Relationships, Layoffs, and Organizational Resilience

Abstract

The terrorist attacks of September 11, 2001, affected the U.S. airline industry more than almost any other industry. Certain airlines emerged successful and demonstrated remarkable resilience while others languished. This investigation identifies reasons why some airline companies recovered successfully after the attacks while others struggled. Evidence is provided that layoffs after the crisis, although intended to foster recovery, instead inhibited recovery throughout the 4 years after the crisis. But, layoffs after the crisis were strongly correlated with lack of financial reserves and lack of a viable business model prior to the crisis. Digging deeper, the authors find that having a viable business model itself depended on the development and preservation of relational reserves over time. Our model shows that the maintenance of adequate financial reserves enables the preservation of relational reserves and vice versa, contributing to organizational resilience in times of crisis.