Does Exposure to a Traumatic Event Make Organizations Resilient?

Why do some organizations bounce-back from traumatic events more quickly than others? While the research on organizations offers extensive insights on recovery from economic or technological shocks, there is limited understanding of how organizations recover from life-threatening events such as terrorist attacks. In this study, we build on the research on resilience and argue that organizational recovery from a traumatic event is informed by the perception of threat. Higher perception of threat increases inter-organizational collaboration and the care associated with the deployment of slack as well as to learning. We tested our arguments with a sample of US and non-US firms before and after the 9/11 terrorist attacks and found that, due to spatial proximity, US firms' higher perception of threat led to a larger increase in the frequency of inter-organizational alliances than that of non-US firms. This preference was more frequently directed towards local partners and demonstrated a distinct emphasis on slack and learning. Contrary to conventional wisdom, our findings suggest that organizational resilience in the face of a traumatic event benefits not from immunity but from spatial proximity to the threat. Proximity increases the perception of threat, and with it, the impetus for adaptation.