Anticipatory Adaptation and Organizational Resilience in Responding to Extreme Weather Impacts

Extreme Weather Events and the Critical Importance of Anticipatory Adaptation and Organizational

Resilience in Responding to Impacts

Martina K. Linnenluecke,

¹

* Andrew Grif fi ths

¹

and Monika Winn

²

1UQ Business School, The University of Queensland, Brisbane, Australia

2Faculty of Business, University of Victoria, Victoria, BC, Canada

ABSTRACT

Growing scienti

fi

c evidence suggests that more frequent and severe weather extremes such as heat waves, hurricanes,

fl

ooding and droughts will have an increasing impact on organizations, industries and entire economies. These

fi

ndings call for the development of theoretical and practical frameworks to strengthen the capacity of organizations to respond to such impacts. Yet despite the need to understand what is required to build anticipatory adaptation and organizational resilience to expected impacts, the organizational theory literature offers only limited insights. This paper proposes a comprehensive conceptual framework of organizational adaptation and resilience to extreme weather events for addressing the effects of ecological discontinuities in organizational research and strategic decision

‐

making. Implications and suggestions for future research are offered. Copyright © 2011 John Wiley & Sons, Ltd and ERP Environment.

Received 1 June 2010; revised 13 December 2010; accepted 16 December 2010

Keywords: organizational adaptation; organizational resilience; climate change impacts; extreme weather events; ecological discontinuities; business strategy; sustainability management; organizational capacity building

Introduction

E

XTREME WEATHER EVENTS CAN CREATE SIGNIFICANT ABRUPT CHANGES IN THE ORGANIZATIONAL ENVIRONMENT AND–

depending on the damage caused – pose a major threat to organizational survival. Impacts of weather extremes can lead to large‐scale disasters if organizations across sectors and related communities incur physical damage, losses and/or disruption of their routine functioning and are unable to cope with the event effectively (Kreps,1984). Recent weather extremes such as the 2011 Queensland floods, the 2010 floods in China and Pakistan, the 2010 drought and wildfires in Russia, the 2009 Victorian Bushfires or hurricanes Ike and Katrina in 2008 and 2005, respectively, have focused attention on the human and economic costs of weather‐

related disasters and on the challenge for organizations to deal with their impact (Allenby & Roitz, 2005). The 2010 Russian drought and wildfires, for instance, wiped out significant parts of Russia’s grain production; the corresponding grain shortage and temporary export ban had an impact on international wheat prices. It appears that organizations in these areas, despite having significant adaptive capabilities for competitive environments,

* Correspondence to: Martina K. Linnenluecke,UQ Business School, The University of Queensland, Brisbane, Queensland 4072, Australia.

E-mail: m.linnenluecke@business.uq.edu.au

Published online 16 February 2011 in Wiley Online Library (wileyonlinelibrary.com)DOI:10.1002/bse.708

were unable to assemble or did not possess suitable resources and capabilities for withstanding and recovering from impacts.

While past weather‐related disasters have already created significant challenges for organizations, impacts are likely to increase in the future (Wilbankset al., 2007). Findings from the natural sciences indicate that the increasing surface temperature of the Earth has lasting effects on climate and weather patterns, leading not only to gradual changes in mean climate conditions, but also to greater climate variability and more frequent and intense weather extremes (Trenberthet al., 2007). Together with warnings from global reinsurance companies (e.g. Munich Re, 2007), thesefindings call for deliberate attention to strategic planning. They suggest that formulating longer‐term adaptation and resilience strategies and learning how to respond to ecological discontinuities will be indispensable to management practice. For the context of this paper, we define adaptation as longer‐term, anticipatory adjustments to observed or expected impacts from weather extremes and greater climate variability, while we define resilience as organizational capacity to absorb the impact and recover from the actual occurrence of an extreme weather event.

Expected changes in the frequency and severity of extreme weather events suggest that organizational research needs to better understand and map effective organizational responses to these ecological discontinuities, particularly since coping with more frequent and severe weather extremes lies largely outside the range of previous experience. An assessment of organizational and strategy theories reveals only sparse conceptual foundations for understanding effective organizational responses to weather extremes. While the literature on organizational adaptation to environmental pressures is extensive, it deals primarily with incremental adjustments to relatively continuous (as opposed to increasingly discontinuous) environmental changes (Meyeret al., 2005; National Research Council, 2002). The current literature is also heavily embedded in notions of ‘business as usual’, where ‘environmental disruption’is assumed to be accounted for in either current strategic scanning or in crisis management. The literature on organizational resilience is concerned with how organizations withstand disturbances and discontinuities (e.g. Korhonen & Seager, 2008; Sutcliffe & Vogus, 2003), but offers only limited theoretical and empirical insights into factors promoting organizational resilience to ecological discontinuities due to weather extremes.

Aiming to redress these gaps, this paper develops a conceptual framework of organizational adaptation and resilience, thus focusing on the dynamic interplay between business activities and weather extremes. Our paper is guided by the following questions: Given the expected rise of extreme weather events, how can organizations become strategically prepared and develop adaptation and resilience capacities to counter the effects of these events? And how do we build on current theories of adaptation to create resilient organizations? To address these questions, we begin with a brief overview of the current knowledge of future trend changes in weather extremes and anticipated effects on organizations, thus highlighting the need for organizations to be prepared. Second, we review the literature on organizational adaptation, crisis and disaster management and resilience for their applicability. Building on, bridging and extending these diverse literature streams, we then develop a conceptual framework to explain how organizations can strengthen their capacities for anticipatory adaptation and resilience to extreme weather events. In the final section, we highlight the paper’s contribution and implications for organizational research and practice, and offer suggestions for future research directions.

