to the SM process to broaden it and strengthen it. The integration task
will also be facilitated by a large area of common ground (i.e. similarities) that
currently exist between CM and SM.

CRISIS MANAGEMENT AND STRATEGIC MANAGEMENT SIMILARITIES

Mitro€ et al. (1992) have argued that CM should be integrated into the SM
process because they share the following six characteristics: a focus on environ-
mental relations; a complex set of stakeholders; the involvement of top manage-
ment; a concern for the whole organization; the expression of a consistent
pattern; and a representation of emergent processes. Each of these characteristics
will be discussed in turn and others will then be added to this set.
SM proponents have been increasingly concerned about rapid changes
emanating from the external environment. As a consequence, they have been
encouraged to adopt an `open-system' perspective (Thompson, 1967), to scan the
environment to identify early events and changes taking place there (Aguilar,
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 INTEGRATING THE CRISIS MANAGEMENT PERSPECTIVE 775

1967) and to devise adaptive strategies that improve the ®t or alignment of the
®rm with the environment (Bourgeois, 1980; Hofer and Schendel, 1978). CM
advocates also embrace an open-systems perspective in order to better under-
stand the dynamics of crises and for developing CM e€orts (Bowonder and
Linstone, 1987). However, as mentioned earlier in this paper, SM's primary
interest in the environment is outside-in (i.e. search for opportunities and
threats), while CM is additionally focused on inside-out (i.e. the ®rm's impact on
the environment).
With the external environment playing an increasingly important role in the
strategic management of organizations, the emergence of a constituent (Elkins
and Callaghan, 1981) or stakeholder (Freeman, 1984) model of management has
developed. The manager is seen as a system balancer of all the competing claims
and demands on the organization (e.g. shareholders, employees, suppliers,
customers, bankers, government, etc.). Frequently, these constituents hold
di€ering basic assumptions or frames of reference (El Sawy and Pauchant, 1988)
for evaluating management actions. While CM is concerned with additional
constituents (e.g. ecologists, terrorists, etc.), di€erences in stakeholder `frames of
reference' have been shown empirically both to contribute to the emergence of
crises and to be a key of CM e€orts at remediation (Bowonder and Linstone,
1987; Shrivastava, 1987a).
The involvement of top management is widely viewed as a necessary condition
for both SM and CM e€orts to be e€ective (Preble, 1994; Thompson and Strick-
land, 1995). In the ®eld of strategic management the role of the CEO/president,
general manager, or top management team (Hambrick and Mason, 1984) is to
structure and guide the process, and to provide symbolic support to unit-level
managers who are actually devising plans and strategies (Kiechel, 1987). The
®eld of CM views top management attitudes as key to getting any real CM activ-
ities o€ the ground and the direct participation of top managers on crisis teams
is seen as critical to their proper functioning (Preble, 1994; Wold and Shriver,
1988). Pauchant and Mitro€ (1992) have found that the emergence of crises, the
extent of CM preparedness, and the e€ectiveness of CM e€orts are all in¯uenced
to a great degree by the basic assumptions and activities of top management.
The ®eld of strategic management has, since its inception, been concerned
with the management of the total enterprise (i.e. the whole organization) (Bower
et al., 1991 [1969]). Similarly, CM attempts to manage crises that could poten-
tially disturb the entire organization and is concerned with the survival or devel-
opment of its stakeholders, the industry as a whole and the environment
(Pauchant and Mitro€, 1992).
Strategy-making is a complex blend re¯ecting consistency and emergent
processes. It is consistent in the pattern that can be found in past actions or
decisions. Strategy's emergent processes are evident when strategies form in
response to an evolving situation (Mintzberg, 1987; Quinn, 1980). Recently,
Mintzberg (1994) has suggested that planners can assist managers in ®nding
these ¯edgling strategies that are present in pockets of the organization and are
ripe for exploitation. Meanwhile, CM researchers see a consistency in the basic
assumptions of top managers and others in the ®rm, i.e. a kind of organizational
identity (Mason and Mitro€, 1981). Of course, this consistency can be associated
with an organization being either crisis-prone or crisis-prepared. Crises are also
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776 JOHN F. PREBLE

