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Empirical investigation of the relationships between environmental characteristics and organizational… Tung, Rosalie Suet-Ying Lam 1976

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AN EMPIRICAL INVESTIGATION OF THE RELATIONSHIPS BETWEEN ENVIRONMENTAL CHARACTERISTICS AND ORGANIZATIONAL VARIABLES by Rosalie Suet-Ying Lam Tung B.A.,York University, 1972 M.B.A., University of B r i t i s h Columbia, 1974 A THESIS SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF DOCTOR OF PHILOSOPHY in the Faculty of Commerce and Business Administration We accept this thesis as conforming to the required standard THE UNIVERSITY OF BRITISH COLUMBIA December, 1976 Copyright Rosalie Tung 1976 In p r e s e n t i n g t h i s t h e s i s i n p a r t i a l f u l f i l m e n t o f the r e q u i r e m e n t s f o r an advanced degree at the U n i v e r s i t y of B r i t i s h C olumbia, I agree that the L i b r a r y s h a l l make i t f r e e l y a v a i l a b l e f o r r e f e r e n c e and stud y . I f u r t h e r agree t h a t p e r m i s s i o n f o r e x t e n s i v e c o p y i n g o f t h i s t h e s i s f o r s c h o l a r l y purposes may be g r a n t e d by the Head o f my Department or by h i s r e p r e s e n t a t i v e s . I t i s u n d e r s t o o d t h a t c o p y i n g o r p u b l i c a t i o n o f t h i s t h e s i s f o r f i n a n c i a l g a i n s h a l l not be a l l o w e d w i t h o u t my w r i t t e n p e r m i s s i o n . Commerce & Business Administration Department of _____________________________ The U n i v e r s i t y o f B r i t i s h Columbia 2075 Wesbrook Place Vancouver, Canada V6T 1W5 March 8, 1977 i i A B S T R A C T In the September 1974 i s s u e o f the A d m i n i s t r a t i v e S c i e n c e Q u a r t e r l y , Ray J u r k o v i c h p r e s e n t e d a c o r e t y p o l o g y f o r a n a l y z i n g and i n t e r p r e t i n g o r g a n i z a t i o n a l e n v i r o n m e n t s . H i s 6 4 - c e l l t y p o l o g y , which was d e v e l o p e d on a t h e o r e t i c a l b a s i s , sought t o i d e n t i f y o r g a n i z a t i o n a l e n v i ronments a l o n g f i v e major d i m e n s i o n s : c o m p l e x i t y , r o u t i n e n e s s o f problem/ o p p o r t u n i t y s t a t e s , d i r e c t l y r e l a t e d s e c t o r s , o r g a n i z e d s e c -t o r s and movement, which i n c l u d e d change r a t e and the s t a b i l i t y o f change. Most p r e v i o u s t h e o r i s t s and r e s e a r c h e r s i n the f i e l d o f o r g a n i z a t i o n - e n v i r o n m e n t i n t e r a c t i o n have f o c u s e d on the c o m p l e x i t y and movement d i m e n s i o n s . J u r k o v i c h argued t h a t t h i s was not s u f f i c i e n t and t h a t the f o u r - c e l l t y p o l o g i e s o f Thompson (1967) , Laivrence and L o r s c h (1967) were " e s s e n t i a l l y o v e r - s i m p l i f i e d " . I n h i s a r t i c l e , J u r k o v i c h m e r e l y p r e s e n t e d the dimen-s i o n s . He d i d not o p e r a t i o n a l i z e the d i m e n s i o n s nor d i d he dem o n s t r a t e e m p i r i c a l l y the v i a b i l i t y o f h i s t y p o l o g y . Conse-q u e n t l y , the f i r s t u n d e r t a k i n g i n the p r e s e n t s t u d y was to d e v e l o p o p e r a t i o n a l d e f i n i t i o n s f o r t h e s e d i m e n s i o n s . Data on e n v i r o n m e n t a l c h a r a c t e r i s t i c s and o r g a n i z a t i o n a l v a r i a b l e s ( d e p a r t m e n t a l s t r u c t u r e , time p e r s p e c t i v e t a k e n i n p l a n n i n g and f r e q u e n c y o f changes t o p l a n s ) were c o l l e c t e d from 64 o r g a n i z a t i o n a l u n i t s which came from 21 d i f f e r e n t b u s i n e s s and i n d u s t r i a l f i r m s l o c a t e d i n B r i t i s h C o l u m b i a . The d a t a on i i i environmental c h a r a c t e r i s t i c s were subjected to p r i n c i p a l components analysis to a s s i s t in detecting the underlying structure. Six discrete dimensions were obtained. However, these were d i f f e r e n t from the ones hypothesized by Jurkovich on a t h e o r e t i c a l basis. The six dimensions that were obtained on an empirical basis were pluralism, degree of interdependency, routineness of problem/opportunity states, organized sectors, d i r e c t l y related sectors and change rate. Based on the results of regression analyses which sought to r e l a t e environmental c h a r a c t e r i s t i c s to organizational v a r i -ables, two dimensions (the organized sectors and d i r e c t l y related sectors dimensions) were found to be least s i g n i f i c a n t i n explaining the v a r i a t i o n s i n departmental structure, time perspective taken i n planning and frequency of changes to