Climate Change, Extreme Weather Events and Organizations

While uncertainty remains about the effects of climate change in terms of the scope and timing of impacts, there is growing scientific concern that various extremes such as heat waves, droughts, floods and hurricanes may be changing in frequency and intensity as a result of human influences on the Earth’s climate (Trenberthet al., 2007).

Extreme weather events occur when an individual local weather variable (e.g. temperature or rainfall) exceeds a particular threshold (also referred to as simple extremes) or when a critical combination of different variables occurs, as in the case of cyclones or droughts (also referred to as complex extremes; see Table 1). Critical levels that have to be exceeded for a weather event to be classified as extreme are often locally dependent (Schneideret al., 2001).

Changes in extreme events are related to changes in the mean and/or variance of climate variables in complicated ways (Meehlet al., 2000; Trenberthet al., 2007).

Although it is difficult to attribute the occurrence of single events directly to human‐induced climate change, as a wide range of extremes can be reasonably expected to occur in certain geographic locations even under an unchanging

climate (Hegerlet al., 2007), patterns of events reveal trends. In some cases, significant trends have already been observed in recent decades. For instance, droughts have become more common since the 1970s, particularly in the tropics and subtropics (Trenberth et al., 2007). There is also evidence that intense tropical cyclone activity has increased since about 1970, and that there has been a large increase in the number and proportion of hurricanes reaching categories 4 and 5 globally since 1970 (Trenberthet al., 2007; Websteret al., 2005). In the cases of hurricanes Katrina and Rita (2005), scientists have argued that increased sea surface temperatures in the Gulf of Mexico were a factor contributing to their intensity (Trenberth, 2005).

There have also been concerns that, as a result of climate change, large‐scale abrupt and irreversible changes in the Earth’s climate could occur (e.g. Alleyet al., 2003; Hulme, 2003; Schefferet al., 2001), potentially leading to even greater challenges for industries and organizations (the third option in Table 1). Individual business organizations would experience such climate and resulting social system shifts as‘massive discontinuous change’

(Winnet al., 2010). While the probability of occurrence and magnitude of the impact of such large‐scale changes is subject to ongoing debate, the effects of extreme weather events are already creating significant challenges for national economies, industries and organizations under current, relatively stable climate conditions.

Cyclone Larry, for instance, made landfall in Australia in 2006 and led to economic losses of US$ 1.3 billion (Munich Re, 2007), equal to about 0.17% of Australian gross domestic product (GDP). Included in thisfigure are losses resulting from the destruction of banana and sugar cane plantations in the order of US$ 400 million. In smaller nations, losses from single events can range between 3% of GDP (El Niño in Central America) and 7%

of GDP (Hurricane Mitch in Honduras) in the year of their occurrence (Wilbankset al., 2007). In some cases (e.g. Hurricane Fifiin Honduras), losses can even amount to as much as 50% of a country’s GDP (Hooke, 2000).

These losses result in significant economic setbacks as well as lasting social and environmental problems for the affected regions. In the aftermath of Hurricane Mitch, Honduran President Carlos Flores Facusse announced that floods and mudslides resulting from the storm wiped out 50 years of economic development of his country (Glantz

& Jamieson, 2000). When another disaster hits before reconstruction can be completed, the economic situation of a country or region may spiral downward (Downinget al., 1999; Vellingaet al., 2001).

Combined impacts of more frequent and/or intense extreme weather events across several regions and sectors further amplify the damaging consequences of climate change. Organizations likely to be more vulnerable are those with long‐lived and exposed capital assets, such as organizations in the energy, water and transportation sectors, and those dependent on climate‐sensitive inputs or locations, such as organizations in the tourism, agriculture,fishery and forestry sectors. Other organizations likely to be affected are those in the insurance,financial and infrastructure management sectors, as well as local and regional governments (Mendelsohn, 2000; Wilbankset al., 2007).

Type Description of extremes Examples of events Characterization Economic impact (examples)

Simple extremes

Individual local weather variables exceeding a critical level on a continuous scale

Heavy rainfall, higher minimum/maximum temperature, high wind speed

Frequency/return period, sequence and/or duration of variable exceeding a critical level

Shift in tourist destinations;

crop damage; increased flood damage

Complex extremes

Severe weather associated with particular climatic phenomena, often requiring a critical combination of variables

Tropical cyclones, droughts, ice storms, El Niño–Southern Oscillation events

Frequency/return period, magnitude, duration of variable(s) exceeding a critical level, severity of impacts

Increased property and infrastructure damage;

decreased agricultural and rangeland productivity;

risk of epidemics

Unique or singular phenomena

A plausible future climatic state with potentially extreme large‐scale or global outcomes

Collapse of major ice sheets, cessation of the thermohaline circulation, major circulation changes

Probability of occurrence and magnitude of impact

Widespread and sustained impacts, a full range of plausible scenarios has not yet been developed and evaluated

Table 1. Typology of extreme weather events. Adapted from Schneideret al. (2001) and McCarthyet al. (2001)

The impacts of extreme weather events also depend on interactions between physical impacts and socio‐

economic factors. Population growth and movement into coastal areas at risk offlooding from storm surges and sea level rise exacerbate the impacts of extreme weather events due to increased exposure of economic activity and society in general. In contrast, economic development can reduce vulnerability to extreme weather events due to the technological andfinancial resources available to deal with their consequences (Downinget al., 1999; Stern, 2007).

Organizational Adaptation and Resilience to Weather Extremes

Projected changes in climate and weather patterns pose significant challenges for organizations to strengthen their capacities for anticipatoryadaptation (i.e. longer‐term adjustments to observed or expected impacts from climate change and greater climate variability) andresilience(i.e. their capacity to absorb the impact and recover from the occurrence of extreme weather events). The previous section highlighted the need for organizations to better prepare for and respond to the more frequent and intense weather extremes anticipated in the future. To develop a better understanding of how organizations can do so, we now examine research on organizational adaptation, crisis response and resilience to examine their relevance and applicability for organizational responses to extreme weather events.