organizationally emergent, whether being dictated by the environment (imposed)

or arising from the choices and actions of organization members (Mitro€ et al.,
1992).
A key similarity that can facilitate the integration of CM into the SM process
is the fact that both ®elds have developed models which depict formulation and
implementation aspects in their processes (as will be discussed subsequently). In
addition, both SM proponents and CM advocates argue strongly that their
processes be conducted continuously (Bower et al., 1995 [1965]; Pauchant and
Mitro€, 1992). Because of the importance of these two processes, SM and CM
are primarily concerned with the long-term survival and well-being of the organi-
zation and the constituents a€ected by it.
Thus, SM and CM similarities include: a focus on the external environment;
numerous stakeholders; the need for top management involvement; a concern
for the entire organization; both consistent and emergent processes; process
models that have similar components and are both conducted continuously; and
a concern with long-term organizational survival. We will now examine brie¯y
the ®eld of crisis management and, in a more detailed way, its process.

THE CRISIS MANAGEMENT PROCESS

While crisis management is increasingly being recognized as an established ®eld,

its practice and theory development are still in the formative stages with only
about 50% of large United States corporations having some level of CM
programme (Fink, 1986; Mitro€ et al., 1988; Reilly, 1987; Wisenblat, 1989).
Although some research on CM was conducted in the 1960s and 1970s, a
computer search using the key words `crisis management' revealed that 80% of
CM publications appeared after 1985 (Pauchant, 1988). A similar computer
search conducted by the author in 1995 using the `ABI-Inform' database listed
450 articles published in the last ten years. Dissertations that have dealt with
some aspect of CM totalled 62 for the period January 1988±September 1995,
using the `ProQuest' dissertation abstracts database.
It should be acknowledged at this point in the paper that the approaches
about to be discussed here to prevent and deal with crisis situations have their
greatest applicability in the United States or in Western European type societies.
However, there are ongoing e€orts to link disaster prevention and reduction to
socio-economic development in disaster-prone countries like China (Jingshen et
al., 1992) and other developing nations through the World Bank's assistance in
the planning and management of environmental (both natural and technological)
problems/risks (Kreimer and Munasinghe, 1992). But there remain signi®cant
barriers to the rapid transference of ®rst world disaster planning strategies to
developing nations, including cultural di€erences (Ali, 1992), knowledge, skills
and resource constraints and de®cient infrastructures (Kreimer and Munasinghe,
1992), and political considerations (Por®riev, 1992).
The de®nition of a crisis chosen for this study is in fact a combination of
several de®nitions, the ®rst of which is, `an organizationally-based disaster which
causes extensive damage and social disruption, involves multiple stakeholders,
and unfolds through complex technological, organizational and social processes'
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 INTEGRATING THE CRISIS MANAGEMENT PERSPECTIVE 777

