Playing With Fire: the Effects of Institutional Dysfunctions in Postdisaster Business Recovery

Area of Science:

• Business Administration
• Disaster Management
• Sociology

Background:

• Limited research exists on institutional dysfunction's impact on post-disaster business recovery.
• Previous studies focused on general effects of dysfunction, not specific post-disaster contexts.
• Entrepreneurs in developing economies face unique institutional challenges.

Purpose of the Study:

• To investigate how institutional dysfunction shapes business recovery after disaster events.
• To identify and analyze the stages of institutional dysfunction impacting businesses post-disaster.
• To understand the role of formal and informal institutions in business resilience.

Main Methods:

• Qualitative study drawing insights from entrepreneurs affected by marketplace fires in a developing economy.
• Analysis of two distinct, interrelated stages of institutional dysfunction manifestation.
• Examination of business closure triggers and institutional shortcomings.

Main Results:

• Institutional dysfunction acts as an accelerator for business closures post-disaster.
• Stage 1: Sensemaking of disaster events and identification of institutional inadequacies.
• Stage 2: Unfulfilled support leads to business demise, highlighting institutional fragilities.

Conclusions:

• Institutional dysfunction critically impedes post-disaster business recovery, leading to closures.
• The study reveals the dynamic, multi-stage nature of institutional dysfunction's effects.
• Findings offer theoretical insights and practical risk mitigation strategies for businesses and policymakers.