The influences of business and decision makers’ characteristics on disaster preparedness—A study on the 1989 Loma Prieta earthquake

Abstract

Disaster preparedness is very important for business continuity, but the determinants of disaster preparedness in business organizations have not been explored much in existing research. Therefore, in this article we undertake to analyze the influences of organizational and decision makers’ characteristics on business disaster preparedness. In 1997, eight years after the Loma Prieta earthquake, the Disaster Research Center at University of Delaware conducted a large-scale mail questionnaire survey in Santa Cruz County, California, which was hard-hit by the 1989 earthquake. A total of 933 completed surveys from business organizations were obtained. Our analysis is based on this historical dataset. The results revealed that larger companies are more likely to engage in disaster preparedness activities, which is consistent with previous studies. Companies in finance, insurance, and real estate sectors tend to prepare more for disasters compared with wholesale and retail trade firms. Disaster experience has a significant and positive impact on business disaster preparedness, and the degree of lifeline loss can be a reasonable indicator of the disaster experiences of business organizations. One interesting finding is that the better a company’s financial condition is, the less it will engage in preparing for disasters. Finally, the risk perception of business owners or decision makers has a statistically significant and consistent positive effect on business disaster preparedness activities.