(Shrivastava et al., 1988, p. 285). We would add natural disasters to this de®ni-
tion and recognize that implicit in any de®nition of a crisis is some element of
surprise, the need for a quick response, the threat to high-priority goals, and the
stress brought on by any of the above (Hermann, 1972). It is believed that most
individuals working in the ®eld of CM would accept the above characterization
of a crisis.
Crisis management is de®ned as a systematic process by which an organization
attempts to predict or identify potential crises that an organization may
encounter, take precautions to prevent the crises, or minimize the e€ects of the
crises (Wilson, 1992). Crisis management is an emerging ®eld characterized by a
fair amount of heterogeneity and fragmentation. Crisis studies propose several
de®nitions, concepts, typologies, taxonomies, models, and frameworks for analyti-
cal purposes (Mitro€ et al., 1988; O'Connor, 1987) as well as programmes for
practical use by managers (Mitro€ et al., 1996). The multidisciplinary nature of
the ®eld (i.e. economics, sociology, psychology, environmental science, manage-
ment, etc.) further leads to de®nitions and causal attributions biased by ®eld
(Lagadec, 1991; Pauchant and Mitro€, 1992). With no single paradigm guiding
the research in CM (Shrivastava, 1993), researchers have tended to focus on one
or just a few of the elements in the process, for example, the crisis audit (Shrivas-
tava and Mitro€, 1987), crisis management teams (Nelson-Horchler, 1986), crisis
management plans (Truitt and Kelley, 1989), crisis readiness (Reilly, 1987),
disaster recovery (Schreider, 1990), activities of crisis preparedness (Pauchant and
Mitro€, 1992), and crisis protocols (Truitt and Kelley, 1989; Wisenblat, 1989). In
light of the above it is not surprising that comprehensive process models of crisis
management that would encompass all of the elements of our de®nition of CM
and their interaction(s) are rare in the CM literature.
None the less, the US ®nancial industry, encouraged by a surge in recent
actual disasters and by numerous legal and regulatory requirements (see Wold
and Shriver, 1988, pp. 1±5, for a description of these requirements) has
developed a normative crisis management process model, which is suciently
comprehensive to be useful here (Preble, 1993; Wold and Shriver, 1988). Rapid
development and acceptance of this approach to crisis management by ®nancial
institutions has been driven by the recognition that these ®rms are so dependent
on technology and automated systems that a disruption or crisis lasting just a few
days can cause severe ®nancial losses and even threaten survival. The model
presented here incorporates many of the process elements mentioned above (see
®gure 2).
The process, which is labelled contingency planning in the ®nancial industry
(Fritts, 1989), proceeds and recycles continuously through the following steps
(Preble, 1993; Wold and Shriver, 1988):

(1) Top management initiates contingency planning. Senior management and

the board of directors (BOD) are legally and morally responsible for initiat-
ing, overseeing and controlling contingency planning in ®nancial institu-
tions. They begin the process by appointing a diverse management group
(e.g. data processing, operations, internal audit, department heads) that is
given adequate resources to pursue the task of formulating and implement-
ing the bank's disaster plan.
# Blackwell Publishers Ltd 1997
Figure 2. A normative crisis management process model
Source: Preble, 1993; Wold and Shriver, 1988
 INTEGRATING THE CRISIS MANAGEMENT PERSPECTIVE 779

(2) Risk assessment. The management group assigned to the project begins by
conducting an internal and external organization-wide analysis (i.e. audit)
of potential natural (e.g. earthquake, ¯ood), technical (e.g. electric power
or telecommunications failure), and human (e.g. malicious damage to
software or data) threats. Disaster sequences and worst-case scenarios are
then contemplated (Schwartz, 1991). Threats can then be evaluated as to
their likelihood of occurrence and impact on vital business functions.
(3) Develop alternative strategies. Several strategies should be developed to
help prevent threats from becoming reality and to prepare for and cope
with those threats that cannot be eliminated. Wold and Shriver (1988)
describe procedural prevention techniques such as backing up data and
software, performing preventive maintenance, and developing emergency
procedures to deal with natural disasters. Physical prevention techniques
include measures such as proper computer area design, protection and
duplication of vital records, redundancy in air-conditioning systems, electri-
cal supply stability safeguards and the posting of emergency procedures.
Since actual disasters may still occur, it is necessary for ®nancial institu-
tions to prepare for the worst by formulating and implementing back-up
strategies. For example, these strategies might include the use of hot sites,
cold sites (empty shells), reciprocal agreements, electronic vaulting, service
bureaus/centres, branch buildings, modular buildings, vendor-supplied
equipment, and disaster planning teams.
(4) Plan documentation. It is essential to provide a written plan that
documents exactly what steps are to be taken by whom (employee and
management responsibilities) in the event of an actual disaster. All disaster
recovery strategies, procedures, and individual responsibilities must be
clearly and concisely spelled out.
(5) Testing. Both procedures for and frequency of testing should be detailed
and incorporated into the overall disaster plan. Testing via a `simulated
disaster' will allow individuals to practise their responses (rehearsal) and
will uncover areas in the plan that may need to be ®ne-tuned.
(6) BOD approval. Both the contingency plan and test results with respect to
it are reviewed, approved and recorded by senior management and the
BOD.

