Ethnic Categorization & Organizational Crisis Management in Multi-Ethnic Societies

Abstract

Increasing business interests in multi-ethnic emerging economies as a result of the opportunities they offer for trade and investments, expose organizations operating there to ethnic group rivalries and conflicts. Despite this growing threat, little has been documented on the role of ethnicity in shaping perceptions of corporations and organizational crises. This study proposed an ethnic attribution framework for understanding organizational crises in multi-ethnic settings, laying as its foundation the assumption that stakeholders in multi-ethnic societies perceive organizations along ethnic lines. The study identifies some of the factors responsible for ethnic categorization and suggests the ethnic inclination of stakeholders would be positively related to the ethnic categorization of organizations. Drawing from a sample of 158 stakeholders, this study found reports of ethnic categorization of organizations driven primarily by the lack of diversity amongst staff. The findings assert that in multi-ethnic societies, the application of an ethnic frame to an inter-organizational crisis is a function of the attribution of ethnicity to the corporate organizations involved in the crisis.