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Predicting long-term business recovery four years after Hurricane Katrina
Elizabeth Ann Dietch and Christy M. Corey
Department of Management, University of New Orleans, New Orleans, Louisiana, USA
Abstract
Purpose – This study is an empirical examination of the ongoing recovery efforts of surviving businesses in the greater New Orleans area four years after Hurricane Katrina. Factors thought to contribute to long-term recovery were examined including internal factors (e.g. organizational size), population-related issues (e.g. loss of customer base), and macro variables (e.g. neighborhood recovery). Problems with population issues were expected to be a primary cause of slow business recovery. The paper aims to discuss these issues. Design/methodology/approach – Managers from 186 businesses in the New Orleans area participated in the study by completing a survey. Eligible business needed to exist before Hurricane Katrina and still be operating at the time of data collection which occurred in Spring 2009. Findings – Results from analysis of variance indicated that managers from organizations performing worse compared to pre-Katrina levels reported significantly greater problems across the internal, population-related and macro variables. In regression analysis, only three factors within the population and macro variable areas were significant predictors of organizational performance. As expected, organizational performance was strongly predicted by population-related issues, especially the loss of customers. Research limitations/implications – One limitation concerns the cross-sectional design of the study which focused specifically on surviving businesses. The survivor bias in the data limits the generalizability of the results. Also, observations from businesses in the same neighborhood could be spatially dependent due to the systematic influence of external factors. Originality/value – This study provides a rare investigation of long-term business recovery, at the organizational level of analysis, in the wake of a disaster that resulted in one of the most extreme population dislocations in US history. Keywords Organizations, Natural disasters, United States of America Paper type Research paper

Hurricane Katrina

311

On August 29, 2005, Hurricane Katrina made landfall in Southeast Louisiana. It caused major destruction all along the Gulf Coast, and levee failures in New Orleans resulted in massive flooding of the city. The hurricane resulted in the greatest population dislocation in US history, with an estimated one million residents displaced (Institute for Southern Studies (ISS), 2009). Most of the population of New Orleans was prevented from returning to the city for a month after the storm, as Hurricane Rita followed closely after Katrina, flooding the city a second time. Four years after this disaster, the population in the greater New Orleans (GNO) area had recovered to about 88 percent of its pre-Katrina level of 1.2 million residents (United States Census Bureau, 2009). However, the population within the city limits of New Orleans had only recovered to 74 percent of pre-Katrina levels, and many displaced New Orleans residents who wished to return still were not able to do so. An estimated 107,000 businesses in Louisiana

Management Research Review Vol. 34 No. 3, 2011 pp. 311-324 q Emerald Group Publishing Limited 2040-8269 DOI 10.1108/01409171111116321

. some businesses never did return to the New Orleans area. there is little research on what features are most vital to that survival at an organizational level. The inconsistencies in these findings highlight differences in impacts of different disasters. (2009) provide a useful examination of re-opening rates at various time points after Hurricane Katrina. good and services. some businesses are definitely performing better than others. size. have fixed the majority of their physical damage. The features that matter most in the immediate aftermath of a disaster are likely not the same as those that sustain long-term recovery. Tierney (1997) found that the length of disruption to operations. size of the business.MRR 34. Differences in disaster recovery research conclusions likely also depend on how long after the natural disaster measurement took place. how many people were displaced. Disasters differ in terms of how widespread the damage was. As we are only examining businesses that had re-opened after Katrina. What research has focused on businesses has often been at a very aggregated level (Cohen. Chang and Falit-Baiamonte (2003) found business sector. and remained in business for nearly four years post-Katrina. and so forth. and other macro level variables. progressing from 25 percent four months post-Katrina to 65 percent two years later. 1992). .3 312 were impacted by the hurricane ( Jarmin and Miranda. (2010) and Thompson (2009) for a discussion of the measurement of regional economic impact). and tax dollars (Cochrane. A few studies have tried to examine factors that determine the success of recovery for individual businesses post-disaster. see also Ewing et al. (2002) found different factors predicted successful recovery in Miami after Hurricane Andrew compared to Santa Cruz after the Loma Prieta earthquake. We examined the ongoing recovery efforts of businesses in the GNO area three to four years after Hurricane Katrina. Thus. 2009). However. This paper examines the factors that are contributing to or impeding the continuing long-term recovery of surviving businesses in the New Orleans area. Business survival is an extremely important part of community recovery after a natural disaster. 1993. In this study. The primary purpose of this study is to determine what factors are making a difference in the degree of recovery success at this point. how long lifelines were disrupted. For example. four years down the road. In order to provide a comprehensive examination of all possible factors affecting business recovery in a post-disaster area. Webb et al. West and Lenze. we examined variables in the following four categories: industry sector. Nonetheless. In contrast. 1994. and building occupancy tenure were the best indicators of business vulnerability after the 2001 Nisqually earthquake. and general economic decline in the area were most predictive of success after the Northridge earthquake. All the businesses studied here have survived the immediate aftermath of Katrina. Eguchi et al. the New Orleans area is recovering. but results have been inconsistent regarding what matters most. rebuilding infrastructure and re-establishing residential and business communities. They found that although there was a steady increase in re-opened businesses over time. despite that fact that all the businesses we surveyed had at least survived. These regional-level investigations provide little guidance about what makes the difference for individual businesses that recover easily and those that struggle. population issues. Lam et al. this study does not address factors in the ability to re-open at all after a natural disaster. an earthquake will not cause precisely the same problems as a hurricane. internal business features. providing jobs. 1998. and have had to struggle to rebuild. we are assessing factors contributing to long-term recovery.

