An Ounce of Prevention: What Promotes Crisis Readiness and How Does It Drive Firm Performance?

Organizations develop crisis readiness to avoid and mitigate crises. This study investigates several factors that influence crisis readiness, including market dynamism, perceived likelihood of a crisis (PLC), and firm size. It also evaluates the impact of crisis readiness on firm performance. Results from a PLS-SEM assessment of 301 managers in the United States suggest that market dynamism drives firm performance while heightening both PLC and crisis readiness. When compared to large organizations, managers in small- and medium-sized enterprises (SMEs) reported higher PLC but lower crisis readiness, underscoring the challenges faced by small firms regarding crisis preparation. Crisis readiness was also positively linked to both financial and non-financial performance. The model tested in this study supports the influence of external and organizational factors on crisis preparation, as well as subsequent links with firm performance.