plans. The "degree of interdependency" dimension was found to be s i g n i -f i c a n t i n two of the regression functions where "time perspec-ti v e taken i n planning" was used as the dependent v a r i a b l e . Based on these findings, i t was believed that a 16- or 8 - c e l l typology was quite capable of explaining the v a r i a t i o n s i n the three organizational variables, without too much loss of explana-tory power. To test the hypotheses that were investigated in t h i s study, the data were systematically subjected to a c a r e f u l l y planned series of data analyses, including multivariate regress-ion, canonical c o r r e l a t i o n , discriminant analysis and analysis of covariance, to c i t e only a few. The f i r s t set of hypotheses i v which sought to r e l a t e environmental c h a r a c t e r i s t i c s to p e r -c e i v e d environmental u n c e r t a i n t y was s t r o n g l y supported. The second s e t of hypotheses sought to examine the r e l a t i o n s h i p s between environmental c h a r a c t e r i s t i c s and o r g a n i z a t i o n a l v a r i -a b l e s . The departmental s t r u c t u r e , time p e r s p e c t i v e taken i n p l a n n i n g and frequency of changes to p l a n s of o r g a n i z a t i o n a l u n i t s l o c a t e d i n d i f f e r e n t c e l l s v a r i e d s i g n i f i c a n t l y from each o t h e r . Two v a r i a b l e s : s i z e and p e r c e i v e d environmental uncer-t a i n t y were i n t r o d u c e d as t e s t f a c t o r s to e l a b o r a t e the r e l a t i o n -s h i p s between the dependent and independent v a r i a b l e s . When s i z e was h e l d c o n s t a n t , the r e l a t i o n s h i p s between environmental c h a r a c t e r i s t i c s and o r g a n i z a t i o n a l v a r i a b l e s became more pro-nounced. P e r c e i v e d environmental u n c e r t a i n t y i n t e r p r e t e d the r e l a t i o n s h i p s between environmental p r o p e r t i e s and o r g a n i z a t i o n a l c h a r a c t e r i s t i c s , because i t was o n l y when u n c e r t a i n t y was per-c e i v e d and r e c o g n i z e d by d e c i s i o n makers t h a t there would be subsequent changes i n departmental s t r u c t u r e and frequency o f changes to p l a n s . T h i s study showed t h a t i t was indeed p o s s i b l e to measure environmental c h a r a c t e r i s t i c s on more than two dimensions, and t h a t environmental c h a r a c t e r i s t i c s d i d have an impact on o r g a n i -z a t i o n a l v a r i a b l e s . ACKNOWLEDGEMENTS F i r s t of a l l , I would l i k e to thank the members of my committee for t h e i r encouragement, support and assistance during the various stages of my doctoral programme at the University of B r i t i s h Columbia. Special thanks i s due to Vance M i t c h e l l , my committee chairman, who contributed not only as an academic advisor but above a l l as an enthusiastic f r i e n d . C l early the study would have been impossible had not the senior executives who pa r t i c i p a t e d i n the research given un-sparingly of the i r time. While i t would not be possible to i d e n t i f y such firms and individuals by name for reasons of anonymity and c o n f i d e n t i a l i t y , I would l i k e to thank a l l those executives who contributed to the successful completion of the data c o l l e c t i o n process. As i s customary, I hasten to add that while I am gr a t e f u l to these various sources for their assistance and cooperation, I assume f u l l r e s p o n s i b i l i t i e s for the findings and conclusions of this study. ROSALIE S.Y. TUNG University of B r i t i s h Columbia Vancouver, Canada. November, 1976. 1 CHAPTER ONE INTRODUCTION Towards the late 1950's*, many leading organizational theorists became increasingly aware of the inadequacy of view-ing complex organizations as "closed systems." The tenets of the closed system approach came under f i r e . As Katz and Kahn put i t : Tr a d i t i o n a l organization theories have tended to view the human organization as a closed system. This tendency has led to a disregard of d i f f e r i n g organizational environments and the nature of organizational dependency on environment. It has also led to an overconcentration on p r i n c i p l e s of internal organizational functioning, with conse-quent f a i l u r e to develop and understand the pro-cesses of feedback which are essential to s u r v i v a l . (1966 , p. 29) The study of environmental properties is not new. Murray (1938) distinguished between the "alpha" press, or the environ-ment as i t i s , and the "beta" press, or the environment as per-ceived by the i n d i v i d u a l . L e w i n , i n his F i e l d Theory of Social Science (1950) hypothesized that "behaviour is a function of personality and