Businesses are facing multiple crises that are threatening their existence. Some crises reappear in waves (such as the COVID-19 pandemic waves), while others are isolated at first but are multiplied by other side-effect crises (Russia-Ukraine war, complemented by energy crisis, global supply crisis, and other humanitarian, social, and economic crises). However, this volatile, uncertain, complex, and ambiguous (VUCA) world creates a need for companies to prepare for different crises by creating their response strategies. In this B2B Insights article, the focus is on presenting the Situational Crisis Communication Theory (SCCT) introduced by Timothy Coombs, the different crisis types it detects, as well as optimal response strategies for each presented type.

Situational Crisis Communication Theory

Situational Crisis Communication Theory (SCCT) is a theory proposed by Coombs in 2007. It focuses on the protection of an organization and its reputation in times of crisis, by finding optimal as well as suboptimal response strategies, when communicating with different stakeholders. The theory proposes that the organization should coordinate its strategic communication and response with the level of responsibility it has in a specific crisis and the level of threat that the crisis poses to its reputation. As such, SCCT is suitable to be used in a crisis management team. However, before the strategy can be chosen, an organization needs to carefully detect a type of crisis it faces at a specific point in time.

Crisis types

In this article, we focus on three types of situational crises, as detected by Coombs in his SCCT (see Coombs 2007; Coombs 2020).

First, there is a victim crisis type or a cluster, in which the firm is perceived to be a victim of the crisis at hand. This type of crisis includes, for instance, natural disasters, product tampering, workplace violence, or rumours (see Coombs 2020). In this situation, a firm cannot prevent or avoid the crisis, and it has a very low or no attribution of crisis responsibility. The example is found in COVID-19 times, when companies were forced to close their stores, resulting in loss of profit, and for many companies, even bankruptcy.

Bed Bath & Beyond is a clear example of a victim crisis (1). In its case, after many years of battling the COVID-19 crisis and the restrictions it brought, they ran out of possibilities. The company that was once a part of the Fortune 500 with its 1,560 stores and 65,000 employees, was coming to an end through no fault of their own. After operating losses and attempts to raise additional funds, there was nothing left to do. They filed for bankruptcy in April of 2023 and their stock was delisted from the stock exchange.

Second, there is an accidental crisis type or a cluster, in which an organization has a minimal attribution of crisis responsibility (Coombs 2020). This type of crisis includes different technical challenges, such as breakdown accidents, recalls (due to product harm), or different accidents with environmental damages (see Coombs 2020).

A good example of an accidental crisis can be seen in the story of the Japanese manufacturer Takata (2). At the time, one of the major automotive parts suppliers faced a crisis in the form of one of the biggest automotive recalls in history. Some of their airbags held defective inflators and could expand with too much force upon deployment while scattering metal shrapnel. Before they could discover the exact problem and react, many accidents already happened and the defect in their product was linked to several deaths and even more injuries. After the recall of tens of millions of vehicles, huge financial losses and legal battles, there was little hope for recovery. Takata filed for bankruptcy in 2017.

Finally, a third type of crisis is a preventable or intentional crisis, in which an organization holds high attributions of crisis responsibility (Coombs 2020). This type includes different mistakes, such as human breakdowns recall (e.g., product harm), accidents, or different organizational misdeeds that result in either no injuries (such as in cases where management misled its stakeholders on purpose), or with certain injuries (in cases where management intentionally places stakeholders in certain risks). Finally, there can be misconduct related to an intentional violation of the law by management (see more in Coombs 2020).

One of the biggest cases of preventable crisis was seen in the Boeing 737 Max case (3). Boeing’s planes were involved in two fatal crashes in a span of only five months, resulting in the loss of 346 lives. The automated flight control system was not operating correctly, a problem that Boeing was aware of. Despite that knowledge, Boeing decided to keep the information hidden and keep the race with the Airbus going. After the accidents, they made another mistake of trying to downplay the issue, which only led to public distrust and criticism. The whole situation resulted in the grounding of all Boeing 737 Max aircraft worldwide, huge financial losses, as well as lawsuits, which damaged the reputation of one of the biggest aircraft manufacturers in the world.

Crisis response strategies

There are many ways that companies can respond to crises. However, what is important is that the firm chooses the optimal strategy, related to the specific type of crisis.

For instance, when the firm is facing a victim crisis, such as the COVID-19 closure of its premises, it can respond to the crisis through marketing communication with its customers. Most of the companies used their social media or posted printed messages/notices on the windows of their stores, to inform customers of their new ways of conducting business (see e.g., Toth et al. 2022). When the firm is faced with rumours, the best response is to make sure that the firm gives its honest statement as soon as possible, indicating what has happened and explaining its side of the story. This can be done through public relations (PR) activities or online statements.

Another possibility is to choose a “denial strategy” as a crisis response strategy (e.g., Coombs 2022). This strategy refers to a firm denying any claims that there is a crisis, confronting the accuser for their false accusations, while blaming someone else for the crisis, i.e., re-assigning the blame for the crisis away from the firm. However, this strategy is only effective in cases where the firm is not responsible for the crisis in any way, intentionally or unintentionally.

