The Impact of Organizational Crisis Preparedness on Firm Business Performance

Purpose – Organizations which are crisis prepared are generally considered better equipped to anticipate, detect, manage and make adequate decisions in times of crisis. Therefore, organizational crisis preparedness has strategic importance and significant influence on business. Additionally, very successful organizations are to a large extent crisis prepared, which implies the existence of close ties between general business success and organizational crisis preparedness. Hence, it is of managerial interest to gain insight into whether organizational crisis preparedness can be considered an important determinant of business success. This study aims to empirically explore the importance of medium and large sized firms’ organizational crisis preparedness and subsequent impact on their business success. Moreover, it aims to determine whether current organizational crisis preparedness and prospective organizational crisis preparedness statistically significantly influence firm’s organizational performance, measured through its two dimensions – business efficiency and business effectiveness. Design/Methodology/Approach – This study applies variance-based structural equation modeling PLS SEM on a set of empirically gathered results from a primary research survey. Findings and implications – This paper empirically confirmed the existence of statistically significant positive impact of organizational crisis preparedness on the business success. Limitations – Research sample size is adequate; however, it comprises multiple industries and does not fully reflect specific measures of organizational crisis preparedness of each single industry. Originality – Research provides interesting insight into the inadequately empirically explored concept of crisis management, along with providing recommendations for managers.