Adaptation in Organizational Theory and Strategy

Extant work on organizational adaptation has been extensive, suggesting that organizations respond and adapt to changes andfluctuations in their external environment. Organizational adaptation has generally been defined as a gradual, longer‐term and incremental intra‐organizational change process (e.g. Tushman & Romanelli, 1985), usually in response to an actual or anticipated external change originating from the organization’s economic (or task) environment. Several authors have attempted to provide a theoretical understanding of how external pressures are interpreted and acted upon by organizational actors through sensemaking processes (e.g. Weicket al., 2005). Adaptation involves progressive modification and optimization attempts to achieve better performance of an organization in (or ‘fit’ with) its business environment, a perspective sometimes referred to as ‘fit perspective’

(Lewinet al., 2004). Through adaptation, the organization seeks to dynamically meet changes in product markets, consumer profiles or changes in regulation via a range of internally oriented responses – it may develop new products, lobby governments or seek internal efficiencies. If organizations do notfit their environment (or cannot sufficiently adapt) they are expected to falter or even fail (Miles & Snow, 1978).

Adaptation studies have mostly analyzed organizational adaptation to changing industry structures or institutional conditions, including changes in political, economic, regulatory, social, demographic and technological parameters (e.g. Griffiths & Zammuto, 2005), not considering changing natural environmental conditions. The literature is largely based on the assumption that environmental change occurs gradually and systematically (Meyer et al., 2005). A number of studies have been undertaken on managing organizations under conditions of discontinuous change, such as technological discontinuities (Tushman & Anderson, 1986), environmental jolts in the form of an unprecedented strike (Meyer, 1982a) or hyperturbulent environments (McCann & Selsky, 1984;

Meyeret al., 1993; Selskyet al., 2007; Zohar & Morgan, 1996). These studies usually refer to discontinuities in an organization’s economic environment or product market which are dealt with by developing competency‐

enhancing or competency‐disabling sets of responses, or by the deployment of slack resources (De Caroliset al., 2009; Meyer, 1982a; Tushman & Anderson, 1986).

We conclude that even though adaptation studies deal with organizational adjustments to external change, they currently do not address how organizations can respond to physical impacts from weather extremes. Such impacts have the potential to account for large‐scale, systemic changes of business conditions (Winnet al., 2010) and can lead to direct and disastrous effects on economies, industries and organizations (Griffiths & Winn, 2005).¹ Applying insights from the adaptation literature to ecological discontinuities suggests that organizations may be generally able to undertake anticipatory adaptation measures to widen their capacity to deal with weather extremes, for instance by developing drought‐resistant crops or flood barriers. However, such measures require time for

1Ecological changes also indirectly affect organizations, for example through regulatory and market responses.

implementation. Weather extremes that occur with greater magnitude, frequency, abruptness and/or are more persistent may therefore exceed thresholds for adaptation and lead to adverse impacts (i.e. adaptation measures cannot be implemented fast enough or are insufficient to alleviate impacts), requiring responses that enhance organizations’resilience. The adaptation literature also suggests that organizations can deploy sets of resources and capacities to deal with discontinuities as they occur – which aligns with the crisis response and resilience mechanisms reviewed below and suggests that there is a need to integrate theories of adaptation with insights from studies in these domains.

Organizational Responses Aimed at Adapting to Crises and Disasters

Studies focusing on crisis management and disaster response approaches deal with short‐term, emergency responses of organizations when facing untoward circumstances outside the realm of‘normal’economic activities (originating either within thefirm or externally). The occurrence of such circumstances is assumed to be‘a low‐

probability, high‐impact event that threatens the viability of the organization and is characterized by ambiguity of cause, effect, and means of resolution, as well as by a belief that decisions must be made swiftly’(Pearson & Clair, 1998, p. 60). The crisis and disaster management literature offers insights into organizations’defensive capabilities for identifying, forecasting and preventing the development of a crisis, or lessening the effects of a crisis once it occurs (Preble, 1997). Such capabilities can include the development and use of forecasting systems, contingency plans, exercises and simulations as well as the allocation of human and organizational resources, equipment and systems to respond to the potential occurrence of a crisis.

The crisis and disaster management literature provides important insights into how organizations can strengthen their capacities to deal with impacts from untoward circumstances. However, several researchers (e.g. Boin &

McConnell, 2007; Rosenthal & Kouzmin, 1996) have already suggested that crisis management approaches should be incorporated into broader strategies that enhance adaptation and resilience, for several reasons. First, crisis management focuses largely on immediate reactions to crisis situations and the mitigation of losses (e.g. Mitroff &

Pearson, 1993; Mitroffet al., 1996; Smart & Vertinsky, 1984), rather than on building longer‐term capacities to deal with changed environmental conditions. Second, although several authors have developed typologies and classifications of crises and disasters that may have an impact on organizations, issues relating to climate change or extreme weather events are often not specifically addressed (see, e.g., Pearson & Clair, 1998). The crisis and disaster management literature thereby neglects the potentially greater scope and scale of weather extremes and their increasing trend, as well as their high unpredictability, limited controllability and manageability, and their potentially major disastrous effects on economies, industries and organizations (Griffiths & Winn, 2005).

Furthermore, extreme weather events might no longer be low‐probability events, but occur more frequently and/

or intensely due to the effects of climate change, further suggesting that crisis management needs to be coupled with organizational adaptation and resilience strategies. To date, this has not occurred, although some have argued for an integration of thefields of crisis and disaster management and organizational strategy (Preble, 1997). While crisis management approaches enable an immediate response, they cannot fully account for the new challenges and complexities of responding to the scale and scope of the impacts of climate change. And since repeated short‐term crisis responses to successive extreme events may be beyond the scope of an individual organization, organizations need to develop response mechanisms of a different nature. We now examine the concept of resilience for contributions to studying organizational responses to extreme weather events.