We thus expected an overall advantage of larger size.. Hurricane Andrew also resulted in increased demand for building contractors in the Miami area. there is not a clear indication as to whether businesses in services industries should fare better or worse.. 2009). (2009) point out that larger firms are more likely to have multiple locations. 1990. 1990. and be better able to afford insurance for disaster recovery. We expected a similar pattern of recovery to persist in the New Orleans area. previous studies suggest they may simply hold their ground. with service industries reporting intermediate levels of recovery. be located in newer facilities. construction/manufacturing firms will be performing better. 2002). Dahlhamer and Tierney (1998) did find that the largest proportion of recovered businesses after the Northridge earthquake were in the manufacturing and construction sectors. failing suppliers can cause a “domino effect” to other businesses (Zhang et al. Even businesses that have successfully weathered disaster may suffer due to the failure of their suppliers or difficulties transporting supplies where needed. materials. 2003. Internal factors We examined four features of organizations’ internal operations that may impact long-term performance: organizational size. four years after the storm. 1997. (1990) found a similar result in Oakland and Santa Cruz after the Loma Prieta earthquake. Webb et al. Webb et al. 1997). 2003. even though more long-term recovery was being examined: H1. Other studies have also found that wholesale and retail businesses generally report loss of customers and sales following disaster. and expertise (Zhang et al. several studies have found that larger organizations are better able to withstand disasters than smaller businesses (Chang and Falit-Baiamonte. some suppliers Hurricane Katrina 313 . without either much increase or decrease in business (Webb et al. and Kroll et al. 1998. sufficiency of capital and the perceived quality of managerial decision making.. even as tourism as retail industries suffered substantial losses (Cole et al.. Available capital is also likely to be an important potential feature in business recovery. Regarding size.. Relative to pre-Katrina levels of performance. Some studies have suggested that businesses with very little liquid capital often struggle after a disaster (Tierney. 2002). It makes sense that construction and manufacturing businesses could realize gains post-disaster. Consequently. Thus. 2001). Kroll et al.. 2005). as investments in rebuilding and learning how to thrive in a changed local landscape are necessary to survive. Tierney.Industry sector Several studies have found that some industries are more resistant to disaster. in terms of an organization’s number of employees in the GNO area. Although most businesses might be expected to have solved supply problems by the time this data were collected. Furthermore. Zhang et al. 2002). and retail firms will be performing worse. 2009).. and may actually profit from it. they may have been unable to achieve as optimal arrangements as they had before the storm.. We also examined supply problems. have more financial and political capital. Chang and Falit-Baiamonte. supply-line problems. as rebuilding efforts require their labor. However. it was anticipated that those businesses that are still struggling to recover would be more likely to report problems with insufficient capital.. and have a more difficult time regaining pre-disaster performance levels (Boarnet. Larger businesses are likely to have more of a “cushion” in terms of employees and capital (Whitney et al. Kroll et al.

