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Theoretical Framework for Stakeholders’ Disaster

Response Index in the Built Environment

S. Mohammad H. Mojtahedi1, Bee Lan-Oo2

Abstract

Disasters are becoming increasingly frequent, expensive and devastating globally. They Formatted: Indent: Left: 0.03 cm,
Right: 0.03 cm
also jeopardize society, performance of economy, built environment, and other socio-
economic and physical determinants. While disasters cannot be eliminated, resilient built
environment are those where disasters are effectively managed by stakeholders. Therefore,
it is important to measure stakeholders’ approaches against disasters in the built
environment. A widely used measure is to create a composite index. The aim of this paper is
to propose a theoretical framework using stakeholder and decision-making theories in the
development of stakeholder disaster response index. Stakeholder theory determines power
and legitimacy of stakeholders whether they have tendency towards proactive or reactive
approaches. Decision-making theory, on the other hand, provides optimized decisions for
stakeholders in order to minimize all negative consequences of disasters. Furthermore,
stakeholders take rational behaviors in reactive approaches in recovery and post-disaster
reconstruction activities. With a sound theoretical framework, the anticipated benefits of the
resultant stakeholders’ disaster response index include: (1) direct comparison of different
stakeholders’ approaches against disasters in the built environment; (2) high-level disaster
management planning decisions; and (3) development of stakeholder disaster management
procedure.

Keywords: built environment, decision-making theory, disaster response index,


stakeholder management theory

1. Introduction

The natural hazard becomes a natural disaster as soon as human beings, infrastructure, or
other forms of tangible or intangible capital is threatened and/or destroyed by that hazard
(Alexander, 1997). However, it is noted that some scholars believe that 'Natural Disaster' is
now largely considered to be a misleading concept (Bosher 2008; Mileti 1999; Winser et al.
2004). O’Keefe et al. (1976) suggested that some radical rethinking on the nature of “natural”
disasters is necessary. Natural disasters can occur when natural vulnerability and human
vulnerability have the same coordinates in space and time (Alcantaraayala 2002; Alexander
1997, 2000; Smit et al. 2000). The crucial point about understanding why disasters occur is

1
PhD candidate; Civil Engineering School; The University of Sydney; NSW 2006, Australia;
mohammad.mojtahedi@sydney.edu.au.
2
Senior Lecturer; Faculty of Built Environment; The University of New South Wales; NSW 2052;
bee.oo@unsw.edu.au.
that it is not only natural events that cause them, but they are also the product of the social,
political, and economic environment. In this paper we focus on disaster as a general concept
which covers natural, technological, and man-made hazards.

Disasters affect not only communities, but also physical assets and the built environment
due to lack of stakeholders’ awareness before, during and after natural disasters (Bosher et
al. 2009). Although there have been efforts to measure different aspects of natural disaster
management including preparedness, resilience, mitigation efforts, social vulnerability, and
hazard exposures, there is little work on stakeholder approaches against disasters in the
built environment. There are potential benefits from measuring stakeholders’ approaches,
such as a clearer understanding of their preparedness, and providing a means to encourage
stakeholders that are more vulnerable and less prepared to improve their preparedness
efforts. Better measurement also may lead to more efficient allocation of scarce resources,
and assist in assessing risk more effectively and accurately.

An overview of literature related to preparedness indices in disaster management indicates


that previous research efforts have dealt mainly with emergency management theory, and
socio-economic conditions (e.g., Haque 2003, Ibarrarán et al. 2007, Kahn et al. 2005).
Indeed, there is no solid foundation of emergency management theory to guide the
development of disaster response indices (Covington and Simpson 2006). Increasingly, few
studies have focused on stakeholders’ roles and reaction behaviours against disasters in the
built environment (Roberts 2008). The aim of this paper is to propose a theoretical
framework using stakeholder and decision-making theories in the development of
stakeholder disaster response index. Stakeholder theory determines power and legitimacy of
stakeholders whether they have tendency towards proactive or reactive approaches.
Decision-making theory, on the other hand, provides optimized decisions for stakeholders
with considering expectation, asset integration, and risk aversion. We hypothesise that the
ideas of both stakeholder and decision-making theories would pave the way to develop
stakeholder disaster response index remarkably. In this, first we review the concept of both
theories, and then we borrow ideas from both theories to support the theoretical framework
of stakeholder disaster response index.