Theoretical Foundations for Organizational Resilience

Researchers have recently turned to the concept of organizational resilience (Vogus & Sutcliffe, 2007) to understand how organizations can exist in complex environments with unpredictable, non‐linear and non‐

incremental change. Developments such as increased risk of terrorism, shocks in monetary policy, food and energy prices as well as impacts from natural disasters and severe climate events have heightened concerns about the limited capacity of organizations to anticipate every challenging event that could arise; they have also led to a search for new conceptual foundations of how organizations can deal with and possibly even thrive under adverse conditions (Folke & Rockström, 2009; Sutcliffe & Vogus, 2003). Interest in organizational resilience has been

further stimulated by concerns about trends towards the increasing complexity of socio‐economic, financial and technological systems (e.g. Kambhuet al., 2007), their growing interdependence and associated heightened risk of failure. Resilience goes beyond specific adaptations or crisis responses and implies the presence of latent organizational resources and capacities that can be activated, combined and recombined as different adverse conditions arise (Vogus & Sutcliffe, 2007).

Much previous research on resilience has been undertaken in the context of so‐called ‘high‐reliability’

organizations, such as nuclear power plants, air traffic control systems, aircraft carriers, emergency departments or hostage negotiation teams that operate in complex environments where even minor errors can lead to potentially catastrophic consequences (e.g. Bigley & Roberts, 2001; Weick & Roberts, 1993; Weick & Sutcliffe, 2001; Weick et al., 2005). Key aspects of resilience for these organizations are continuous processes of identifying, understanding, evaluating, monitoring and revising unexpected situations and intervention before effects escalate.

However, high‐reliability organizing may only be a partially sufficient response to the systemic changes underlying more frequent and intense weather extremes. For instance, an energy company may experience increased storm events that affect its distribution network through damage to transmission lines and focus on improving the reliability of its energy supply. The organization might not, however, examine the systemic nature of changes in its operating environment that cause the increased frequency of severe storms, and might not recognize the need for capital investments, such as putting transmission lines underground or investing in other resource endowments.

Business as usual then continues, in spite of trends indicating an increase in disruptive events.

Other perspectives of organizational resilience are less concerned with avoiding the escalation of unexpected situations, but rather focus on how organizations can absorb the impacts of external extreme events and quickly restore their performance to a more favorable or pre‐impact state in case of any disruptions. Resilience in this context consists of two dimensions: (1) impact resistance (the capacity of an organization to withstand a damaging impact as it occurs) and (2) rapidity (the capacity of an organization to quickly recover and to restore to a pre‐disturbance or even an improved state after experiencing a damaging impact) (Linnenluecke & Griffiths, 2010a; McDanielset al., 2008).

Several definitions of organizational resilience draw on these two dimensions, suggesting that resilience is the capacity of an organization to ‘absorb’ adversity (e.g. Meyer 1982a), ‘maintain’ and ‘preserve’ organizational functioning (e.g. Wreathall, 2006) and‘recover’and‘bounce back’(e.g. Wildavsky, 1988; Wreathall, 2006).

Insights into factors that promote resilience to extreme weather events are sparse, both on a theoretical and empirical level. On a theoretical level, researchers suggested that resilience is promoted by decentralization, diversity and redundancy of organizational resources and structures (Bruneauet al., 2003; Wildavsky, 1988) and by organizational processes that allow the appropriate deployment of resources (Vogus and Sutcliffe, 2007). Empirical findings from studies on organizational resilience in the context of a strike and on organizational behavior during a disaster pointed to the importance of slack resources and sensemaking processes (Meyer, 1982a; Weick, 1993).

Other empirical studies on organizational resilience in the aftermath of the 9/11 terrorism attacks reported that moral purpose, personal relationships andfinancial reserves were crucial to the recovery process (Freemanet al., 2004; Gittellet al., 2006). However, research has not yet examined whether these are underlying mechanisms of resilience that are transferable to different contexts, specifically to resilience to extreme weather events. Our paper seeks to open up debate on this issue.

Recent years have also seen attempts to incorporate thought from ecological resilience into organizational theory and management. Alternative views on organizational resilience have been developed by borrowing from the concept of resilience in ecology (Holling, 1996, 2001), focusing on the persistence of organizations when encountering adverse impacts. Resilience in this context has been defined as the amount of disturbance an organization can absorb before it has to significantly alter or cease its production and/or service delivery (Linnenluecke

& Griffiths, 2010a; McDaniels et al., 2008). This definition does not solely focus on organizational recovery and restoration processes, but extends to the amount of disturbance an organization can absorb and still persist.

Table 2 summarizes the characteristics of organizational adaptation and resilience which form the foundation for the framework introduced in the next section. Table 2 also distinguishes between different temporal aspects of adaptation and resilience to extreme weather events. These range from adaptation as an underlying, gradual and incremental change process to resilience to discontinuities from rapidly unfolding and/or unexpected events. While these organizational responses are not independent of each other, different temporal impacts are distinguished in order to differentiate organizational responses accordingly (Smitet al., 2000).