It is worth noting that in the United States the public sector analogue to the
®nancial industry's normative crisis management process model just described is
the Integrated Emergency Management System (IEMS). This system is built on
the concept of a common set of functions for all emergencies and is the
framework recommended by the Federal Emergency Management Association
(FEMA). E€ective community-based emergency management is pursued via the
co-ordinated e€orts of local, state and federal government agencies and the use
of the IEMS approach, which includes key elements such as hazard analysis,
community capability assessment, emergency planning and response, and
recovery (McLoughlin, 1985).
We will now examine in more detail why the crisis management perspective
should be integrated into the strategic management process. In so doing we will
explore some of the causes for the slow integration to date and also examine if
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780 JOHN F. PREBLE

crises are indeed inevitable. We will then be in a position to propose an inte-

grated strategic management process model.

RATIONALE FOR THE INTEGRATION OF CRISIS MANAGEMENT AND STRATEGIC

MANAGEMENT

Crisis management is strategic in nature (Pauchant and Mitro€, 1992) and Smith
(1992) contends that there is an inexorable link that binds CM and SM together.
The similarities, orientations, and characteristics that the two ®elds have in
common would seem to help de®ne and support this linkage. The actual occur-
rence of an organizational crisis can cause changes in existing strategies and
strategic actions (Mintzberg and Waters' `imposed strategy', 1985; Starbuck and
Milliken, 1988). Conversely, the lack of strategic actions in the form of crisis
management repertoires, can determine crisis outcomes (Reilly, 1987). Corporate
crises are events that threaten an organization's key goals of survival and pro®t-
ability (Nystrom and Starbuck, 1984; Shrivastava and Mitro€, 1987). Examples
of recent large-scale crises include the Three Mile Island and Chernobyl nuclear
power plant accidents, the contamination of Tylenol capsules, the Challenger
Space Shuttle explosion, the Bhopal gas leak, and the Exxon Valdez oil spill.
Additionally, it has been argued that numerous crises occur because of earlier
failures in an organization's strategic management process (Shrivastava and
Mitro€, 1987; Smith, 1992).
Despite the proported relationship between CM and SM discussed above,
Pauchant and Mitro€ (1992) observe that the ®eld of strategic management has
seldom acknowledged the importance of industrial crises and the discussion of
crisis management issues is rare as a part of the basic curriculum in business
schools. Petak (1985, p.3) suggests a parallel problem may exist in the manage-
ment of public organizations when he states: `Public administration, as a disci-
pline, has generally neglected to consider emergency management within the
mainstream of its activities.' In the actual operation of private organizations,
Wisenblat (1989) found it surprising that so many companies did not include
crisis planning as an integral component in their business planning, despite the
fact that crises threaten both strategic objectives and the very foundation of a
company. Of course, the current condition may be attributable in part to the
fact that SM and CM are relatively new and emerging ®elds that possess several
apparent di€erences (discussed earlier) which while providing areas of integration
opportunity tend to slow actual integration e€orts. But we have also discussed
numerous similarities or common ground between SM and CM, and there is an
impetus to move quickly towards integration, as complex, tightly coupled, socio-
technical systems proliferate and actual disasters of increasing magnitude increase
in frequency. So why the slow rate of progress on integration e€orts thus far?
Overcoming any impediments to progress requires a deeper exploration of their
causes and can provide support for why change is critical in the near future.
For crisis management to be an integral part of strategic management an orga-
nization's key managers or top management team must recognize the strategic
nature of CM. However, several perceptual, psychological, and behavioural
processes are at play that provide ready rationalizations for why serious CM
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 INTEGRATING THE CRISIS MANAGEMENT PERSPECTIVE 781