pointing out that some make sounder post-disaster decisions than others. Although our data were collected in Spring 2009. and have engaged in effective managerial decision making will exhibit better organizational performance. Businesses that are larger. current population estimates for the New Orleans metro area continue to fall short of their pre-Katrina levels. we expect that population-related variables will remain the most important predictors of organizational performance: H3. Runyan (2006) noted that Gulf Shore business owners had to make a great many decisions in a short amount of time in order to re-open after the disaster. Finally. we considered one aspect to recovery that does not appear to be assessed in previous research. Sustained recovery will depend on management making appropriate short. So customer loss after dislocation may be a major contributing factor to business failure post-disaster (Tierney.and long-term decisions regarding how to operate in a changed landscape. Given that. we included managerial decision making as a possible contributing factor to recovery: H2. leading to persistent or newly-developing supply problems for businesses downstream. Corey and Deitch (n. Population decrements cause problems for businesses in two ways.) found that problems associated with a loss of customer base showed the strongest inverse relationship with performance. When populations are displaced. area businesses may lose existing employees and have difficulty recruiting new hires (Zhang et al. population levels in the area still had not recovered to pre-Katrina levels (United States Census Bureau. relative to pre-Katrina levels. (2000) suggested that future research should consider the decision-making processes of business owners and managers.” making this sort of fresh start and responsiveness to the altered business environment a more likely possibility. relative to pre-Katrina levels. some interviewees reported that their business a quarter into the recovery was quite different than prior to Katrina.MRR 34. are experiencing fewer supply problems. Webb et al.d. n. 2009). The first is the role of the local population as a valuable labor source.. The local population is also a critical source of customers.3 314 that struggled to remain open right after Katrina may have since collapsed. Population-related issues A distinguishing feature of Hurricane Katrina was the astoundingly huge amount of population dislocation it created. Zolin and Kropp point out that those businesses that survive may be more likely to have an “entrepreneurial orientation. four years after Hurricane Katrina.). Therefore. as they newly assessed the changed external environment and planned fresh strategy in response. 1997). These population-related factors will have the greatest impact on organizational performance. Businesses that report greater customer loss and labor shortages will show more decrements in organizational performance. An examination of factors contributing to New Orleans business recovery within the first year following Hurricane Katrina showed that population-related issues presented the most influential obstacles hindering recovery (Corey and Deitch. Although the variable labor shortages was a significant predictor of organizational performance. . have sufficient liquid capital. Zolin and Kropp (2007) reported that the surviving businesses in the Katrina-impacted are reported that their recovery experience was quite similar to an approach to starting up a new business. 2009).d. Thus.

Surveys from businesses that did not fall into one of these categories (e. as government responses to disaster in the form of community aid and business loans impact the recovery of businesses and neighborhoods (Zhang et al. St Tammany. long-term survival in a post-disaster economy. Businesses that are performing worse four years after Hurricane Katrina will be more likely to assess government aid as inadequate.” with some performing better and others doing worse (while some merely hold steady) compared to their pre-Katrina levels. 1997). to report negative impacts of the overall national economy. To be eligible. both at the state/local level and the federal level. by telephone. businesses included in this investigation have overcome the biggest obstacle. from government agencies) were not used in the study.. or Plaquemines.Macro variables What happens beyond the organization itself will have a large impact on an organization’s functioning. So. Hurricane Katrina 315 .g. between three and four years post-Katrina. The business also needed to exist before Hurricane Katrina and still be operating at the time of data collection. Organizations may be categorized into “winners” and “losers. and to be situated in neighborhoods that are slower to recover. managers needed to be familiar with the history of the organization during the specified time period in order to complete the survey. we also considered how much the depressed national economy might be contributing to local business success or failure: H4. We also assessed perceptions of government response and aid. 2009). Respondents were asked to describe the goods or services they provide. businesses had to be situated in one of the five parishes comprising the GNO area: Orleans. in terms of the percentage of gain or loss in revenue relative to pre-Katrina levels. Clearly. Method Sample Managers from 186 businesses in the GNO area participated in the study by completing a survey. one can also attempt to quantify the amount of performance changes. St Bernard. retail/wholesale trade. and in person using convenience sampling methodology. the declining economic situation of the USA as a whole has been impacting businesses all over the nation at this time. these were then sorted into three categories: construction/manufacturing. since the important issue in assessing recovery is performance relative to that prior to Hurricane Katrina. However. We also included this variable because the post-Katrina response from government agencies such as Federal Emergency Management Agency (FEMA) and the Small Business Administration (SBA) has been roundly criticized (Runyan. Additionally. they were recruited via e-mail. Finally. We examined both types of performance measures in our tests of hypotheses. 2006). Jefferson. Data were collected in the Fall of 2008 and Spring of 2009. or service industry. organizational performance is not simply conceptualized as current revenue levels. Finally. The level of damage and recovery of the neighborhood surrounding the business may be more important than the damage sustained by the business itself (Tierney. Assessing organizational performance The outcome variable of interest in this study is organizational performance. Measures Business sector.

