Do Managers and Strategies Matter? A Study In Crisis*

Daniel W. Greening and Richard A. Johnson

Journal of Management Studies, 1996, vol. 33, issue 1, 25-51

Abstract: Highly interactive, tightly coupled, high‐risk technological systems have introduced the potential for catastrophic events. Although many people consider crises and disasters to be inevitable, our results suggest that firms that are better able to avoid crisis events have top‐management teams with a higher level of functional team heterogeneity, higher education levels, shorter organizational tenures, and more tenure heterogeneity. These characteristics serve as proxies for deeper underlying cognitive processes such as more complex thinking, quality decision making, dialectical inquiry, and multiple perspectives in solving potential catastrophic problems. These cognitive and social processes appear to be successful in addressing interactive complexity in high‐risk technologies, and may be associated with fewer faulty assumptions about firms' vulnerability to crises. In addition, firms whose top managers' time and energy is devoted to managing acquisition and divestment activities are more likely to experience crisis events. Highly diversified firms emphasizing financial and bureaucratic controls appear to develop threat‐rigidities, a lack of firm specific knowledge, and decreased information processing capabilities making them increasingly vulnerable to systemic crisis events.

Date: 1996
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