2. Impact of natural disasters on the built environment

The built environment, defined by the facilities and civil infrastructure systems that people
use, is the fundamental foundation upon which a society exists, develops, and survives. Built
environment is at risk from the impacts of natural disasters associated with climate changes.
Natural disasters affect built environment not only in developing countries but also in
developed countries. The estimated damages from flooding in UK is around £270 million and
around 80,000 urban properties in UK are presently at risk from flooding (Wilby 2007).
According to the Department of Climate Change and Energy Efficiency 2011, between
187,000 and 274,000 residential buildings in Australia are exposed to the combined impact
of inundation and shoreline recession associated with sea level rise. Furthermore, between
27,200 and 34,500km of transportation infrastructure is potentially at risk from floods
associated with sea level rise and climate changes. The average value of exposed
residential buildings and transportation infrastructure is $65 and $60 billion, respectively. In
2009, natural disaster costs US$ 41.5 billion, which the costliest disaster was winter storm
Klaus, which caused damages totalling US$ 5.1 billion in France and Spain (Bureau of
Transport Economics (2001). The database has also recorded that Hurricane Katrina solely
caused damages amounting to almost US$ 137 billion in United States in 2005. The issue of
climate change and natural disasters are remarkably crucial in the built environment. The
climate risks most frequently addressed in existing studies are associated with sea-level rise,
and water resources (Nicholls 2004). Anticipated consequences of climate change for cities
include fewer periods of extreme winter cold; increased frequency of air and water pollution
episodes; rising sea levels and increased risk of storm surge; and changes in the timing,
frequency and severity of urban flooding (Wilby 2007). These events and changes will, in
turn, have both direct and indirect impacts on the built environment (Wilby 2007). A review
on literature by Hunt and Watkiss (2010) suggests that there has been little study pertinent
to impacts of disasters on energy sectors and transport infrastructure. Roberts (2008) argue
that the principle vulnerability of the built environment and infrastructures to climate changes
is derived from extreme events; including floods and storms and to a lesser extend heat-
waves and drought. New buildings will have to be designed to cope with the effects of
disasters associated with climate change. Stakeholder approaches towards natural disasters
in order to mitigate the consequences of disasters are firmly recommended in the built
environment (Moe and Pathranarakul 2006, Bosher et al. 2009).

3. Stakeholder approaches to managing disasters in the built


environment

Stakeholders’ approaches toward natural disaster management can be classified into pro-
active and reactive approaches. Moe and Pathranarakul (2006) described that pro-active
approach refers to those activities such as mitigation and preparedness that are planned and
conducted before the natural disasters by stakeholders in order to tranquilize the adverse
impacts of natural disasters effectively. In contrast, responses and recovery activities which
are conducted by stakeholders during and after natural disasters is called reactive approach.

Although there are two approaches to tackle the natural disasters; reactive and proactive
approaches, most studies have claimed that the stakeholders often resolve the
predicaments arisen in natural disasters by reactive approaches (Bosher et al. 2009, Brilly
and Polic 2005, Loosemore and Hughes 1998). It is also noted that few studies exist on
stakeholders’ approaches toward natural disaster management in the built environment.
Loosemore (1998) investigated reactive crisis management in construction projects. Brilly
and Polic (2005) studied a case in Slovenia to provide an integrated flood mitigation decision
making process with considering stakeholders’ approaches. Moe et al. (2007) proposed a
balanced scorecard technique with considering pro-active and reactive approaches to
provide a continuous assessment of performance in each life-cycle phase in natural disaster
management project. Bosher et al. (2009) claimed that there is a need to proactively address
strategic weaknesses in maintaining the built environment from a range of disasters. They
also emphasized that there is still insufficient evidence that key construction stakeholders
are playing an active role in mitigating flood risk. The pre-construction phase of building’s life
cycle has been identified as the most critical stages in their study when key stakeholders
such as architects/designer, structural and civil engineers, urban planners, specialist
contractors and emergency/risk managers need to adopt natural disaster mitigation
strategies. Their survey on the integration of disaster risk management in UK’s built
environment indicated that knowledge and awareness of integrated disaster risk
management is poor, they also concluded by some key recommendations as: (i) built
environment stakeholders need to become more immersed in group decision making; (ii)
professional training for stakeholders such as architect, planners, engineers, developers, etc
pertinent to risk and hazard awareness should be systematically organized; and (iii)
performance-based contracting, and product or service oriented procurement decision
should be taken in order to make designers and contractors think about long-term
implications and performance of buildings and structures they design and construct.
Development of indices is highly required in the built environment to measure stakeholders’
responses against disasters. For this, we need to shape theoretical framework to justify the
feasibility and reliability of disaster response index in the built environment.