Organizational Adaptation and Resilience: a Conceptual Framework

We now propose a conceptual framework for studying organizational adaptation and resilience based on the literature reviewed earlier (Figure 1). Given the challenges posed by climate change and weather extremes, we argue that existing insights from organizational adaptation, crisis management and resilience need to be comprehensively integrated. We suggest that there is a need to understand how organizations can link adaptive responses and the formation of organizational resilience capacities (i.e. capacity to absorb the impact and recover from the occurrence of extreme weather events) in order to adjust to changing environmental conditions and to effectively absorb, and recover from, the impacts from sudden, unexpected and potentially cumulative weather extremes. This conceptual

Adaptation Resilience

Nature of change Incremental; events can be expected (within limits)

Rapidly unfolding and/or unexpected events (surprises)

Organizational aim To achieve improved performance by reaching an equilibrium with the environment

To absorb rapid environmental change and to recover from organizational impacts; to persist in spite of external disturbances Adjustment to change Incremental response; proactive or

reactive adaptation

Rapid and/or non‐routine response

Table 2. Characteristics of organizational adaptation and resilience

Climate Change: Changes in Frequency and Intensity of Extreme Weather Events

Onset and Impact of Current (Single) Extreme Weather Event

Organizational Resources and Capabilities Sensemaking of

Need for Adaptation Past Experience of

Organization

Ongoing Sensemaking Processes Disaster

Sensemaking Salience of Event - Spatial Extent - Magnitude - Duration - Rate of Onset - Predictability

Sensitivity

Disaster Response Reconstruction Restoration to Same or Different Levels Prevailing Ideologies

Sensemaking of Need for Future Adaptation

Anticipatory Adaptation

Future Adaptation Possible Future Exposure of

Organization

Future Adaptation Anticipatory Adaptation

Organizational Boundary

Anticipatory Adaptation Exposure: Resilience as Impact Resistance

Recovery: Resilience as Rate of Recovery and Restoration

Post-Impact Determination

of Overall Resilience Anticipatory Adaptation

Figure 1. Organizational adaptation and resilience: conceptual framework

framework provides the foundation for future research on how the effects of ecological discontinuities can be addressed in organizational research and strategic decision‐making.

Taking one event as a snapshot, Figure 1 lays out characteristics, events and processes. A full presentation of the framework would include multiple iterations, where individual components may change as a result of frequent exposure to weather extremes, which (individually and cumulatively) can enhance or reduce organizational resilience. Next, we examine each of thefive stages of the framework in detail (see bottom of Figure 1), namely:

(1) anticipatory adaptation, (2) exposure, (3) recovery and restoration, (4) post‐impact determination of the organization’s overall resilience, (5) future adaptation. For each stage, we draw out characteristics and implications for understanding adaptation and resilience in organizations.

Anticipatory Adaptation

Organizational actors can initiate anticipatory adaptation when they become aware that their organization may become exposed to a single (or recurring) future weather extreme. More than the actual environmental change, it is the interpretation by organizational actors that change might occur which strongly influences adaptive behavior (Daft & Weick, 1984).

If organizations are to respond effectively to climate change and weather extremes, managers need to understand the implications for their organization. However, climate change in general, and the relevance for the organizational environment in particular, remain a challenge for individuals to comprehend (Kempton, 1991), in part due to high levels of uncertainty (Peterson, 2006; Winnet al., 2010). This uncertainty makes it difficult for managers to construct the meaning of environmental changes and guide their organization to take appropriate action (Kiesler & Sproull, 1982). It is through sensemaking (Weick, 1995) that organizational actors recognize climate change and extreme weather events as issues that need to be addressed and managed. The sensemaking process is thus central for understanding and acting on climate change and extreme weather events.

Several outcome options exist for anticipatory adaptation. These include: (1) no effective adaptation or even maladaptation, in which case organizational actors take no or ineffective actions; (2) adaptation without experience, in which case organizational actors seek to prepare the organization for the possibility of impacts from extreme weather events, but have no previously acquired and tested knowledge at their disposal on how to best do so; or (3) adaptation with experience, in which case organizational actors have already previously acquired and tested knowledge on how to best adapt the organization (Berkes & Folke, 2002). The second outcome option, adaptation without experience, is difficult to achieve as the need for adaptation is often only recognized after a damaging event has already taken place (Smith, 2001). While organizational actors can undertake adaptation based on imitation or vicarious learning (Denrell, 2003), for instance after observing that another organization has been impacted by an extreme weather event, actions are constrained by a lack of organizational experience with adaptation processes.

Previous experience therefore makes it more likely that an organization undertakes successful anticipatory adaptation. For instance, pastoral or agricultural companies in arid environments with cyclical periods of drought and flood have often built significant organizational knowledge on how to deal with such impacts (Griffiths &

Winn, 2005).

We argue that anticipatory adaptation to extreme weather events contributes to building organizational resilience if it creates resources and capabilities that allow an organization to be more resistant to or recover more quickly from impacts of more frequent and/or severe extreme weather events. Organizations that are highly‘optimized’to deal only with certain environmental conditions are more likely to experience a lack of resilience against unexpected shocks (Korhonen & Seager, 2008; Walkeret al., 2006). For instance, Australian coal producer Ensham was well adapted to minor changes in water levels of the Nogoa River system near its open cut coalmine in Emerald, Queensland, yet unprecedentedflooding submerged several pits and a dragline valued at around AU$100 million (McInnis et al., 2008). Similarly, US insurance companies were used to recurrent hurricane losses, yet the substantial US$15.5 billion insurance loss due to Hurricane Andrew in 1992 led to the insolvency of 12 insurance companies (Wilbankset al., 2007).

Societies located in regions traditionally exposed to extreme climate conditions (e.g. pastoralists in arid regions of Africa and Australia, Pacific Island societies that have a long history of exposure to climate extremes) help illustrate how anticipatory adaptation can contribute to the formation of resilience. Research shows that these societies have

developed several resilience capacities through anticipatory adaptation, including structural changes, the protection, dispersion and diversification of critical infrastructure and resource access, changes to the mobility of the workforce, early warning systems,financial instruments and the creation of options to relocate temporarily and/or permanently (Barnett, 2001; Wilbanks et al., 2007). Such capacities reduce exposure to extreme weather events (e.g. geographic diversification of infrastructure minimizes the risk that crucial components are all destroyed at once) and/or facilitate recovery and reconstruction (e.g. access tofinancial support can facilitate redevelopment).

