Managing Uncertainty in Crisis: Exploring the Impact of Institutionalization on Organizational Sensemaking (Research Series on the Chinese Dream and China S Development)

This book studies the variety of organizational strategies selected to cope with critical uncertainties during crises. This research formulates and applies an institutional sense-making model to explain the selection of strategies for coping with uncertainties during crises to answer the question why some organizations select a rule-based strategy to cope with uncertainties, whereas others pursue a more ad hoc-based strategy. It finds that the level of institutionalization does not affect strategy selection in the initial phase of responding to crises; that three rigidity effects can be identified in the selection of sense-making strategies once organizations have faced the failure of their selected strategies; that discontinuities in the feedback loop of sense-making do not necessarily move organizations to switch their sense-making strategies, but interact with institutionalization to contribute to switching sense-making strategies. This book bridges the gap betwee n institutional thinking and crisis management theorizing. A major step forward in the world of crisis management studies! --Professor Arjen Boin, Leiden University, the Netherlands In a world of increasingly complex, sociotechnical systems interacting in high-risk environments, Professor Lus analysis of how organizations manage uncertainty is both timely and profound. --Professor Louise K. Comfort, Director, Center for Disaster Management, University of Pittsburgh, USA Prof. Lu greatly enhances our understanding of how organizations cope with uncertainty and make sense of their challenges under the pressures of catastrophe. --Dr. Arnold M. Howitt, Faculty Co-Director, Program on Crisis Leadership, Harvard Kennedy School, USA This book provides not only a theory of crisis management but also a key concept around which research and practice can be conducted. --Professor Naim Kapucu, Director of S chool of Public Administration, University of Central Florida, USA A generic instit utional model for analyzing and managing hazards, disasters and crises worldwide. --Professor Joop Koppenjan, Erasmus University Rotterdam, the Netherlands This book has done an excellent job in opening the black box of how organizations make sense of the crisis situations they face and develop strategies to respond. It should be read by all of us who wish for a peaceful and safe world. --Professor Lan Xue, Dean of School of Public Policy and Management, Tsinghua University, China Preface 7 Acknowledgements 9 Contents 10 About the Author 15 List of Figures 16 List of Tables 18 Summary 19 1 Managing Uncertainty in Crisis Sensemaking: A Core Challenge for Public Leadership 24 1.1 Introduction: Exploring the Black Box of Dealing with Uncertainty in Crises 24 1.2 Uncertainty in Crises as a Challenge to Crisis Managers 26 1.2.1 Challenges for Crisis Managers 27 1.3 Research Puzzle: Explaining the Variation of Strategies for Coping with Uncertainties in Crises 28 1.4 Research Strategy: Towards an Institutional Sensemaking Model 31 1.4.1 Comparative Case Study 33 1.5 Research Aims and Outline 34 1.5.1 Outline 34 2 Coping with Uncertainty: Towards an Institutional Sensemaking Model 36 2.1 Introduction 36 2.2 Causes of Diversity in Strategy Selection: Different Types of Uncertainties 37 2.3 Causes of Diversity in Strategy Selection: Psychological Factors 41 2.3.1 Coping with Uncertainty: Individual Cognition Matters 41 2.3.2 Coping with Uncertainty: Prior