e€orts should be minimal or postponed. For example, some managers see little
need for additional CM e€orts because they view contingency planning as the
mechanism already in place to handle unexpected occurrences (Smith, 1992).
Unfortunately, contingency plans (except in the ®nancial services industry where
contingency planning is the term used for full-scale crisis management) usually
examine only a few alternative futures, assume a crisis will follow a predictable
path (Silva and McGann, 1995), and are directed towards damage limitation
rather than crisis prevention (Smith, 1990).
While David (1995) asserts that contingency plans should be simple and cover
only high priority areas, Smith (1990) argues that crises arise through a failure of
management to fully consider all the possible disaster scenarios that face an orga-
nization. Rather than merely hiding behind contingency plans, other managers
are more transparent in their denial of the need for crisis management. In a
survey of Fortune 500 ®rms, several respondents in ®rms lacking crisis capability
said that they believed their companies to be immune from crises (The Journal of
Commerce, 1985). Similarly, Fink's (1986) survey of Fortune 500 CEOs found 50%
without a crisis plan for their organization, yet 97% felt con®dent that they
would respond well if a crisis occurred. Perhaps these managers believed that
they faced a placid (i.e. little change) environment and were responding as Smart
and Vertinsky (1984) predicted by defending the status quo and their belief in
their ability to control events. Another possible explanation, given by Mitro€ and
Pauchant (1990), is the concept of `bounded emotionality', which is used to
describe managers who are unable to deal with their feelings and the anxiety
associated with crisis situations and, therefore, use various forms of denial as
coping mechanisms. Janis and Mann (1977) have explored group processes
where the `illusion of invulnerability' is a dominating theme and a cause of
uncon¯icted inertia (the belief that no serious risks are involved in pursuing the
current course of action) when responding to a threatening environment. Inte-
grating CM into the SM process can help to overcome: ready rationalizations
that minimize the need for serious CM e€orts; a view that contingency planning
is an adequate safeguard against surprises; the diculty of denial that threats
exist; and will provide cognitive and emotional rehearsals for coping with crisis
situations.
An organization's culture often plays a major role in whether or not crisis
management e€orts are extensive. Organizations with an `organizational identity'
(Schwartz, 1987) that is narcissistic, self-in¯ated and internally focused are likely
to be weak in CM e€orts and can be characterized as `crisis prone' (Pauchant
and Mitro€, 1988). Further, managers of crisis prone organizations tend to
rede®ne reality to suit their own fantasies and beliefs (Mitro€ et al., 1989) and
block action because they lack the `emotional' resources to face up to critical
situations realistically (Pauchant and Mitro€, 1992). Similarly, managers may
distort their interpretation of danger signals emitted from technological systems
(Perrow, 1984; Weick, 1986). Additionally, organizations that pursue or have
achieved what they perceive as `organizational excellence' are also less inclined
to develop CM plans (Pauchant and Mitro€, 1992). Integrating CM into the SM
process can lead to cultural change. For example, Truitt and Kelley (1989)
indicate that one of the most useful functions of conducting a crisis audit is
convincing management that something catastrophic could actually happen
# Blackwell Publishers Ltd 1997
782 JOHN F. PREBLE

today to their organization. Integrating a full array of CM activities can move

the organization from being crisis prone to being crisis prepared.
A number of other variables may also explain why CM is underemphasized or
not yet integrated into the long-range planning process. The rise in global
competition, shifting priorities, short managerial attention spans, pressure for
short-term pro®ts (Augustine, 1995), mergers, acquisitions and divestitures, down-
sizing of employees (including those engaged in planning), scarce resources, and
the like may all play a role in causing management to conclude that crisis
planning is not an immediate problem (Meyers, 1986; Phelps, 1986). Of course,
management needs to balance both short-range and long-range considerations if
it is to assure pro®tability and survival.
There is also the general impression held by numerous managers that there is
little or nothing that organizations can do to mitigate crises (Mitro€ et al., 1988).
However, these authors, in the same article, detail some 37 preventative organi-
zational actions such as tamper-proof packaging, detection training, expert moni-
toring systems, crisis management units, etc., that can be utilized to block crises
from occurring. Crises are not inevitable; some organizations operate complex
and potentially hazardous technologies (e.g. nuclear power, air trac control,
Navy aircraft carriers) that have been able to operate error free for very long
periods of time. These organizations focus on operational reliability that results
in outcome reliability and rivals productivity or eciency as a key goal. This
type of organization has been characterized as a `high reliability organization'
(HRO) (Roberts, 1990; Weick, 1987). Some of the prevention strategies utilized
by HROs to achieve high levels of reliability include continuous training of
operators, operational redundancy, personal accountability and responsibility,
and system ¯exibility.
We have just discussed some of the reasons why CM and SM should be more
closely connected and looked at a number of the causes of why that integration
is proceeding at a slow pace. We have suggested that crises are not inevitable,
but are preventable through early incident interventions and extreme diligence
(i.e. HROs). As Smith (1992) has suggested, what is needed now is a more
formal linkage between models and processes utilized by researchers and practi-
tioners in both the CM and SM ®elds. In the next section of this paper we will
take an initial step in that direction by presenting an integrated strategic manage-
ment process model and explaining how this model could be utilized in practice.

