The influences of business and decision makers’ characteristics on disaster preparedness—A study on the 1989 Loma Prieta earthquake

Abstract

Disaster preparedness is very important for business continuity, but the determinants of disaster preparedness in business organizations have not been explored much in existing research. Therefore, in this article we undertake to analyze the influences of organizational and decision makers’ characteristics on business disaster preparedness. In 1997, eight years after the Loma Prieta earthquake, the Disaster Research Center at University of Delaware conducted a large-scale mail questionnaire survey in Santa Cruz County, California, which was hard-hit by the 1989 earthquake. A total of 933 completed surveys from business organizations were obtained. Our analysis is based on this historical dataset. The results revealed that larger companies are more likely to engage in disaster preparedness activities, which is consistent with previous studies. Companies in finance, insurance, and real estate sectors tend to prepare more for disasters compared with wholesale and retail trade firms. Disaster experience has a significant and positive impact on business disaster preparedness, and the degree of lifeline loss can be a reasonable indicator of the disaster experiences of business organizations. One interesting finding is that the better a company’s financial condition is, the less it will engage in preparing for disasters. Finally, the risk perception of business owners or decision makers has a statistically significant and consistent positive effect on business disaster preparedness activities.

Keywords

business / disaster experience / disaster preparedness / risk perception

References

[1] Alesch D. J., Taylor C., Ghanty A. S., Nagy R. A.. Committee on Socioeconomic Impacts Earthquake Risk Reduction and Small Business. National Earthquake Conference Monograph 5: Socioeconomic Impacts, 1993, Memphis, TN: Central United States Earthquake Consortium 133-160.

[2] Arrow K. J.. Essays in the Theory of Risk-Bearing, 1971, Amsterdam: North-Holland Pub. Co

[3] Banerjee M. M., Gillespie D. F.. Strategy and Organizational Disaster Preparedness. Disasters, 1994, 18(4): 344-354 10.1111/j.1467-7717.1994.tb00321.x

[4] Browne M. J., Hoyt R. E.. The Demand for Flood Insurance: Empirical Evidence. Journal of Risk and Uncertainty, 2000, 20(3): 291-06 10.1023/A:1007823631497

[5] Cochrane H. C.. N. R. C. Committee on Earthquake Engineering Overview of Economic Research on Earthquake Consequences. The Economic Consequences of a Catastrophic Earthquake: Proceedings of a Forum, 1992, Washington, DC: The National Academies Press 101-111.

[6] Corey C. M., Deitch E. A.. Factors Affecting Business Recovery Immediately after Hurricane Katrina. Journal of Contingencies and Crisis Management, 2011, 19(3): 169-181 10.1111/j.1468-5973.2011.00642.x

[7] Cruz A. M., Steinberg L. J.. Industry Preparedness for Earthquakes and Earthquake-Triggered Hazmat Accidents in the 1999 Kocaeli Earthquake. Earthquake Spectra, 2005, 21(2): 285-03 10.1193/1.1889442

[8] Cutter S. L., Emrich C.. Are Natural Hazards and Disaster Losses in the US Increasing?. EOS Transactions, 2005, 86(41): 381-388 10.1029/2005EO410001

[9] Dahlhamer, J. M., and L. Reshaur. 1996. Businesses and the 1994 Northridge Earthquake: An Analysis of Pre- and Post-Disaster Preparedness. Paper presented at the Annual Meeting of the Eastern Sociological Society, Boston, MA.

[10] Dahlhamer J. M., D’souza M. J. J.. Determinants of Business- Disaster Preparedness in Two U.S. Metropolitan Areas. International Journal of Mass Emergencies and Disasters, 1997, 15(2): 265-281.

[11] Dillman D. A.. Mail and Telephone Surveys: The Total Design Method, 1978, New York: John Wiley & Sons

[12] Dooley D., Catalano R., Mishra S., Serxner S.. Earthquake Preparedness: Predictors in a Community Survey. Journal of Applied Social Psychology, 1992, 22(6): 451-470 10.1111/j.1559-1816.1992.tb00984.x

[13] Drabek T. E.. Anticipating Organizational Evacuations: Disaster Planning by Managers of Tourist-Oriented Private Firms. International Journal of Mass Emergencies and Disasters, 1991, 9(2): 219-245.