Another strategy for dealing with a victim crisis is a “diminishing strategy” (e.g., Coombs 2022). This strategy focuses on justifying the firm’s actions and offering explanations and excuses for their consequences. It offers justification to minimise any damage that might occur from the crisis, while also minimising the firm’s crisis responsibility. This strategy is best suited for situations when the firm is not at fault for the crisis. In cases of accidental crises, this strategy can still be used, but with caution, as it might be perceived as defensive and damage the company’s reputation even further.

When an accidental crisis occurs, it is crucial to address issues promptly and explain the mistake that occurred. However, in addition to admitting the fault (although unintentional), the firm should make it clear how they are planning to fix the situation, what steps and actions they will take to resolve the issue and ensure that it does not happen again in the future. This resolution should be promptly and clearly communicated to all stakeholders, including the public.

For accidental but also preventable/intentional crises, firms should aim to rebuild broken relationships with their customers or other stakeholders by using “deal strategy” as a crisis response strategy (e.g., Coombs 2022). This can be done by accepting responsibility for the actions that caused the crisis, apologising to affected parties, showing compassion, and potentially offering compensation in terms of gifts or money for the losses that occurred. A firm should also express concern for the victims of the crisis, as well as ask for forgiveness. While this strategy might be a sufficient response to accidental crises, it might not be enough for preventable or intentional crises. However, it can serve as the first step.

Finally, there is a “bolster strategy” (Coombs 2022) that firms can use to remind their stakeholders of their former good works. It can also be used for thanking others for the help provided to the firm during the crisis. This strategy is best used in combination with other, above-mentioned strategies. It is also well suited for responding to a victim crisis.

Benefits and Challenges of Using Situational Crisis Communication Theory

As with the implementation of any theory, there are certain benefits and possible challenges one might run into. In the following text, we will concisely present a few examples of each.

Benefits:

• possibility to categorise each crisis into different types;
• creates an optimal and sub-optimal strategy response that firms can choose from;
• easy to follow recommendations for distinct types of crises;
• can help firms prepare and practice for different crisis types before they occur.

Challenges:

• different response strategies might be context or industry-specific;
• not all companies can create optimal and prompt responses in crises.

Conclusions

Although the list of crises presented in this article is not exhaustive, the aim was to present optimal response strategies for each presented type, to help companies create a better communication plan for upcoming crises. By using one or a combination of the above-mentioned strategies, companies can mitigate damage and start the process of rebuilding relationships with the stakeholders and the public. Having a good strategy and structured approach to crisis communication will ensure that the company is prepared for the complex challenges of today’s VUCA world.

This B2B Insights article is created as a part of the project “Interactive Network Branding: Creating resilience of small firms in times of crisis”, financed by the Research Council of Finland (Decision number 355949) and led by Nikolina Koporcic, a Principal Researcher at Laurea.

About the authors

Dr. Nikolina Koporcic (Ph.D. in Economics and Business Administration) is a Principal Researcher at Laurea University of Applied Sciences and an Academy Research Fellow at the Academy of Finland. Nikolina also holds the title of a Docent (Adjunct Professor) at the University of Turku and acts as an Associate Editor of Business Ethics, the Environment & Responsibility Journal. Her research areas include the co-creation of value, open innovation, corporate branding, entrepreneurship, business relationships and networks. In particular, she is studying the importance of Interactive Network Branding for small firms in business markets. Nikolina has published 16 peer-reviewed academic articles, 3 books, 8 book chapters, 22 conference proceedings, and 10 Laurea Journal articles. orcid.org/0000-0001-5050-3819

Mato Koporcic is a practitioner with a wide range of experience gained working for different companies in Croatia, Germany, and Canada. His interests are in circular economy and sustainability from a B2B perspective. In collaboration with Nikolina, he is regularly writing articles for the B2B Insights series they introduced in Laurea Journal.

References

• Coombs, W.T. 2007. Protecting organization reputations during a crisis: The development and application of Situational Crisis Communication Theory. Corporate Reputation Review, 587 10(3), 163–176.
• Coombs, W.T. 2020. Chapter 5 in Frandsen, F., & Johansen, W. (Eds.). Crisis communication (Vol. 23). Walter de Gruyter GmbH & Co KG.
• Toth, Z.; Emerson, T.; Koporcic, N.; McKechnie, S.; & Shehzad, M. 2022. Communicating Temporary Brick-and-Mortar Store Closures During Covid-19 Lockdowns in the UK. Association of Marketing Theory and Practice Proceedings.

Web pages

(1) 7 Companies That Went Bankrupt Due to COVID — U.S.News
(2) Takata files for bankruptcy in US and Japan — Financier Worldwide
(3) Boeing 737 Max disaster casts long shadow as planemaker tries to rebuild fortunes | Boeing | The Guardian