INTEGRATED STRATEGIC MANAGEMENT PROCESS MODEL

A new integrated strategic management process model, which incorporates the

CM perspective, is presented in ®gure 3. The previously described normative
crisis management process model has been blended into the traditional strategic
management process model. The combined model represents a procedural inte-
gration in that strategy will be formulated and implemented with crisis proce-
dures incorporated directly into the process. A cognitive/emotional acceptance is
also expected to result as conducting these processes simultaneously leaves much
less latitude for managers to consider the ®elds as possessing strictly independent
boundaries.
# Blackwell Publishers Ltd 1997
Figure 3. Integrated strategic management process model
784 JOHN F. PREBLE

It is instructive at this time to examine how the steps in the model might
actually be conducted. Utilizing this approach should help to further clarify the
new process model, and reveal many of the bene®ts that are expected to be
realized by the integration e€ort. The strategy formulation process begins with a
®rm developing a mission statement and then identifying the company's key
external opportunities and threats and its principal internal strengths and weak-
nesses (SWOTs). But now, instead of just focusing on the positive aspects of
producing a product or providing a service, conducting a crisis audit at this time
can reveal a ®rm's areas of vulnerability or susceptibility to potential crises. Thus
the risks or destructive potential of complex new technologies and systems will be
exposed for consideration and re¯ection.
Crisis audits are designed to examine the potential for failure in human,
production, organizational, technological, social, political and macroeconomic
systems, internal or external to the ®rm. The possible interaction among failures
in more than one domain is also considered (Shrivastava and Mitro€, 1987).
Products and processes should be evaluated carefully to determine their potential
to create a hazardous situation. A wide array of worst-case scenarios must be
written to determine worst-case contingencies. Companies may decide to use
brainstorming sessions to develop a greater consciousness of how crises can
develop. Environmental impact assessments are recommended in order to
identify potential areas of failure in social and technological systems (Shrivastava
and Mitro€, 1987). A clear bene®t of the above exercises is that, once threaten-
ing scenarios have been brought into a manager's consciousness, it becomes
extremely dicult for him/her to deny their potential for happening or rationa-
lize away their dire consequences (Preble, 1994; Truitt and Kelley, 1989).
A crisis audit should reveal several low probability, high impact threatening
events and a number of internal weaknesses in systems and products that might
negatively impact customers, employees, or the environment. These issues are
then merged with the results of a ®rm's SWOT analysis for further consideration
and response in the form of alternative plans and strategies. It is important to
note that prior to generating actual strategies, a revised mission statement and
set of long-term objectives (e.g. 3±5 years) will now be written. The updated
mission statement and objectives will include a much broader set of issues and
stakeholders than considered previously, the lens used to envision an organiza-
tion's current position will be outside-in and inside-out, and the goals of quality,
safety and reliability will be directly incorporated and considered on par with
various ®nancial criteria.
The next step in the process is to develop strategies that take advantage of an
organization's internal strengths, minimize weaknesses, ®ght o€ threats to the
®rm or to the environment by the ®rm, and to exploit opportunities emanating
from the market environment or through the reduction or redesign of potentially
harmful products or systems. While a TOWS matrix can still be used e€ectively
and eciently to generate feasible alternative strategies (Weihrich, 1982), addi-
tional crisis avoidance and prevention techniques need to be employed. A wide
array of possibilities has already been presented (see item (3), page 779). Several
companies that have already made crisis management an integral part of their
strategy development have found that these e€orts can result in strategic advan-
tages over their competition (Pauchant et al., 1991). For example, an executive
# Blackwell Publishers Ltd 1997
 INTEGRATING THE CRISIS MANAGEMENT PERSPECTIVE 785