[14] Drabek T. E.. Disaster Evacuation and the Tourist Industry, 1994, Boulder, CO: Institute of Behavioral Science, University of Colorado

[15] Drabek T. E.. New Study Shows that Growing Tourist Industry is Inadequately Prepared for Emergencies. Hazard Technology, 1994, 14(1): 17-21.

[16] Drabek T. E.. Disaster Responses within the Tourist Industry. International Journal of Mass Emergencies and Disasters, 1995, 13(1): 7-23.

[17] Finucane M. L., Slovic P., Mertz C. K., Flynn J., Satterfield T. A.. Gender, Race, and Perceived Risk: The “White Male” Effect. Health, Risk & Society, 2000, 2(2): 159-172 10.1080/713670162

[18] Gujarati D.. Econometrics by Example, 2011, Hampshire, UK: Palgrave Macmillan

[19] Jackson E. L.. Response to Earthquake Hazard. Environment and Behavior, 1981, 13(4): 387-16 10.1177/0013916581134001

[20] Kunreuther H.. Mitigating Disaster Losses through Insurance. Journal of Risk and Uncertainty, 1996, 12(2): 171-187 10.1007/BF00055792

[21] Kunreuther H., Ginsberg R., Miller L., Sagi P., Slovic P., Borkan B., Katz N.. Disaster Insurance Protection: Public Policy Lessons, 1978, New York: Wiley

[22] Lindell M. K., Perry R. W.. Household Adjustment to Earthquake Hazard: A Review or Research. Environment and Behavior, 2000, 32(4): 461-501 10.1177/00139160021972621

[23] Lindell M. K., Prater C. S.. Household Adoption of Seismic Hazard Adjustments: A Comparison of Residents in Two States. International Journal of Mass Emergencies and Disasters, 2000, 18(2): 317-338.

[24] MacCrimmon K. R., Wehrung D., Stanbury W. T.. Taking Risks: The Management of Uncertainty, 1988, New York: Free Press

[25] Miceli R., Sotgiu I., Settanni M.. Disaster Preparedness and Perception of Flood Risk: A Study in an Alpine Valley in Italy. Journal of Environmental Psychology, 2008, 28(2): 164-173 10.1016/j.jenvp.2007.10.006

[26] Mileti D. S., Darlington L. A. D., Fitzpatrick C., O’Brien P. W.. Communicating Earthquake Risk: Societal Response to Revised Probabilities in the Bay Area, 1993, Boulder, CO: University of Colorado Natural Hazards Research and Application Information Center

[27] Mileti D. S., Drabek T. E., Haas J. E.. Human Systems in Extreme Environments: A Sociological Perspective, 1975, Boulder: Institute of Behavioral Science, University of Colorado

[28] Mulilis J. P., Lippa R.. Behavioral Change in Earthquake Preparedness Due to Negative Threat Appeals: A Test of Protection Motivation Theory. Journal of Applied Social Psychology, 1990, 20(8): 619-638 10.1111/j.1559-1816.1990.tb00429.x

[29] Nigg, J. M. 1995. Business Disruption Due to Earthquake-Induced Lifeline Interruption. Paper presented at the Sino-US Workshop on Post-Earthquake Rehabilitation and Reconstruction, Kunming, China.