Experience Matters 43 2.4 Causes of Diversity in Strategy Selection: Organizational Factors 44 2.4.1 Coping with Uncertainties: Information Processing Matters 45 2.4.2 Coping with Uncertainty as a Sensemaking/Organizing Process 46 2.4.3 Coping with Uncertainties: Institutions Matter I 50 2.5 Causes of Diversity in Strategy Selection: The Macro Environment 51 2.5.1 Coping with Uncertainties: Institutions Matter II 51 2.6 Towards an Institutional Sensemaking Model 54 2.7 Conclusion 57 3 Exploring the Influence of Institutionalization on Sensemaking in Crises: A Research Design 58 3.1 Introduction 58 3.2 Defining and Operationalizing Key Variables 58 3.2.1 Defining Uncertainty in a Crisis 58 3.2.2 The Dependent Variable: Strategy Selection 60 3.2.3 Mapping Out the Dimensions of Institutionalization as Independent Variables 62 3.2.3.1 Institutionalization: The Internal Dimension 62 3.2.3.2 Institutionalization: The External Dimension 64 3.2.4 A New Typology of Organizations Based on Institutionalization 66 3.3 Towards an Empirical Exploration of Institutional Sensemaking: Integrating Comparative-Case Study and Within-Case Analysis 68 3.3.1 Case Selection and Data Sources 68 3.3.2 Data Analysis: Process Tracing and Theory Development 71 4 The U.S. Federal Emergency Management Agency and the 2005 Great New Orleans Flood: A Deinstitutionalized Response Organization Facing Unknown Unknowns 73 4.1 Introduction 73 4.2 The Big Easy: A Vulnerable City Hit by a Predictable Top 10 Catastrophic Event 74 4.3 The Deinstitutionalization of FEMA 76 4.3.1 Federal Emergency Management Policy in the United States 76 4.3.2 A Shining Star Among Federal Agencies: FEMA Before 2001 77 4.3.2.1 FEMA’s Internal Institutionalization 77 4.3.2.2 FEMA’s External Institutionalization 82 4.3.3 FEMA’s Deinstitutionalization After 9/11 83 4.3.3.1 FEMA’s Internal Deinstitutionalization After 9/11 84 4.3.3.2 FEMA’s External Deinstitutionalization After 9/11 88 4.4 FEMA and the Great New Orleans Flood: Identifying Uncertainties and Coping Actions 91 4.4.1 Preparing for Hurricane Katrina 92 4.4.2 FEMA’s Actions to Cope with Uncertainties During the Response to the New Orleans Flooding 93 4.5 Analysis: A Deductive Sensemaking Model in a Deinstitutionalized Response Organization 102 5 NASA and the Space Shuttle Columbia Disaster: An Institution Coping with “Unknown Unknowns” 107 5.1 Introduction 107 5.2 NASA: An American Institution 109 5.2.1 NASA in the Apollo Era 109 5.2.1.1 The External Dimension 109 5.2.1.2 The Internal Dimension 110 5.2.2 NASA in the Post-Apollo Era: Doing More with Less 112 5.2.2.1 The External Dimension 112 Political support 112 Public support 114 Contractors 115 5.2.2.2 The Internal Dimension of Institutionalization 116 5.3 NASA and the Space Shuttle Columbia Disaster: Identifying Uncertainties and Coping Strategies 121 5.4 Analysis: The Collapse of Collective Sensemaking in an Institutionalized Organization 128 6 BP and the 2010 Gulf Coast Oil Spill Disaster: An Arrogant Organization Coping with a “Known Unknown” 134 6.1 Introduction 134 6.2 The 2010 Gulf Coast Oil Spill Disaster 135 6.3 BP as an “Arrogant Organization” 137 6.3.1 BP’s Early Years as a State-Owned Company (Before 1987) 137 6.3.2 BP’s Institutionalization 138 6.3.3 The Internal Dimension 138 6.3.4 The External Dimension 142 6.3.5 BP After the Merger Wave 146 6.3.5.1 The Internal Dimension: Too Much Cost Cutting? 