0.01). Then respondents were asked to what extent the following issues were causing difficulties in their post-Katrina recovery: problems with suppliers. there was variation in their reported success. The remaining businesses were evenly split with 48 (25. five were significantly correlated with the percentage of gain versus loss in revenue compared to pre-Katrina levels.98). managers estimated the percentage of the increase or decrease in business since Katrina. Respondents indicated the extent to which loss of their customer base was still causing problems with post-Katrina recovery. had the second largest correlation with organizational performance (r ¼ 2 0. Respondents were asked to what extent problems were caused by four macro variables: slow recovery in the neighborhood of the business. For those reporting improved performance. were rated on a five-point summated rating scale ranging from “1 ¼ not a problem” to “5 ¼ very problematic.1). First. lack of assistance from the Federal Government. Next. in addition to the population and macro variables described below. managers indicated whether performance was better. respondents rated the degree to which labor shortages were hindering business recovery.39. Results Although all businesses in the sample had survived at least three years post-Katrina. The highest average “problem” rating was given for the declining national economy (M ¼ 3. problems with labor shortages.5 percent (SD ¼ 14.3 percent (SD ¼ 32. These variables.71. the average reduction in business volume was 28. Organizational size was assessed using the number of staff reported in the GNO area. p . p . Thus. Performance. the average increase in volume was 33. Internal variables. approximately three-quarters of the sample had fully recovered in terms of business performance. The other population variable. 0.” Population variables. A total of 90 business owners and managers (48.28. SD ¼ 1. and correlations for all numeric variables are shown in Table I.5). These results are consistent with H3 in which we expected . standard deviations. SD ¼ 0.MRR 34. while the least problematic item was managerial decision making (M ¼ 1. slow progress by state and local government. the population variable loss of customer base was most highly correlated with organizational performance (r ¼ 2 0.4 percent) reported that their business was performing at the same level as pre-Katrina.01). In addition. Those reporting no performance change scored as 0. Descriptive analysis Means.24. and another 48 reporting it was better. For those doing worse.3 316 Dummy codes with “services” as the reference category were used for this variable in regression. A total of four internal variables were measured. This percentage increase/decrease was used as the continuous dependent variable for regression analyses. insufficient capital. As expected.37). Of the ten variables that could potentially affect organizational performance. This information was used as a categorical variable representing the performance status of the business. Two population impact items were used. Organizational performance was operationalized as both a categorical and continuous variable. and poor managerial decision making. and the declining national economy. Macro variables. worse. or the same compared to pre-Katrina performance.8 percent) reporting business was worse.