[30] Ozdemir O., Yilmaz C.. Factors Affecting Risk Mitigation Revisited: The Case of Earthquake in Turkey. Journal of Risk Research, 2011, 14(1): 17-46 10.1080/13669871003782751

[31] Peacock W. G.. Hurricane Mitigation Status and Factors Influencing Mitigation Status Among Florida’s Single-Family Homeowners. Natural Hazards Review, 2003, 4(3): 149-158 10.1061/(ASCE)1527-6988(2003)4:3(149)

[32] Pennings J. M. E., Grossman D. B.. Responding to Crises and Disasters: The Role of Risk Attitudes and Risk Perceptions. Disasters, 2008, 32(3): 434-448 10.1111/j.1467-7717.2008.01048.x

[33] Pratt J. W.. Risk Aversion in the Small and in the Large. Econometrica: Journal of the Econometric Society, 1964, 32(1–2): 122-136

[34] Quarantelli E. L., Lawrence C., Tierney K., Johnson T.. Initial Findings from a Study of Socio-Behavioral Preparations and Planning for Acute Chemical Hazard Disasters. Journal of Hazardous Materials, 1979, 3(1): 77-90 10.1016/0304-3894(79)85006-2

[35] Sadiq, A. A. 2010. Digging through Disaster Rubble in Search of the Determinants of Organizational Mitigation and Preparedness. Risk, Hazards & Crisis in Public Policy 1(2): Article No. 2.

[36] Sadiq, A. A. 2011. Adoption of Hazard Adjustments by Large and Small Organizations: Who is Doing the Talking and Who is Doing the Walking? Risk, Hazards & Crisis in Public Policy 2(3): Article No. 6.

[37] Siegrist M., Gutscher H.. Natural Hazards and Motivation for Mitigation Behavior: People Cannot Predict the Affect Evoked by a Severe Flood. Risk Analysis, 2008, 28(3): 771-778 10.1111/j.1539-6924.2008.01049.x

[38] Slovic P.. Perception of Risk. Science, 1987, 236(4799): 280-285 10.1126/science.3563507

[39] Slovic P., Finucane M. L., Peters E., MacGregor D. G.. Risk as Analysis and Risk as Feelings: Some Thoughts about Affect, Reason, Risk, and Rationality. Risk Analysis, 2004, 24(2): 311-322 10.1111/j.0272-4332.2004.00433.x

[40] Tierney K. J.. Facing the Unexpected: Disaster Preparedness and Response in the United States, 2001, Washington, DC: National Academy Press

[41] Tierney K. J.. Rodríguez H., Quarantelli E. L., Dynes R. R.. Businesses and Disasters: Vulnerability, Impacts, and Recovery. Handbooks of Disaster Research, 2007, New York: Springer 275-296 10.1007/978-0-387-32353-4_16

[42] Tierney K. J., Nigg J. M.. Business Vulnerability to Disaster-Related Lifeline Disruption. Proceedings of Fourth US Conference on Lifeline Earthquake Engineering, 1995, New York: American Society of Civil Engineers, Technical Council on Lifeline Earthquake Engineering. 72-79.

[43] UNISDR (United Nations International Strategy for Disaster Reduction). 2011. Economic Disaster Losses Increasing, Threatening All Regions, Rich and Poor Countries, Warns New United Nations Report. http://www.unisdr.org/archive/19849.

[44] Wasileski G., Rodriguez H., Diaz W.. Business Closure and Relocation: A Comparative Analysis of the Loma Prieta Earthquake and Hurricane Andrew. Disasters, 2011, 35(1): 102-129 10.1111/j.1467-7717.2010.01195.x

[45] Webb G. R., Tierney K. J., Dahlhamer J. M.. Businesses and Disasters: Empirical Patterns and Unanswered Questions. Natural Hazards Review, 2000, 1(2): 83-90 10.1061/(ASCE)1527-6988(2000)1:2(83)

[46] Webb G. R., Tierney K. J., Dahlhamer J. M.. Predicting Long- Term Business Recovery from Disaster: A Comparison of the Loma Prieta Earthquake and Hurricane Andrew. Global Environmental Change Part B: Environmental Hazards, 2002, 4(2–3): 45-58 10.1016/S1464-2867(03)00005-6

[47] Weinstein N. D.. Effects of Personal Experience on Self- Protective Behavior. Psychological Bulletin, 1989, 105(1): 31-50 10.1037/0033-2909.105.1.31