4. Theoretical framework

Disaster response indices play an important role to measure stakeholders’ disaster


preparedness, resilience, mitigation efforts, social vulnerability, and hazard exposure.
Davidson and Lambert (2001) explained that natural disaster indices are appealing because
they summarize a substantial amount of technical information in a way that people can easily
understand. Indeed, indices have become more widely applied in social capital and
capacities, and measure quality of life, human development, social vulnerability, emergency
preparedness (Davidson 1997, Davidson and Lambert 2001, Simpson and Katirai 2006).
Disaster response indices have remarkable benefits as following (Cutter et al. 2003,
Davidson and Lambert 2001, Simpson and Katirai 2006): (1) providing a more dynamic
picture of disaster; (2) comparison of vulnerability between different communities; (3)
efficient allocation of scarce resources; (4) assessing disaster risk more effectively and
accurately; (5) understanding community preparedness. They also support disaster resource
allocation, high level planning decisions, public education efforts and disaster risk
assessment (Davidson and Lambert 2001).

Apart from the benefits of disaster response indices, there have been numerous issues
pertinent to the theoretical aspects in developing disaster response index (Covington and
Simpson 2006). Few scholars have applied theories and paradigms in measuring disaster
preparedness. These theories include: practice-based theory and a theory-based practice
(Gillespie and Streeter, 1987) and planning perspective (Perry and Lindell, 2003) and It is
noted that the most frequently used is the emergency management theory (e.g., Dynes
1994, McEntire 2001, McEntire 2002). However, emergency management theory doesn’t
seem to provide a solid foundation to guide the development of disaster preparedness
indices, emergency management theory has three fundamental problems for developing
disaster response indices as follows: (1) we are really interested in disasters, not
emergencies; (2) the focus on emergency makes the field reactive and limits its applicability
to first responders; (3) emergency management may imply that we have total control in our
ability to deal with the adverse occurrences we call disasters. Hence, emergency
management is both a misnomer and an oxymoron. But a suitable replacement has not been
found, and one may never be accepted due to the increasing professional recognition of the
name emergency management (Covington and Simpson 2006). In this paper, we combine
stakeholder and decision-making theories to support the proposed theoretical framework for
developing stakeholder disaster response index.

Figure 1 shows the proposed theoretical framework to develop stakeholder disaster


response index by considering decision-making and stakeholder theories in the built
environment. An important matter for the disaster management team is to identify and
analyse those stakeholders who can have an influence over disaster management phases.
This paves the way for managing a process that maximizes stakeholder positive input and
minimizes any adverse or negative consequences. Furthermore, disaster management is a
decision-making process. In a decision making process we are supposed to choose one or

some choices over different alternatives with considering deficiency of knowledge and
uncertainty about the future. The built environment decision making process requires a
profound integrated understanding of how to avoid and mitigate the effects of risks and
disasters (Bosher et al. 2009).