Within these societies, anticipatory adaptation has also led to the formation of certain ideologies and belief systems which led, for instance, to an increased heeding of ‘early warning signs; or the formation of kinship ties, community support and reciprocity (Barnett, 2001; Oba, 2001).

Organizational adaptation does not occur solely in response to climate change stimuli, but also in response to a range of other (often interrelated) pressures, including environmental regulation, government standards or pressures resulting from customer groups, competitors and/or the community (Dunphyet al., 2003). For instance, Belliveauet al.(2006) analyzed the effects of multiple external non‐climatic pressures on organizational adaptation, highlighting resulting maladaptive outcomes: changing economic conditions following the North American Free Trade Agreement caused grape producers in the Okanagan Valley (British Columbia, Canada) to replace their low‐

quality, but winter‐hardy, grapes with tender varieties; however, new plantations proved to be more susceptible to frost and extreme cold days and incurred injuries more easily. This example highlights how multiple pressures compete for managerial attention and resource allocation to deal with them, forcing trade‐offs that do not always lead to optimal outcomes.

Exposure and Impact Resistance

The exposure phase occurs when the organization is subject to perturbation from an extreme weather event (Adger, 2006). While organizational actors may attempt to undertake short‐term adaptive responses immediately before their organization’s exposure (they may react to prior warnings, evacuate personnel or relocate non‐stationary components), extreme weather events are likely to exceed thresholds for adaptation (i.e. organizations are not sufficiently adapted or cannot adapt fast enough; Wilbankset al., 2007). The degree to which affected organizations can withstand or resist immediate impacts then largely depends on their pre‐existing resilience capacities, especially if the event has a rapid onset. Organizational impact resistance (as a subset of resilience) to the perturbation from an extreme weather event is defined by the extent to which organizational function is maintained. The organization might not be able to persist if changes exceed certain thresholds; if the organization loses vital components and functions it might have to significantly alter or even cease production and/or service delivery (Linnenluecke &

Griffiths, 2010a).

To determine the salience of a specific extreme weather event for an organization, several characteristics of the event are relevant, such as its spatial extent, magnitude, temporal characteristics (duration, rate of onset) and the predictability of its occurrence (Linnenluecke & Griffiths, 2010a; Winnet al., 2010). While the physical exposure of an organization can be determined in geographic or spatial terms (i.e. whether or not the organization is located in an area that is affected by an extreme weather event; Hodgson & Cutter, 2001), the consequences for organizational activities, processes and ultimately continuity are more difficult to assess. In our framework, we therefore discuss organizational exposure relating to sensitivity (the degree to which an organization is physically affected or modified by an extreme weather event) and disaster sensemaking (the challenge for organizational actors to attach meaning to the event and restore the organization).

Sensitivity

The exposure to an extreme weather event often causes significant physical damage to organizations and potentially even the loss of personnel. To capture this damage to the organization (including impacts on physical assets and human resources), we use the term sensitivity, defined as the degree to which a weather extreme or series of weather extremes affect an organization. This definition modifies the concept of sensitivity used in the climate and environmental change literature (e.g. Adger, 2006; Gallopín, 2006; Houghtonet al., 2001) for the organizational context.

There is evidence that certain organizational resources and capabilities can make organizations less sensitive and thus less vulnerable and more resistant (as a subset of their resilience) to the impacts of extreme weather events.

Several researchers have pointed to the importance of‘slack resources’in providing organizations with the time, flexibility and capabilities to respond to environmental disruptions (Chattopadhyayet al., 2001; Griffiths & Winn, 2005; Meyer, 1982a; Nohria & Gulati, 1996). The distribution of resources, such as the protection of personnel, a decentralized workforce, the physical dispersion of assets and back‐up facilities for data, can make organizations less sensitive to the localized impact of an external discontinuity (Allenby & Fink, 2005; Allenby & Roitz, 2005). For instance, researchers have suggested that the sensitivity of the European energy distribution sector to extreme weather events (such as the European heat wave in 2003) could be reduced by enhancing the interconnectedness of the distribution network and by introducing more local micro‐grids (Arnellet al., 2005).

Resources that are non‐adaptive in the short run, on the other hand, such as large and geographically dispersed infrastructure, are likely to increase both the exposure and sensitivity of the organization. Extreme weather events can also impact on linkage infrastructure, such as bridges, roads, pipelines or transmission networks, with potentially substantial immediate losses and disruptions to associated industry sectors (Lemmenet al., 2007; Wilbankset al., 2007). Thus, organizations and sectors which are likely to be subject to greater exposureandsensitivity to extreme weather events are those with long‐term investments in large‐scale, geographically embedded and dispersed infrastructure (Schneideret al., 2001).

Disaster Sensemaking

While organizational resources can lessen the physical sensitivity of the organization to the impact of extreme weather events, organizational actors are still faced with the challenge to collectively attach meaning to the event in order to resolve the uncertainty surrounding it and to restore organizational functioning (Weick, 1995). Because of their low probability, unexpected events make interpretations for organizational actors difficult and impose severe demands on sensemaking. As these events unfold, they often require immediate action which simultaneously forms the basis for sensemaking and affects how well the situation is managed. The less adequate the sensemaking process directed toward the disaster, the more likely it is that organizational actors will not be able to manage its effects successfully (Weick, 1988).