29 0.23 * * – 0.77 * * 0. Problems with suppliers 1.45 1.31 1.06 20.43 * * 2 0. National economic decline 3.04 6.93 – 2.19 20.32 * * 0. Means.37 20.Variable Mean SD 1 2 3 4 5 6 7 8 9 10 11 – 0.05 and * *p .27 * * 0.85 1.26 * * 0.00 – 20.30 * * 0.39 * * 0.40 * * 2 .44 * * 0.28 24. performance (% gain/loss) 1.40 * * 0.43 * * 0.46 * * 0.98 20.28 1.61 1.34 * * 2 0.52 * * – 0. Slow progress state/local government 2.52 * * 0.89 0.32 * * 0.28 1.03 10.32 * * 2 0. and intercorrelations among main study variables .19 20.08 3.13 * * 1.01 Hurricane Katrina 317 Table I. 0.09 Notes: n ¼ 186.39 * * – 0. Insufficient capital 1.07 5. 0. Poor managerial decisions 1.43 * * 20. Number of employees 367.32 * * 0.23 1.28 * * 0.24 * * 20.09 8.45 * * 0.39 * * 0.15 * 11.71 0.38 * * 0.47 * * – 0. Labor shortage 2.01 9. standard deviations.08 – 0.26 * * 0.99 1.32 * * – 0.36 * * 0.24 * * – 0.46 * * 0.28 * * 0.43 * * 2 0. Org. Lack of federal assistance 2.08 4.28 20.303.27 20.24 * * 2 0.42 * * 0.22 * * – 0.13 0.38 * * 0. Loss of customer base 2. Slow neighborhood recovery 2.33 * * 0.13 7. significance at: *p .27 20.52 1.31 * * 0.18 * 0.

14 9.96a 2. 0.001 . Mean differences in internal. one internal variable.96a a Same (n ¼ 90) 299. showed significant mean differences across the three levels of performance status (better. Finally. a one-way analysis of variance (ANOVA) with post-hoc paired comparisons was conducted using performance status as the independent variable and each of the ten factors as dependent variables.65a 1. 0. managers in the worse performance status group indicated the most problematic areas for their organizations were the decline of the national economy and the loss of their customer base. p .13.04a 2.38a.01) and lack of capital (F (2. 0. Results including the mean differences according to performance status are reported in Table II.22a 2.83a 2.01) had a similar negative effect on organizational performance.28b 2.23.01) and slow neighborhood recovery (r ¼ 2 0.23 7.04a 1. With the exception of number of employees. 0. or worse).001 0.120 . had a significant inverse relationship with organizational performance. however. two of the four macro variables measured were inversely related to organizational performance.MRR 34.25b 2.56a 2. 0.121 0.83c 3. problems with suppliers (F (2. Based on the group mean scores across the ten factors.009 . higher mean scores indicate more problematic factors.3 318 population-related issues to continue to present the biggest obstacles faced by New Orleans businesses working towards recovery four years after Hurricane Katrina. 0.31a 2. 0. the same. in partial support of H4.001 .05).90a 1.03a 3. Managers in organizations reporting the same or better performance status since Hurricane Katrina also ranked the decline of the national economy as their biggest problem.14 4. The one-way ANOVAs revealed that seven of the ten factors examined showed different average ratings across the performance status groups. p .46 2.13 2.001 0.67b 3.01).84. 0.059 0.67 2.05 in the Tukey honestly significant difference comparison . and macro variables across performance status groups In order to examine whether organizations reporting their current status as worse.18.58b 1. Two internal factors. This correlation was the lowest significant correlation of those including organizational performance (r ¼ 2 0.87 4. or worse performance status Note: Mean in the same row that do not share a superscript differ at p . ANOVA results for organizations with better. their second most problematic area focused on the slow recovery progress displayed by state and local governments.016 0.72a 1.85a 2.76 p 0. population.88b 2.48 1.27b 2.92b a F 2. In partial support of H2. Problems attributed to the national economic decline (r ¼ 2 0. Post hoc paired comparisons revealed that these Dependent variable Number of employees Problems with suppliers Insufficient capital Poor managerial decision making Labor shortages Loss of customer base Slow neighborhood recovery Slow progress state/local government Lack of federal assistance National economic decline Better (n ¼ 48) 689.31 15. 183) ¼ 9. p .30 1. p .84 9.61a 2. the same.001 Table II. or better since Hurricane Katrina showed predictable mean differences on the ten factors affecting organizational performance.79a 1.92a 2. p .91 9. 0. 183) ¼ 4. lack of capital.11a a Worse (n ¼ 48) 173.68a 1. 0.b 2.24. the same.