Figure 1: Theoretical framework for developing stakeholder disaster response index

5. Stakeholder definition and theory

Any kind of entity can be a stakeholder in managing disasters. Local people, groups,
organizations, institutions, societies, and even the natural environment are generally thought
to qualify as actual or potential stakeholders. First definition of stakeholder is attributed to
Freeman (1984). He borrowed the notion of memo from Stanford Research Institute in 1963.
The memo defined that stakeholder is an entity without whose support the institution would
not survive. He also described that the purpose of stakeholder management was to devise
methods to manage the myriad groups and relationships that resulted in a strategic fashion.
Harrison et al. (2010) claimed that stakeholder theory should be considered the decision
makers’ roles, their decisions and who takes advantages of the outcomes of those decision.
Stakeholders have an interest in the actions of an organization and they have ability to
influence it or they can be affected by the achievement of the organization's objectives
(Freeman 1984, Savage et al. 1991). Stakeholders experience or anticipate experiencing the
harm and benefits of an organization (Donaldson and Preston 1995). Although there have
been a few other stakeholder definitions, the latest describes stakeholder who has input in
decision making as well as who benefits from the results of decision makings (Phillips 2003).
Stakeholder theory is a theory of organizational management and business ethics that
addresses morals and values in managing an organization. This theory was originally
detailed by Freeman (1984), and it has been a popular heuristic for describing the
management environment for years. Stakeholder theory argues that institute’s welfare is
optimized by meeting the needs of the institute’s key stakeholders in an appropriate way.
Increasingly, stakeholder theory offers power and legitimacy attributes which are not found in
other theories of the organization (Mitchell et al., 1997).

It is important to categorize stakeholders into different groups. Mitchell et al. (1997) classified
stakeholders into seven main groups as; (1) dormant stakeholders; (2) discretionary
stakeholders; (3) demanding stakeholders; (4) dominant stakeholders; (5) dangerous
stakeholders; (6) dependent stakeholders; and (7) definitive stakeholders. Although dormant
stakeholders have little or no interaction with the firm the main criteria in dormant
stakeholder is to possess power to impose their will on an organization. Discretionary
stakeholders hold the attribute of legitimacy, but they have no enough power to affect a
firm’s decisions. Demanding stakeholders possess urgent claims but having neither power
nor legitimacy. Dominant stakeholders have enough power and legitimacy to direct a firm’s
decision making process. Coercive behaviours making stakeholders dangerous to the firm
(Mitchell et al., 1997). The identification of stakeholders who are involved in disaster
management depends on the type of the built environment. Furthermore, the number of
stakeholders increases when disasters affect the built environment. A generic set of
stakeholders in managing disasters in the built environment would include local government,
prime (general contractor), subcontractors, suppliers, architects/designers, structural and
civil engineers, urban planners, emergency relief organizations, financial institutions,
insurance companies and affected local community (Bosher et al. 2009; Moe and
Pathranarakul 2006).

In Freeman’s (1984) stakeholder theory, power and legitimacy are two distinctive
stakeholder’s attributes. The power of stakeholder allows them to mobilize social and
political forces and to withdraw resources from the organization (Post et al. 2002, Olander
2007). Legitimacy gives opportunity to stakeholder to abide some sort of beneficial or
harmful risk pertinent to organization (Mitchell et al. 1997, Olander 2007). These suggest
that power and legitimacy provide them to take proactive or reactive approaches in decision
making process. Therefore, stakeholder theory could be a pivotal pillar for supporting the
theoretical framework in the development of disaster response index in examining their
proactive or reactive approaches against disasters. Power and legitimacy help stakeholders
to bring about the outcomes they desire; hence, these attributes are very crucial for
stakeholders to take proactive approaches against disasters in the built environment. In
other words, combination of power and legitimacy can create authority for stakeholder’s firm
to take proactive responses independently. However, decision making process definitely
influence stakeholders to migrate from proactive approach to reactive response, or vice
versa. In the next section we explain how decision making theory can affect the
stakeholders’ approaches toward disasters in the built environment.
6. Decision making theory and paradigm

