LITERATURE REVIEW

The following Literature review starts with past studies and researches based on the crisis in general. Different types of crisis are referred and what kind of effects do they cause to businesses and people. Additionally are past studies on management strategies in period of recession and what does a business has to follow, not only old businesses but also new. Furthermore we focus on the new start up businesses that decide to grow in period of crisis. What Past studies and researches found and proved through history, when again in the past there was a recession.

Crisis

A crisis is an adverse incident with an unpredictable outcome (Campbell, 1999; Coombs, 1999; Coombs & Holladay, 2002; Ruff & Aziz, 2003). Interestingly, it should be pointed out that there is a wide range of crisis categories, from a basic ‘internal versus external’ introduced by Evans and Elphick (2005, p. 135), to a more complex system proposed by Henderson (2007) who categorized crises into economic crisis; political crisis; socio-cultural crisis; environmental crisis; technological crisis; and commercial crisis.

Although there are numerous approaches to crisis categorization, The Pacific Asia Travel Association (2003) has suggested that crises can be largely categorized into two major types, which are human-made and natural-made crises.

It is crucial for one to understand that not all types of crisis lead to the same consequences, differing from one another in terms of the scope and extent of damage caused (Aktas & Gunlu, 2005). Different public reactions to both human-made and natural crises provide a clear example of the critical differences in the public’s reaction to different types of crisis. The public normally reacts more negatively to the effects of human-made crises than to those of a natural crisis. While it is generally conceded that organizations have little control over natural crises, human-made crises can devastate the established reputation of an organization. As human-made crises are usually preventable, this type of crisis therefore often receives severe public condemnation (Pearson & Mitroff, 1993).

Furthermore, different crisis types, particularly both natural and human induced crises, are neither absolutely predictable nor avoidable. This means while crises occur rarely and randomly, it is also true that no industries are unaffected by those crises. In response to the near certainty of experiencing crises, it is suggested that organizations come up with a plan for minimizing the damage of, and accelerating the recovering from, such crises through the development of crisis management strategies (Faulkner, 2001).

Therefore the concept of crisis management is discussed below.