Weick argues that organizational ideology acts as a fundamental source for sensemaking as it combines‘beliefs about cause–effect relations, preferences for certain outcomes, and expectations of appropriate behaviors’(Weick, 1995, p. 111). Ideologies make situations understandable and meaningful (Trice & Beyer, 1993), provide a frame of reference for organizational actors to interpret and act upon external stimuli (Starbuck, 1982), and thus guide organizational responses to external threats (Meyer, 1982b). This suggests that ideologies which pose cognitive and motivational limitations for individuals constrain employee choices and action within the organization (Scott, 2003), whereas ideologies which emphasize moral authority, social integration, flexibility and employee commitment provide a basis to survive in turbulent environments (Linnenluecke & Griffiths, 2010b; Linnenlueckeet al., 2009).

Coutu (2002) provides anecdotal evidence for the importance of organizational ideology as a critical source for sensemaking during organizational exposure to an extreme event. Investment bank Morgan Stanley, the largest tenant in the south tower of the World Trade Center with over 2700 employees on over 22floors, lost only seven employees in the 9/11 attacks when the second plane crashed into the south tower. According to Coutu’s description, Morgan Stanley’s executive management realized after the 1993 attack on the World Trade Centre that their company could be exposed to a terrorist attack due to its location in a symbolic building, and implemented a disaster preparedness program. The program included employee training about what to do in case of a catastrophe, practicing of fire drills and setting up recovery sites. As the disaster preparedness program became part of the organizational belief system, it provided a frame of reference, as well as actual skills and preparedness, for how to respond to the terrorist attack and it guided the immediate organizational response to evacuate the building.

Recovery and Restoration

The recovery phase includes the immediate disaster (i.e. short‐term) response as well as the usually longer‐term reconstruction phase that an organization undergoes after the initial exposure to an extreme weather event.

Organizational resilience during this phase refers to the rate of recovery and restoration of the organization to the same level (referring to the same state of the organization as prior to exposure to the extreme weather event) or to a different level (referring to a different state of the organization, either due to improvement or failure to restore parts

of the organization or its functionality). Organizational actors can mobilize existing resilience capacities during recovery, but can also attempt to access new sources of resilience through improvising (Weick et al., 2005), by establishing intermediate facilities to preserve functional attributes (Kendra & Wachtendorf, 2003), by mobilizing social networks, or through obtaining disaster assistance (Freemanet al., 2004).

Organizations from sectors with long‐lived capital assets (e.g. energy generation and distribution), geographically embedded, dispersed or directly weather‐dependent resources (e.g. mining, agriculture) and extended supply chains (e.g. distribution) face additional challenges in their recovery if substantial parts of their assets and resource base are destroyed or rendered unavailable (Haigh & Griffiths, 2009). For instance, after the impact of hurricanes Katrina and Rita, Entergy New Orleans required a total of 45 days to restore power to its customers; restoration proved particularly costly since a vast amount of infrastructure had to be rebuilt (Entergy, 2005). Pragmatic approaches to increase the resilience of these sectors may therefore be to reduce their sensitivity to extreme weather events (i.e. to increase impact resistance or decrease interdependency), rather than to rely on effective disaster response and reconstruction activities.

Disaster Response

An organization’s disaster response (or coping) capacity (Turneret al., 2003) refers to the ability of an organization to adjust to disturbances caused by an extreme weather event, moderate potential damage, take advantage of any opportunities, and cope with the consequences of the impact or transformation that occurs (Gallopín, 2006).

Disaster response usually includes organizational actions immediately after extreme weather events have happened, including emergency relief activities (Smith, 2001) as well as attempts at rebuilding organizational infrastructure.

In this phase as well, the capacity for a disaster response is an attribute of the organization determined both by resource factors and the organizational ideology which provides a frame for organizational action.

Reconstruction

The reconstruction phase is usually a longer‐term activity than the immediate disaster response during which the organization attempts to return to normality (Smith, 2001). Reconstruction can take many years and may include attempts to make permanent changes to the organization, including improvements that restore the organization to a different level. Long‐term reconstruction efforts may be subject to repeated interruptions from a host of variables in thefirm’s environment. This can include repeated destruction from subsequent extreme weather events, which can set the organization back significantly, but which also offers the potential for accelerated learning and innovation.

Post‐Impact Determination of Overall Resilience

The overall degree of an organization’s resilience becomes fully visible only after the organization has been exposed to an extreme weather event and has engaged in recovery attempts. It is at this state that the organization can evaluate its overall, post‐event resilience in terms of its capacity to absorb the impact and recover from the occurrence of an extreme weather event.

Future Adaptation

Once an organization has survived and recovered from the impact of an extreme weather event, organizational actors can engage in activities to enhance further adaptation towards climate change and future extreme weather events. This adaptation is undertaken both reactively, based on past experience of operating under extreme weather conditions, and proactively, based on environmental perception and risk evaluation of future extreme weather events (Smithers & Smit, 1997) and heightened attention to vicarious learning. Further research is needed into whether and how organizational actors learn from such rather unusual events (Marchet al., 2003), and how they translate their learning into new organizational capacities for adaptation and resilience. For example, does such experience change investment practices and how does it change risk perception?

While future adaptation might be facilitated after an extreme event due to the heightened awareness of risks and a broad consensus that preventive actions are needed, there is–often politically oriented–pressure to quickly return to conditions prior to the event, rather than to consider and implement longer‐term developments (Adgeret al., 2007).

Furthermore, the experience of a disaster is likely to reduce adaptive capacity both in short and longer timeframes (Wilbankset al., 2007), particularly due to limited access to or destruction of resources and capabilities, thus providing additional challenges for future adaptation. Recurrent vulnerabilities, often accompanied by increasing damages, illustrate that the capacity of organizations and socio‐economic systems to deal with ecological discontinuities is often less than sufficient (Schneideret al., 2001).

