Managing Crises: Lessons for Managers from the SARS Outbreak in China

International Journal of Management, Sep 2007 by Flynn, Dave, Lenaghan, Janet

An examination of the events and responses surrounding the SARS (Severe Acute Respiratory Syndrome) crisis provides a context to analyze crisis management strategy. Herein, we suggest that organizations need to expand the breadth of crisis management to respond proactively to an array of potential threats. Herein, we also introduce an integrative construct, Threshold of Security, as a model for corporate action.

Introduction

Chinese health officials first gave the World Health Organization sketchy details on 16 March 2003 about a mysterious respiratory ailment, which we now know as SARS, that is believed to have first broken out in Guangdong Province. World Health Organization (WHO) officials were elated to receive the information, because it was the first official communication from China about the outbreak and thus, provided a opportunity to explore the potential causes of the emergence and spread of the virus.

Herein, we review the reluctant and slow response of the Guangdong and Beijing government officials to a potentially devastating health crisis. As a result of the outbreak of SARS, the economy of China significantly dropped off in the 2nd quarter of 2003. Since that time the economy has revived to its original growth rates of approximately 6-8%. However, SARS sickened 8,000 people worldwide and killed 774 (approx.), by December of 2003 (Regalado et al., 2003). Of these casualties, 349 were on the Chinese mainland and 299 in Hong Kong, according to the WHO.

China's Response - Culture and Development

We begin by examining the causes of the crisis. Although, China has recently taken steps to kill civet cats, sold in the open market that have been found to carry the SARS Coronavirus, these markets have long been critical to the eating behavior of the Chinese people who distrust food, e.g. animals, birds, and fish, that is not alive. Fresh killed is important to the perception of healthy cuisine but it creates conditions that allow germs to multiply and migrate from one species to another.

For a time, the Chinese government agreed in the theory about possible transmission of the diseases and proceeded, in April of 2003, to ban the trading of all exotic species of animals. But the strictures were eased in August of 2003 to provide relief to tens of thousands of vendors, restaurant workers, and others left unemployed by the ban. Even the rules that still exist to restrict the killing of exotic animals are often ignored in a nation that largely considers political insurrection, as the main cause for rigorous enforcement.

The SARS crisis is not about the epidemic's medical demands or its economic fallout. Instead, it is political. For example, a more transparent political system would have allowed a freer flow of information about the disease. One of the hallmarks of the Chinese political system is that the goals are set by the leadership, and bureaucrats - mindful of these 'goals' - report statistics back to the top. Chinese employees have been indoctrinated into a system which rewards those who follow directives not those who act or think independently (Kiger, 2003) This is the source of suspicion about China's economic growth statistics and the reason why provincial officials have (or hopefully, had) been covering up the extent of epidemic. Hofstede ( 1 99 1 ) defined Chinese culture as one that has a relatively high power distance, and low individualism. The stability of the society is based on unequal relationships between people who assume complementary obligations. One needs to respect the societal hierarchy and fulfill their obligations to authority in an obedient and subservient manner, also a Confucian virtue.

Notwithstanding long held beliefs, the government's response - secrecy above human lives - has created a confidence crisis among the Chinese people. This type of "legitimacy crisis" (Habermas, 1975) in which followers withdraw allegiance to decision-makers and begin to doubt the present social structure and institutions, can lead to social unrest and conflict (O'Connor, 1987). Effective communications is paramount to preserving the belief of any stakeholder. When a crisis is dealt with behind a veil of secrecy, it leaves all beyond the hem to question management's effectiveness. Moreover, when speculation serves as the only means of information, rumors will likely surface to fill the void providing the fuel to intensify the crisis (Pearson & Clair, 1998, Weick, 1988). As Pearson and Clair (1998) posit the early dissemination of information will help repair the "breakdown of social order created by the crisis".

However, as the SARS epidemic demonstrated, China's political system is still relatively opaque and can threaten the economies and livelihoods of its neighbors. Beijing's early bungling of the crisis quickly undermined goodwill toward China in the Asia-Pacific region. Focusing on internal stability, the country's leaders initially ignored the disease, facilitating its spread by withholding information. Fortunately, the crisis has left these leaders newly sensitized to their country's tight integration with the international community (Medeiros & Fravel, 2003). Consistent with Pearson and Chair's definition of crisis management, it can yield both "success and failure components as outcomes" (1998). The key is for decision-makers to acknowledge the failures without fear of tainting the entire process. Inherent in the notion of crisis management is the understanding that no country, organization, or individual can completely avoid crisis, however, those that manage it well, will be better served. In fact, the World Health Organization suggests that every nation develop a pandemic preparedness plan which identifies an adequate system for alert, response and disaster management. Organizational preparedness is essential in successfully minimizing or avoiding the peril altogether.