A tale of two cities: How firms’ reactions may shape societal adaptation following climate disasters

Abstract

Cities around the world are preparing for the effects of climate change, including sudden climate-induced disasters such as floods, hurricanes, and droughts. The science and policy literatures that inform cities’ adaptation and disaster plans have focused on the probability and impact of climate disasters, but have not systematically considered how firms will react. We leverage management and organization research to build a framework of how firms make sense of such disasters, characterizing their responses as “fight”, “flee”, or “freeze”. We extend our framework to the city level by using historical data and prospective sensemaking to develop a narrative scenario of a future flood in the Netherlands, where analysts already discuss how the next ‘100-year flood’ may unfold. Our study reveals how heterogeneity in firms’ sensemaking may come to dramatically affect which adaptation strategy is likely to prevail: city reconstruction or retreat. The paper bridges the climate science and policy literatures with organizational research, advances research on business sustainability and firms’ responses to punctuations, and helps broaden the explanatory potential and methodological toolkit of organization theory. In so doing, the paper serves as a springboard for policy debates and future interdisciplinary research on societal adaptation following climate disasters.