Factors That Influence the Recovery of Small Family-Owned Residential-Care Facilities for Senior Citizens in New Orleans, Louisiana after Hurricane Katrina

By Harrell, Adrine J. | Academy of Strategic Management Journal, January 1, 2008 | Go to article overview
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Factors That Influence the Recovery of Small Family-Owned Residential-Care Facilities for Senior Citizens in New Orleans, Louisiana after Hurricane Katrina


Harrell, Adrine J., Academy of Strategic Management Journal


ABSTRACT

This research examines management issues of privately-owned senior-citizen residential care facilities in the aftermath for senior citizens survival of Hurricane Katrina." The significant increase in the creation of new businesses is the direct result of more and more people who desire to go into business for themselves many new business owners start as self-employed specialists in new and successful entrepreneurial ventures' (Steward & Boyd, 1998, p. 8). Normally, if a business receives passionate attention from its owner, the business owner will strive to take the steps necessary to enable the business to succeed and recover in the face of adversity or crisis. If the business is a family firm, there is no guarantee that those who inherit it will have the same devotion to it as its creator. With a natural disaster like Hurricane Katrina causing immense social and business upheavals, some small firm owners may have used this situation as their way to unburden themselves from their family businesses.

INTRODUCTION

The largest natural disaster in U.S. history, Hurricane Katrina slammed into the Gulf Coast on 29 August with its eye making landfall about 55 km east of the city of New Orleans. Although Hurricane Katrina caused significant damage of historic proportions along the Mississippi and Louisiana coasts, the situation in the New Orleans area was amplified when several levees protecting the area failed the following the day, and much of the city and surrounding areas, (about 80% of which is below sea level) were inundated. "The floods may have killed thousands, stranded many more, and triggered a massive relief and evacuation effort" (Travis 2005, p. 1656).

In the New Orleans area, businesses were closed and unable to operate within the city for weeks or months depending on the wind and flood damage and their locations. Many business buildings were destroyed. Although the New Orleans city leaders and citizens knew Hurricane Katrina was approaching, they had no idea that the levees would break and that the city would face the devastation that it did.

Natural disasters can have a significant impact upon business in the areas in which they occur. This "impact" is not only financial but also the psycho-social and economic uncertainty that also follows. As natural disasters cannot be controlled by humans, the fear of the unexpected influences what would otherwise be rational management decisions. In the days and weeks after a major natural disaster, many business owners may have several unanswerable questions, which they ask themselves. Is it safe to return? What if something like this incident happens again? Their customers will ask the same questions: Is it safe to return? Many businesses in disaster areas are affected by these fear factors. This research unveils several common issues affecting disaster business recovery globally after natural disasters

PROBLEM: FINANCIAL LIMITATIONS OF SMALLER BUSINESSES VERSES LARGER ENTITIES

"Risk management is the art and science of setting out plans of contingency in case of emergency or other natural disasters. One of its tools is the disaster recovery plan, wherein the company can plan for the problems brought about by calamities. Moreover, companies should have long-term approaches and business income worksheets to address the company's time element exposure" (Stephenson, 2006, p. 25). This research shows that many of the New Orleans area senior-citizen residential care business owners operated prior to Hurricane Katrina with limited resources and tight budgets. Many small residential care facility owners struggled to maintain their basic liability insurance coverage. Many of the firms enjoyed minuscule returns after expenses and payroll were covered.

A survey into the financial status of the companies before Katrina is part of this study. Flott (1997) indicates that lack of pre-disaster profitability as one of the key determinants of slow recovery.

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Factors That Influence the Recovery of Small Family-Owned Residential-Care Facilities for Senior Citizens in New Orleans, Louisiana after Hurricane Katrina
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