Network and crisis: Moderating effects of network characteristics on performance decline and recovery after the 9/11 Attacks

This study explores the moderating effects of network characteristics on organizational performance decline during an exogenous crisis and the subsequent recovery. Utilizing comprehensive alliance network and performance data from the U.S. aviation industry spanning 1978 to 2011, we examine how airlines’ network attributes—specifically centrality, status, and structural holes—condition their vulnerability and resilience in the face of external shocks. Consistent with our expectations, we find that exogenous crises have a significantly negative impact on firm performance. Furthermore, our results reveal that airlines occupying advantageous network positions are more susceptible to greater performance decline during crises but also experience more accelerated recovery in the aftermath. These findings suggest a double-edged nature of network advantages: while such positions can intensify exposure to external disruptions, they simultaneously provide critical pathways for mobilizing resources, accessing information, and restoring performance post-crisis. By analyzing the dynamic and contrasting effects of network characteristics across different phases of organizational disruption, this study contributes to the crisis management literature by offering a more nuanced understanding of organizational responses to external shocks. It also advances social network theory by demonstrating that the value of network positions is not uniformly beneficial but contingent upon the environmental context. Practical implications are discussed for managers formulating strategic responses to crises, particularly with respect to leveraging network structures for both risk mitigation and recovery enhancement.