Faculty of Economics and Business Administration Publications Database

True exogenous shock or just a scapegoat: Making sense of crises – the case of the 2008/2009 global banking crisis’ impact on manufacturing industries

Nienhaus, Andreas
Volume: 11
Number: 2
Pages: 203 - 223
ISSN-Print: 1755-425X
Link External Source: Online Version
Year: 2018
Keywords: Unit root, Time series analysis, Attribution theory, Organizational crisis, Sense making, Exogenous shock


Sensemaking models generally lack an objective determinant to distinguish between CEO fault and changes in systematic risk caused by exogenous negative shocks like a banking crisis. The interdisciplinary approach of this paper combines attribution theory with econometric time series analyses to provide an objective measure of exogeneity and persistence of a negative shock to an organization. The purpose of this paper is to address the exploratory research question, of how scapegoating by managers can be avoided by the use of an objective and empirical measurement and if the recent financial crisis can be seen as an exogenous shock to manufacturing firms.


By testing for stationarity with a structural break with an econometric time series analysis, the model helps to reduce agency costs during organizational crisis by effectively determining crisis causation and avoid scapegoating by managers.


By combining the sensemaking models of Haleblian and Rajagopalan (2006), Staw (1980), and Weick (1988), an integrated model of sensemaking in performance crises under the specific context of simultaneously occurring external crises is provided. By applying the authors approach the results suggest that the financial crisis of 2008/2009 has true exogenous adverse effects on US manufacturing firms.


The interdisciplinary approach encourages the integration of econometric time series analysis as an objective determinant in sense making models.