0.31. Population issues. p . 0. do seem to be a continuing problem for those organizations that are floundering.05). 0.01). In contrast with H2. 183) ¼ 9. both labor shortages (F (2. a multiple regression analysis was conducted using the percentage of business improvement or decline as the dependent variable.83). displayed marginally significant mean differences across the three performance status groups. p ¼ 0. and then better status organizations (M ¼ 1.27) compared to those with the same (M ¼ 2. none of the internal variables proved to be significant predictors of business performance this long after Katrina.05) compared to those in retail or service sectors. three of the four macro variables.01). 183) ¼ 9. Notably. p . slow neighborhood recovery (F (2. the regression results did not echo this finding. The predictors in this model account for approximately 26 percent of the variability in organizational performance.01) and loss of customer base (F (2.37.factors were significantly more problematic in organizations reporting worse performance since Hurricane Katrina compared to those reporting the same or better performance status across the past four years. the results supported H1 in that industry sector did seem to make a difference. Results are shown in Table III. population. Regarding industry sector. 183) ¼ 15. Again. the population variable loss of customer base only showed a significant mean difference between organizations with a worse performance status (M ¼ 3. As expected. Retail vs service showed no significant effect. all three groups differed significantly in labor shortages with the most problems being reported by worse status organizations (M ¼ 2. post hoc paired comparisons showed that the only statistically significant difference was between organizations in the worse and the same performance status groups. Regarding the two population variables affecting organizational performance. Businesses in the manufacturing or construction sector were performing significantly better (t ¼ 1. lack of federal assistance (F (2.22) or better performance status (M ¼ 2. The problem most strongly associated with performance was customer loss (b ¼ 2 0. The better performance group did not differ statistically from either of the other two groups. followed by same status organizations (M ¼ 2. 183) ¼ 2.46. Although the correlation results presented earlier showed that five out of the ten factors within the internal.91. p . population. p . Differences in labor shortages may be used to discriminate among all three levels of performance status for organizations in post-Katrina New Orleans. 183) ¼ 7. the fourth macro variable. the worse performance status group had the highest mean score in this area.23. and macro variables were significantly related to profit loss and gain.01) showed significant mean differences across the performance status groups. managers of organizations in the worse performance status group indicated significantly greater problems in the areas of slow neighborhood recovery and national economic decline compared to the other two groups.99. 0.04). Similar to the results regarding the internal variables. and macro variables on organizational performance To determine which problems were most predictive of the amount of business decline or gain. p . on the other hand. According to the post hoc comparisons. Hurricane Katrina 319 . slow response on the part of state and local governments (F (2. and national economic decline (F (2. 0. 0.059). Finally.76. p .87.83). had significant mean differences across levels of organizational performance status. 183) ¼ 4.28). Predictive effects of internal. In the area of lack of federal assistance.

Loss of customer base was the clear winner in terms of creating the most problems impeding business recovery.37 2 0. the population variables as a whole were not the most influential predictors in the multiple regression analysis. had the smallest impact of all the significant predictors in the multiple regression model.MRR 34.48 0.3 Variable Sector Manufacturing/construction Retail/wholesale Internal features Number of employees Problems with suppliers Insufficient capital Poor managerial decision making Population issues Labor shortages Loss of customer base Macro variables Slow neighborhood recovery Slow progress state/local government Lack of federal assistance National economic decline a Unstandardized coefficient 11.05 0. this did not relate to how successful those businesses were.05). organizations performing the same or better compared to their pre-Katrina levels were virtually indistinguishable in terms of the magnitude of problems they have experienced.30 * * 2 1.01).01.042 * 0. Regression results for predicting amount of gain/loss in business volume since Katrina 0.99 2.62 2. only lack of aid from the Federal Government was significantly blamed for performance difficulties (b ¼ 2 0. in contrast to H3.03 2. 0.27.67 4. In fact. Although all respondents had rated the declining national economy as being problematic. population. significance at: *p .01 2 0. p .01). In most areas.09 2 0.049 0.06 2 0.05 2 0.03 1. but the other population variable.00 2.05 2 6. Results from the ANOVA analysis supported the idea that organizations performing worse relative to their pre-Katrina levels were suffering with more problems across internal. However.02 * 2 2.05 and * *p .21 2.14 0. They were more likely to continue to have difficulties with . some are doing astoundingly better.19 2 0.92 SE 5. those performing worse reported more problems in several areas.01 2 0.142 * * Table III. Discussion The good news here is that three-quarters of the businesses surveyed report doing as well or better than they were before Hurricane Katrina. However.32 2 1.19 2 4.49 2 0.66 0. 0.39 * 2 8. 1997).27 2 0.48 2.47 1. Neighborhood progress and state/local government aid also failed to show significant impacts.26 * 0. problems with labor shortages. This is consistent with previous research showing that most businesses do in fact recover eventually after a natural disaster (Tierney.024 320 0.257 Notes: n ¼ 186. Labor shortages was a significant problem as well (b ¼ 2 0.18 2 .00 2. p .89 1. 0. 0. adummy-coded with services as reference category p .14 Total R 2 DR 2 for block 0. and macro variables compared to organizations performing the same or better.18. 0.01 0. Among the macro level variables.73 Standardized coefficient 0.