147 6.3.5.2 The External Dimension 149 6.4 BP and the 2010 Gulf Oil Spill Disaster: Identifying Uncertainties and Coping Actions 151 6.4.1 Uncertainties and Coping Actions 152 6.5 Analysis: An Arrogant Organization Playing with Discretion 161 7 The Los Angeles Police Department and the 1992 LA Riots: A Mythical Organization Coping with Known Unknowns 167 7.1 Introduction 167 7.2 An Overview of the 1992 Los Angeles Riots 168 7.3 LAPD as a Mythical Organization 170 7.3.1 LAPD and South Central Los Angeles 170 7.3.2 Parker’s “Thin Blue Line” 171 7.3.2.1 The Internal Dimension 171 7.3.2.2 Institutionalization: The External Dimension 175 7.3.3 The Post-Parker Era 176 7.3.3.1 The Internal Dimension 176 7.3.3.2 Institutionalization: The External Dimension 178 7.3.4 After the 1991 King Incident: Escalating Deinstitutionalization 182 7.3.4.1 Institutionalization: The External Dimension 182 7.3.4.2 The Internal Dimension 183 7.4 In Summary 184 7.5 LAPD and the 1992 LA Riots: Identifying Uncertainties and Coping Actions 185 7.5.1 Los Angeles’ Emergency Preparedness Before the Trial 186 7.5.2 Coping with Uncertainties During the Response to the 1992 Riots 188 7.6 Analysis: A Deinstitutionalizing Organization Caught Short 196 8 Towards a Theory of Institutional Sensemaking: Building on a Comparison of Four Cases 202 8.1 Introduction 202 8.2 Comparing the Influence of Institutionalization on Sensemaking Strategies: Towards a Dynamic Model of Institutional Sensemaking 203 8.2.1 Organizational Sensemaking Starts with Rule-Based Strategies 203 8.2.2 Rule-Based Sensemaking, Discontinuities, and Institutionalization 206 8.2.2.1 Discontinuities as Internal Contradictions 206 8.2.2.2 Discontinuities as Failures of a Rule-Based Sensemaking Strategy 208 8.2.3 Specific-Based Sensemaking in Crises: Mission Impossible? 210 8.2.4 Sensemaking After Intervention by Authorities 212 8.3 Implications for Theory 213 8.3.1 An Expansion of Sensemaking Theory 213 8.3.2 Contributions to Institutional Theory 215 8.3.3 Contributions to Crisis Management Theory 216 8.4 Policy Implications 217 8.4.1 Organizing Sensemaking Feedback Loops 217 8.4.2 Overcoming Organizational Routines That Do Not Work 218 8.4.3 Build a Unique Organizational Capacity: Instant/Emergent Institutionalization 219 8.5 Reflections on Sensemaking and Crisis Management in China 219 8.5.1 Limited Availability of Data Is a Barrier to Studying Crises in China 219 8.5.2 Testing Western Theories in the Chinese Context and Adapting Them 220 8.6 Limitations of the Study and Recommendations for Future Research 222 Appendix A: A List of Web Sources Relevant to This Research 225 Appendix B: Figures and Tables Indicating the Flooding Areas in New Orleans 228 References 232 Front Matter ....Pages i-xxvii Managing Uncertainty in Crisis Sensemaking: A Core Challenge for Public Leadership (Xiaoli Lu)....Pages 1-12 Coping with Uncertainty: Towards an Institutional Sensemaking Model (Xiaoli Lu)....Pages 13-34 Exploring the Influence of Institutionalization on Sensemaking in Crises: A Research Design (Xiaoli Lu)....Pages 35-49 The U.S. Federal Emergency Management Agency and the 2005 Great New Orleans Flood: A Deinstitutionalized Response Organization Facing Unknown Unknowns (Xiaoli Lu)....Pages 51-84 NASA and the Space Shuttle Columbia Disaster: An Institution Coping with “Unknown Unknowns” (Xiaoli Lu)....Pages 85-111 BP and the 2010 Gulf Coast Oil Spill Disaster: An Arrogant Organization Coping with a “Known Unknown” (Xiaoli Lu)....Pages 113-145 The Los Angeles Police Department and the 1992 LA Riots: A Mythical Organization Coping with Known Unknowns (Xiaoli Lu)....Pages 147-181 Towards a Theory of Institutional Sensemaking: Building on a Comparison of Four Cases (Xiaoli Lu)....Pages 183-205 Back Matter ....Pages 207-239