The framework suggests that future adaptation will depend on how organizational actors assess their organization’s past degree of resilience and the likelihood that their organization is subject to future anomalous weather conditions. Future adaptation will depend on the capacity of organizational actors – based on their sensemaking processes and their access to resources–to alter organizational resources and capabilities; sensemaking will also be shaped by prevailing organizational ideologies about how climate change is going to impact upon the organization.

Conclusion and Implications for Future Research

We have argued that the prospect of increased intensity and severity of extreme weather events demands a better understanding of organizational adaptation and resilience to ecological discontinuities. This paper proposes a framework which offers afiner‐grained understanding of the specific variables that can or cannot be managed–in advance, during and after the onset of a weather‐related disaster. For practitioners, the heightened uncertainty surrounding more frequent and severe incidences of extreme weather events presents complex challenges, which are further exacerbated in times of resource scarcity (e.g. during economic downturns). Uncertainty regarding the timing, magnitude, location and impact of extreme weather events on organizational infrastructure, product markets and well‐being of personnel raise particularly difficult questions for organizational decision‐makers about what strategies to adopt, when and at what level. In addition to building adaptation and resilience to the expected impacts of climate change, organizations also need to address and minimize their impacts on the natural environment (Winn & Kirchgeorg, 2005a), and consider transition paths from carbon‐intensive technologies towards lower‐emission technologies (Pinkse & Kolk, 2010). Only sustained emission reductions can minimize the risk of climate change along with unforeseen outcomes and surprises which pose an additional source of uncertainty for decision‐makers aiming to formulate response strategies (Barnett, 2001; King, 1995).

While recent studies have contributed to improving projections of future climate change impacts, current research offers only limited guidance to decision‐makers regarding impacts on a relativelyfine‐grained geographic and sectoral scale (Wilbanks et al., 2007). Recent work (e.g. Lemmen et al., 2007) aims to deepen our understanding of local, regional and sectoral impacts, yet the implications for managing wisely during such periods of instability, change and uncertainty are only beginning to be understood. Further research is required to understand how organizations can best manage for resilience to extreme weather events by altering underlying features of the organization, including its resources, capabilities and organizational ideologies. Further research is also required to understand whether there are underlying mechanisms of resilience that are transferable to organizations in different sectors or contexts.

One important proposition from the framework is that prevailing ideology and resource factors provide a context which either facilitates or inhibits the organization’s adaptation process at every stage. There is ample evidence of conservatism in organizations. Resistance to change, rooted in social and psychological factors, can hinder adaptive responses, even when the consequences are disastrous (Gersick, 1991; Schön, 1971; Tushman & Anderson, 1986).

Strong organizational ideologies, for example, can cause organizations to become rigid and stagnant (Meyer, 1982b). Inertial forces such as core rigidities point to the need to investigate organizational barriers to change (Sørensen, 2002) as part of organizational adaptation and resilience to extreme weather events.

Below, we offer a few examples of potential research questions, suggesting that further elaboration of the framework can offer fruitful avenues for both conceptual and empirical advances. Specifically: How does afirm’s industry sector or geographic location affect its adaptation and resilience along the stages of the framework (see also Linnenluecke et al., 2010)? What are critical political and regulatory, societal and community factors for the formulation of adaptation and resilience? How do organizations with a multinational presence compare with single‐country, or even single‐location, operations? Linking important advances from other fields of climate

research with organizational theory: How can an understanding of geographic settings be used to narrow down relevant climate and weather scenarios to reduce uncertainty for anticipatory adaptation? How can the implications of building adaptation and resilience to weather extremes be linked to the broader implications of climate change for organizations? We also know little about what kind of organizational ideologies about climate change and weather‐related disasters enhance or reduce organizational resilience: How do organizational decision‐makers understand and interpret the likelihood of exposure to an extreme weather event, and how is this information translated into building specific capabilities and strategies? And how can policy makers formulate policy responses for increasing awareness about climate change impacts and encourage the development of broader adaptation and resilience strategies?

In light of the uncertainty associated with extreme weather events, what does it mean to be prepared, when is a wait‐and‐see approach more expedient? What kind of performance measures can effectively capture preparedness and resilience after the onset of an event? And how have organizations dealt with exposure to extreme weather events and how did they translate their experience into organizational adaptation? Empirical work could further investigate whether and how organizations in exposed sectors have included considerations about more frequent and severe ecological discontinuities in their strategic planning processes, and how concepts like single‐loop and double‐loop learning (Argyris & Schön, 1996) apply in situations of repeated exposure to weather‐related disasters.

Organizations will have to overcome barriers to new thinking and require the support structures, capabilities and processes to do so. Furthermore, in order to address complex issues such as climate change and weather extremes, organizations will need to develop an understanding of changes in ecological systems and processes (Berkhout et al., 2006).

Insights from organization‐theoretical fields such as the organizational learning literature, strategy, entrepreneurship, organizational development, positive scholarship, organizational sustainability and many others can contribute significant conceptual advances to effective resilience management. It is our hope that this paper will help to stimulate deeper investigation of these questions to provide further insights into how organizations can adapt to and build resilience against ecological discontinuities.

Acknowledgements

The essential ideas and the framework in this article are based on the paper “Organizational Adaptation and Resilience to Extreme Weather Events”which won the Carolyn Dexter Best International Paper Award at the 2008 Academy of Management Conference. We would like to thank three anonymous reviewers from BSE and the anonymous Carolyn Dexter Award reviewers for their constructive and insightful comments. The first author (Martina K. Linnenluecke) acknowledges funding support by the Queensland Government’s Growing the Smart State PhD Funding Program. The opinions in this article are those of the authors and do not necessarily represent the opinions of, or carry any endorsement by, the Queensland Government.

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