the very well-publicized failures of FEMA may have created an understanding that it was FEMA’s responsibility to be providing aid. so this may be simply an issue of whether or not capital is “sufficient. FEMA was certainly expected to do more to aid New Orleans than they ultimately accomplished. The first limitation concerns the cross-sectional design of the study. The primary issue now seems to be population related. for business owners. the performance of the SBA may have factored into this attribution. or state levels because their expectations of the Federal Government are higher. local. Those businesses doing worse were more likely to say that the loss of their customer base was very problematic for them. those owners and managers who made very poor decisions immediately post-Katrina may have failed to successfully reopen at all. In the regression. and they are more likely to be plagued by labor shortages. There are many individuals who were displaced by Hurricane Katrina who wish to return to New Orleans. And while problems with capital did distinguish struggling businesses in the ANOVA analyses. 2005). The FEMA has borne most of the responsibility of providing aid to people who wish to return. Although managers for businesses in all performance categories rated the highest problem area as the declining national economy. showing how strongly business recovery is tied to recovery of the larger community. and thus also their flagging performance numbers. Thus. This is very likely due to the fact that this data were collected between three and four years after the disaster. The advantages of business size may be especially important for short-term recovery. whereas those who have persisted this long were those who showed at least satisfactory levels of competence. the Federal Government appears to get the most blame. 2009). and their performance has not been well reviewed (ISS. SBA performance was marked by loans requiring inordinate amounts of documents that many. more than lower-level entities. That these difficulties persist even four years post-Katrina attests to the long-term nature of recovery after a disaster of such magnitude. Similarly. especially in regards to the amount of available customers. Businesses may also be attributing their difficulties to federal failures more than to those at the neighborhood. Thus. with problems acquiring labor and slow neighborhood recovery also being strong differences. none of the features internal to businesses was found to be significantly related to the level of business increase or decrease. those that have persevered this long clearly had enough resources to do so.suppliers and report problems with sufficient capital. 2009). 2006). the most dramatic differences between worse performing organizations and all others were the problems caused by the health of the larger neighborhood and city. these problems were not predictive of degree of performance change. Also. what may be most helpful for these businesses would be to encourage more people to move (back) to New Orleans. but are unable to do so without assistance in rebuilding (ISS. This may be one reason why.” with gradations of sufficiency above that being of minimal importance. had no way of providing (Runyan. of the macro-level variables. Loss of customer base was an especially stark distinguishing feature. whose businesses were utterly destroyed. The methodological limitations of this study impact the broadness with which the results can be generalized. The SBA was also extremely slow in providing responses to applications for loans (Loten. businesses may be drawing the connection between a shortfall in aid to help population return and their own reduced customer base. A longitudinal study of business recovery would have been statistically more Hurricane Katrina 321 .