in an insurance company indicated that his organization had recently won a

large government contract over their competitors, partly due to their extensive
contingency capabilities in the area of information technology. Another executive
in the banking industry claimed that continuous customer service had been
maintained during a large telephone outage by operating a mobile unit in the
a€ected areas. DuPont is developing a new generation of environmentally safe
products and is actually selling specialized services in CM training (Pauchant et
al., 1991).
Royal Dutch/Shell Group has developed strategies that position them well to
respond e€ectively to high levels of risks that they perceive in their complex
operating environment. For example, Shell employs a decentralized organiza-
tional structure, with six managing directors and a host of service companies (i.e.
research and technical sta€) supporting some 260 principal operating units.
These entities attempt to blend with their local communities, and operate with
almost complete autonomy under an organizational culture that encourages indi-
vidual initiative. This overall approach to managing allows individual units to
respond quickly to any crisis that might suddenly occur. The use of advanced
technology is another device used to reduce the physical and environmental risks
(i.e. operating in deep water or arctic terrain) faced by Shell. The company
spent $845 million on research and development in 1990 and is the world leader
in three-dimensional seismic technology, which signi®cantly improves the `hit
rate' on striking oil and thus fewer wells need to be drilled (Knowlton, 1991).
The next phase in the strategic management process is that of strategy imple-
mentation, which begins with the articulation of company policies (i.e. general
guidelines for taking action) and annual goals that are designed to help achieve
long-term objectives. Detailed crisis plans should be formalized and put in
writing at this time. Crisis plan documentation should include elements such as
the expected procedures, and employee and manager areas of responsibility.
Setting up crisis management `teams' that can swing into action when a
disaster strikes has been a most popular crisis readiness strategy (e.g. Heinz,
United Airlines, Dow Chemical, Waste Management). The composition of a
crisis management team (CMT) should include a core group of managers with
general crisis management skills and di€erent sets of specialists who can be called
in quickly to manage di€erent types of crises (Shrivastava and Mitro€, 1987). For
example, the CMT would normally consist of representatives from at least the
following divisions: (1) legal, (2) security, (3) human resources, (4) health and
safety, (5) quality assurance or operations, and (6) corporate communications or
public a€airs (Mitro€ et al., 1996). The core group should have CEO support
and sucient authority to make decisions and commit resources (our model
actively seeks this support in a subsequent step). They must be able to handle
the stress and be ¯exible and creative enough to respond to novel high pressure
situations. Outside specialists might include neutral experts (e.g. Dow Chemical
Canada has used a regional public health ocer to explain to the public the
hazards of a chemical spill into a nearby river), `truth squads' of scientists ready
to present the `facts' to the public (Nelkin, 1988), medical personnel, etc.
Fink (1986) has argued that bene®ts can accrue by rehearsing for crises, such
as the way in which the military prepares for combat with war games. Preparing
for crises provides an opportunity for cognitive rehearsal of coping with high
# Blackwell Publishers Ltd 1997
786 JOHN F. PREBLE

