Abstract
Early crisis detection has become crucial for modern marketing strategies, particularly in today's interconnected business environment, where crises can rapidly impact a firm's performance and reputation. This study develops a Daily Crisis Shock Indicator (DCSI), a novel framework for real-time crisis detection that enhances firms' ability to identify and respond to emerging marketing crises at their earliest stages.
The research introduces an innovative approach to crisis detection using multiple data sources, including internal and external communications and financial performance data, integrated with advanced analytical techniques. DCSI framework utilised artificial neural networks (ANNs) and genetic algorithms (GAs) to analyse the data sources. These data from these sources are synthesised into sub-DCSIs, which are then combined into an integrated DCSI (i-DCSI), creating a comprehensive crisis detection framework.
Through application to the Enron case study, the research demonstrates that DCSI effectively identified early warning signals, particularly during transition periods (referred to as "yellow zones"), before the crises fully manifested. The results reveal that communication data captures crisis signals earlier than traditional financial metrics, highlighting the importance of a multifaceted approach to crisis detection. Furthermore, DCSI's adaptable structure, featuring optimised parameters and dataset weights, enables firms to tailor it to their specific operational contexts and crisis management needs.
This study critiques and expands the Situational Crisis Communication Theory (SCCT) by addressing its limitations in early crisis detection and transitional phases, proposing a more comprehensive crisis management approach. While SCCT provides strategic guidance on crisis response based on crisis type and perceived organisational responsibility (Coombs, 2021), its focus is primarily on managing communication during and after a crisis. The theory emphasises response strategies to mitigate reputational damage and rebuild trust, but lacks a framework for proactive crisis detection and transition management. This study enhances SCCT by integrating these aspects to strengthen crisis preparedness and response effectiveness.
DCSI represents a significant innovation in marketing crisis management, equipping firms with a proactive framework to detect and respond to emerging crises. By enhancing firm resilience and stakeholder trust, the framework provides a pathway for sustainable business performance in an increasingly unpredictable market environment while providing marketing analysts, who have access to the relevant data sources, with concrete frameworks for early crisis identification and response. This research underscores the importance of adopting advanced analytical tools and a multidimensional approach to navigate the complexities of modern crisis management effectively.