Exploring the Concept of Crisis in Businesses: a Critical Step in the Formulation and Implementation of Crisis Management

After an initial period of ignorance of the phenomenon of crises that are experienced by businesses, a fast expanding literature is approaching this issue. However, the present authors perceive a lack of commonly agreed conceptualization and taxonomy in debating the situations when companies are facing difficulties. We explore in this paper how economic theory and management knowledge could assist escaping such challenging contexts. We argue that a narrow focus on financial indicators of the company is critical for any business decision targeting the restructuring and reorganization but the deep causes of the challenging context should be identified. We argue that crisis management has in common principles and approaches with risk management but the delimitation should be made clear. There may be organizational crisis when risk management approaches could be employed in order to deal with them but there are many instances when the approach of risk management is insufficient or even not operational. Such circumstances require a real entrepreneurial approach. We advance a coherent system of conceptualizing the crisis and differentiating crisis management from risk management.