. utilities. the current results suggest that after initial emergency recovery is complete. Neighborhood recovery greatly impacted the likelihood of business survival or death (Lam et al. 2009). although the parish in which businesses operated was recorded. Another problem created by differing rates of neighborhood recovery is that the difficulties and challenges related to factors external to a business may have impacted businesses in the same neighborhood or geographic location in a systematic.g. and consider how they could survive without it. Businesses probably should anticipate a possible dearth of government assistance in planning for future disasters. Rather. postal service. Perhaps. In this study. . and were therefore less likely to be included in our sample. This is an issue in this study because linear regression analysis assumes observations are independent. Nonetheless. In addition. In sum. Businesses in neighborhoods that were especially slow to recover or that never recovered faced additional challenges making their post-disaster survival less likely. only GNO area businesses open prior to Katrina that managed to reopen and remain in operation nearly four years after the storm were included in the sample. sanitation service) for geographic areas with the least amount of damage and the most potential for a quick recovery. Given that the level of damage and neighborhood recovery varied greatly within parish lines. this creates a spatial dependence among observations within that space. non-random manner. Although over 25 percent of owners and managers reported declining organizational performance compared to pre-Katrina levels. specific neighborhood locations were not. Violations of the independent observations assumption can lead to unstable parameter estimates and yield unreliable significance tests in regression analysis. one indicator of the survivor bias in our data was the lack of significant effect that neighborhood recovery had on organizational performance. the long-term success of businesses that have been subject to a natural disaster is primarily dependent on the recovery of their customer and labor base. local government officials prioritized the restoration of basic services (e. this gave business owners and managers in less damaged areas an advantage over those whose businesses were located in more heavily damaged areas. which lends a great deal of hope for the continued recovery of New Orleans in the future. we suspect that area businesses with the worst performance were less likely to survive four years post-Katrina.3 322 powerful and better able to reflect recovery change over time. the Federal Government has been expected to do more to help business owners and to help rebuild the population. This focus on businesses that achieved long-term survival after Katrina most likely resulted in a truncated distribution for many of the main study variables including our main criterion variable organizational performance. neighborhood recovery may play a more vital role in likelihood of business survival or death. it was not possible to control for geographic proximity or neighborhood of business locations other than at the parish level. most of the organizations surveyed here were doing relatively well. a longitudinal approach would have allowed the tracking of post-disaster business survivals and business deaths. These results and conclusions may be characterized as suffering from a general survivor bias. Our results in this area should be interpreted only to suggest that the level of neighborhood recovery is not a determining factor in the degree of success for surviving business. In the current sample.MRR 34. When properties within a geographic space covary. Clearly. Because the Katrina-related damage varied greatly by neighborhood. Also.

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edu Christy M. She is currently appointed as the Richard J. “Non-structural earthquake preparedness of Southern California hospitals”.J. Tierney. Zhang. West. 17. Vol. About the authors Elizabeth Ann Dietch is a Professor in the College of Business Administration at the University of New Orleans. A.J.M. G. (2001). 38-57. Lindell. and has also taught at Tulane and Loyola University in New Orleans. D.S.T. Vol.MRR 34. “Modeling the regional impact of natural disaster and recovery: a general framework and an application to Hurricane Andrew”.K. pp. She received her PhD from Tulane University in New Orleans in 2002. Vol. K.R. pp. R. Environmental Hazards. pp. and Lindell. and Prater. International Regional Science Review. Christy M. Dickerson.3 324 Webb. Elizabeth Ann Dietch is the corresponding author and can be contacted at: edeitch@uno. To purchase reprints of this article please e-mail: reprints@emeraldinsight. Stillman Assistant Professor of Management. Vol.. 121-50. 1. Disasters. (2007). and Dahlhamer. 4. 153-71. 33.emeraldinsight.com/reprints . D. Y. J. M. Whitney. 17. C. (2002). 183-99. pp. 45-58.G. (1994). Journal of Business Continuity and Emergency Planning. Corey is an Assistant Professor of Management in the College of Business Administration at the University of New Orleans. and Kropp. “Vulnerability of community businesses to environmental disasters”. Corey received her PhD in Industrial Organizational Psychology from Tulane University in 2004. and Lenze.K. Zolin. “How surviving businesses respond during and after a major disaster”.com Or visit our web site for further details: www. Earthquake Spectra. M. Vol. (2009). “Predicting long-term recovery from disasters: a comparison of the Loma Prieta Earthquake and Hurricane Andrew”. pp. F... C.

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