Decision making has always been the significant matter for all humans. We need to make
decision individually and in groups constantly. In a decision making process we are
supposed to choose one or some choices over different alternatives with considering
deficiency of knowledge and uncertainty about future (Shih, 2007). There are two
distinguished decision making paradigms namely: value maximization paradigm and intuitive
reasoning paradigm (Ariely 2008). The first paradigm assumes that humans have great
tendency towards to maximize the value of selected alternatives based on their desires. The
latter paradigm assumes that humans’ decisions are influenced by complicated factors.
Therefore, in value maximization paradigm people have rational behavior but in intuitive
reasoning paradigm humans might involve irrelevant factors in their decision making process
(Levy 1992, Ariely 2008). Based on the concept of expected utility, the value maximization
paradigm proposes that a decision maker will choose the alternative that maximizes the
weighted factors obtained by utility functions. Von Neumann Morgenstern Theory (VNMT),
under the value maximization paradigm, explains that a person or unity is rational if and only
if their behavior maximizes the expected value of the set of possible outcomes (Neumann
and Morgenstern 1944). Prospect theory introduced by kahneman and Tversky (1979)
significantly advanced decision making theory. This theory enrich value maximization
paradigm by addressing three principles: (1) expectation, (2) asset integration, and (3) risk
aversion. The overall utility of a prospect is the expected utility of its outcomes, and a
prospect is acceptable if the utility resulting from integrating the prospect with one's assets
exceeds the utility of those assets alone. Moreover, most people will prefer an alternative
with expected value X over any riskier alternative with equal expected value X (Senior 2012).
In decision making process, alternatives encounter dominance and conflict conditions (Shafir
et al. 1993). A condition of dominance emerges when an alternative is perceived as superior
to another in all significant features. In contrast, a conflict condition arises when one
alternative may be superior to another in only some dimensions.
Altay and Green (2006) conducted a comprehensive review on operation research and
decision making in disaster management. They found that most researchers have focused
on mitigation, preparedness, and response and recovery phases of natural disasters. For
flood disaster, Akter and Simonovic (2005) proposed a flood management decision making
methodology to capture the views of multiple stakeholders using fuzzy set theory and fuzzy
logic. More important, decision making theory facilitates to select appropriate exposures and
pertinent variables in the development of stakeholder disaster response index. The use of
decision making techniques can be dated back to four decades. Since then, the theory and
applications have been developed significantly (Shih, 2007).

Based on value maximization paradigm, it is hypothesized that stakeholders who are


involved in the built environment would try to choose proactive approaches against disasters
in order to minimize all negative consequences of disasters. Similarly, stakeholders would
take rational behaviors in reactive approaches in recovery and post-disaster reconstruction
activities. However, understanding stakeholders’ decision making in disaster management
can be attributed to intuitive reasoning paradigm. Stakeholders might choose irrelevant
factors in their decision making process. For instance, in multi exposure analysis of
disasters, one location (e.g., state, city, suburb) would be dominant compared to another
location if the former is perceived to be superior to the latter in all significant aspects. Finally,
by borrowing the ideas from both the stakeholder and decision making theories, we would be
able to justify the development of stakeholder disaster response index that measures
stakeholders’ response approaches against disasters in the built environment as shown in
Figure 1.

7. Conclusion

This paper examined the stakeholder and decision-making theories in the proposed
theoretical framework for the development of stakeholder disaster response index. The
proposed theoretical framework synthesis the two theories in examining stakeholders’
response approaches against disasters in the built environment. Through stakeholder
theory, we determine power and legitimacy of stakeholders whether they have tendency
towards proactive or reactive approaches. Through decision-making theory, we are able to
provide optimized decisions for stakeholders in order to minimize all negative consequences
of disasters. Furthermore, stakeholders take rational behaviors in reactive approaches in
recovery and post-disaster reconstruction activities with considering expectation, asset
integration, and risk aversion.

With a sound theoretical framework for the development of stakeholders disaster response
index, the resultant index facilitates: (1) direct comparison of different stakeholders’
approaches against disasters; (2) high-level disaster management planning decisions; and
(3) development of stakeholder disaster management procedure.

The next stage planned for this study involves validating the proposed theoretical framework
with profound quantitative analysis by gathering relevant data from disaster management
databases and in-depth interviews with stakeholders who are involved in managing disasters
in the built environment.

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