uncertainty (Kiesler and Sproull, 1982). One consulting company, Hill and
Knowlton, Inc., tests a company's crisis team performance by conducting
simulated emergencies. Similarly, United Airlines screens members of their crisis
team by conducting simulated crisis drills. Quarantelli (1988) recommends that
exercises and training be held on ways to be creative, imaginative, and to deal
with unfamiliar external groups in a crisis situation.
Media communications with the public are considered key to the success or
failure of any crisis situation. The objective should be to build public trust
through direct and open communication (Augustine, 1995). Initial secrecy or
delay in informing the public leads to anger and creates suspicion (Nelkin, 1988).
Dow Chemical Canada believes that you need to be prepared to inform the
public about a crisis during the ®rst 24 hours of its occurrence. Dow Canada
has an emergency-response team that is ready with information kits on the
potential hazards of each of the company's products, and executives who have
been trained in interview techniques. Other organizations are retaining public
relations, law and consulting ®rms to train them in the art of e€ective, rational,
non-emotional crisis communication.
The crisis plan has been written, crisis teams have been formed, a detailed crisis
communications strategy has been articulated and several simulations/rehearsals
have been run. As ®gure 3 indicates, this is an appropriate time to seek formal
approval and commitment from senior management and the board of directors.
The timing of these activities directly parallels the company's resource allocation
process, but now funds will be allocated to both competitive and crisis strategies
re¯ecting a comparable level of importance and commitment to each.
The ®nal phase of the integrated SM process model is the evaluation of
progress to date towards the achievement of strategies and crisis plans using both
feedback and feedforward controls (discussed earlier). The information obtained
is used to solve problems, take corrective actions, re®ne strategies and reward
performance. Special alert controls have been blended into this process and crisis
readiness is continually determined through periodic simulations and drills.
Should a crisis have occurred or been thwarted at the incident stage during the
review period, an extensive evaluation of the organization's crisis management
performance can be conducted. Additional crisis prevention strategies can then
be explored and, if needed, be incorporated into the new planning cycle.

SUMMARY AND CONCLUSION

This paper has discussed the reasons why the ®elds of strategic management and
crisis management have evolved in a parallel fashion to date. In spite of these
developments, it has been shown here that numerous core similarities help to
de®ne an inexorable link between SM and CM and that key di€erences in
perspectives provide several areas of integration opportunity.
In an e€ort to uncover more of the common ground existing between SM and
CM and to provide a tangible step towards integrating these ®elds we did the
following. First, a consensus model of the strategic management process was
explicated and then examined with respect to a gap that exists in this orientation.
We then discussed di€erences and similarities between SM and CM perspectives.
# Blackwell Publishers Ltd 1997
 INTEGRATING THE CRISIS MANAGEMENT PERSPECTIVE 787

Next we presented a prescriptive CM process model that has been widely used
in the ®nancial services industry. We then argued, at some length, why these
®elds need to be brought closer together and in a timely fashion.
It was then possible, using commonly accepted models of SM and CM, to
present an integrated strategic management process model that incorporates the
CM perspective directly into the SM framework. The steps in the model were
then explained as well as the bene®ts that could be expected to be realized by
the integration. A key bene®t is, of course, adding CM's defensive capability for
preventing crises or lessening their e€ects if they occur to SM's o€ensive focus
on markets and competition in order to make the SM process more comprehen-
sive, thorough and e€ective. This new process should result in a better balance
between the production orientation of ®rms and the destructive e€ects of causing
a sudden catastrophic crisis or creating negative externalities like pollution on a
daily basis. Additionally, a much needed bene®t is that the integrated model
represents an ideal pedagogical tool to bring the discussion of crisis management
issues directly into the business school curriculum ± for example, as part of
existing strategic planning/strategic management courses. Further, it is expected
that the direct incorporation of CM into SM should, as Pauchant and Mitro€
(1992) have suggested, provide a positive stimuli to push forward the boundaries
of SM and thus contribute to the scienti®c advancement of the ®eld. It should
also facilitate the reduction of barriers that have been blocking CM's more wide-
spread practice and legitimation in the minds of some managers. In the ®nal
analysis, a strategic management process that doesn't strive for high reliability
and crisis preparedness is no SM process at all, it is one doomed to failure ± an
accident waiting to happen.

NOTE

* I would like to thank C. Gopinath, Richard C. Ho€man, Arie Reichel and three
anonymous JMS reviewers for their helpful comments on earlier drafts of this paper.

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