SI Seminar with Jennifer Oetzel

There is a substantial amount of research interest on how firms can develop effective strategies for managing exogenous risk. Yet, less is know about how to prepare in advance for major disasters and other threats. Preparation is often a critical part of an effective risk management strategy but the topic tends to be overlooked in strategy research. Drawing on the literatures on risk perception and experiential learning, we investigate why some firms in disaster-prone areas engage in disaster preparation while others do not. Using unique cross-country survey data on top managers from 575 firms in 18 disaster-prone countries, we find that direct negative experience with natural disasters increases the likelihood that managers will prepare for future hazards. Also, a willingness to learn from others positively mediates this relationship. Direct negative experience with disasters positively affects managers’ threat perceptions but has a weak effect on the relationship between direct experience and firm preparation. Given that there are thousands of cities around the world, and perhaps millions of managers and firms who are not prepared for a disaster, understanding the factors that influence the decision to prepare can be financially valuable to businesses (and possibly lifesaving).

The seminar takes place in Kilen 2.53 and is open to all.