LEARNING ABOUT A SUDDEN CRISIS: AIRLINE RESPONSES TO THE COVID COLLAPSE

Strategy & Business Policy

Speaker: Henrich Greve

Professor - INSEAD Singapore

Conference  Jouy-en-Josas T015

ABSTRACT

Organizational learning is based on inferences from history, so is it useful if the organization encounters a sudden rare shock? The Covid pandemic has generated crises in many industries. The crises have called for quick responses that decisions makers need to choose with no prior exposure to similar experiences, and with highly uncertain estimates of the form, duration, and severity that the crisis will have. This paper examines how organizations draw from selected parts of their history to decide responses, and also simplify decision making by drawing from the responses of peer organizations and by learning from organizations that face the same context. The findings show that organizations seek to learn through the usual mechanisms even when facing rare shocks, but they are applying different learning rules to reversible and irreversible actions. There is also suggestive evidence that the learning rules help organizations make adaptive choices during a shock