Shocking Performance: The Effects of Anticipated and Unanticipated Shocks on Organizational Performance

Abstract

Public organizations operate as open-systems. As such, exogenous perturbations in the environment can affect organizational performance. Often, management buffers these shocks to maintain performance through both managerial strategies and organizational structures. To this extent, the literature commonly assumes shocks in the environment are largely unanticipated, resulting in management responding to a precipitation of negative effects to the organization's internal operations and processes. We argue exogenous perturbations can take on two different forms: anticipated and unanticipated shocks. Based on the level of managerial anticipation, we argue public managers will adopt strategies that resemble those of disaster preparedness as opposed to managers focused on the recovery-oriented aspects of management. We test this argument by empirically examining the effects of an anticipated and unanticipated shock on the performance of Texas public school districts.