environment". These early researchers adopted a more micro view towards individual-environment in t e r a c t i o n . They focused on the individual's need structure and how t h i s * Although Ludwig von Ber t a l a n f f y advocated a "general system theory" as early as the 1920's, h i s views received l i t t l e a t tention u n t i l s h o r t l y s h o r t l y a f t e r World War I I . Beginning i n the e a r l y 1950's, researchers from varied d i s c i p l i n e s started to explore "systems theory", and many arr i v e d at the same conclusion expressed by Kenneth Boulding i n a 1953 l e t t e r to Bertalanffy. "I seem to have come to much the same conclusion as you have reached, though approaching i t from the d i r e c t i o n of economics and the s o c i a l sciences rather than from biology - that there i s a body of what I have been c a l l i n g 'general empirical theory' or 'general system theory 1 i n your excellent terminology, which i s of wide a p p l i c a b i l i t y i n many d i f f e r e n t d i s c i p l i n e s . " (Bertalanffy, 1968, p. 14) 2 interacts with the "alpha" and "beta" presses to produce a resulting set of behaviour. Murray, for example, "saw the individual as interacting with various environments (presses) according to the degree to which they g r a t i f y or s a t i s f y his needs." (Pervin, 1968, p. 63) The concepts of organizational environment and organizational climate, as they are generally understood today, were not c l e a r l y distinguished. In current l i t e r a t u r e , most researchers are agreed that organizational climate i s a subset of the concept "organizational environment." The l a t t e r includes the p o l i t i c a l , legal and s o c i a l structures which impinge or impose constraints upon the functioning of the organization. The term, organizational climate, on the other hand, generally refers to the properties or attributes internal to a given organization. Thus, organizational climate i s a "less general, less broad concept than environment." (Taguiri § Litwin, 1969, p. 21) In most instances, studies published p r i o r to the mid-s i x t i e s which did look into s i t u a t i o n a l variables usually dealt with organizational climate variables, rather than with organi-zation environmental c h a r a c t e r i s t i c s as defined and understood by researchers such as Lawrence and Lorsch (1967). The c l a s s i c a l , neo-classical and early human relations schools of management a l l were concerned primarily with internal structural attributes and processes. The external environment was largely ignored or treated as a constant, as these theorists and researchers sought u n i v e r a l i s t i c p r i n c i p l e s of structure, control and planning. V i r t u a l l y a l l of the published l i t e r a t u r e 3 on management was d e v o t e d t o i n t r a o r g a n i z a t i o n a l phenomena. As a r e s u l t , a g r e a t d e a l was known a b o u t p a r t i c u l a r o r g a n i z a t i o n s and t h e i r i n t e r n a l f u n c t i o n i n g , b u t much l e s s i n f o r m a t i o n was a v a i l a b l e t o a n s w e r q u e s t i o n s s u c h as why o r g a n i z a t i o n s / i n d u s -t r i e s d i f f e r as t h e y d o , what a r e t h e b a s e s f o r s u c h d i f f e r e n c e s , why a r e some s t y l e s o f l e a d e r s h i p e f f e c t i v e / i n e f f e c t i v e i n one o r g a n i z a t i o n b u t n o t i n a n o t h e r . I n s h o r t , t h e " c l o s e d s y s t e m " a p p r o a c h r e s t r i c t e d o u r v i s i o n t o a m i c r o l e v e l , w h i c h i s h a r d l y s u f f i c i e n t f o r t h e p u r p o s e s o f v i e w i n g and u n d e r s t a n d i n g m o d e r n , c o m p l e x o r g a n i z a t i o n s w h e r e t h e r e i s a h i g h d e g r e e o f i n t e r d e -p e n d e n c e o r i n t e r a c t i o n among s e c t o r s i n s o c i e t y i n t e r m s o f r e s o u r c e a c q u i s i t i o n and p r o d u c t d i s p o s a l . E v e n when r e s e a r c h was d i r e c t e d t o w a r d i n t r a o r g a n i z a t -i o n a l phenomena, t h e " c l o s e d s y s t e m s " v i e w p r o v e d t o be i n a d e -q u a t e . C a m p b e l l e t a l ( 1 9 7 0 ) , f o r i n s t a n c e , f o u n d t h a t an i n v e s t i g a t i o n o f t h e f a c t o r s t h a t a c c o u n t f o r m a n a g e r i a l e f f e c t -i v e n e s s i n a n o r g a n i z a t i o n o r o r g a n i z a t i o n a l u n i t s i m p l y c o u l d n o t i g n o r e t h e i m p o r t a n c e o f e n v i r o n m e n t a l o r s i t u a t i o n a l c h a r a c t e r i s t i c s : ... t h e o t h e r t h r e e c l a s s e s o f v a r i a b l e s ( p r e d i c t o r s , o r i n d i v i d u a l d i f f e r e n c e s d e v e l o p e d b e f o r e t h e m a nager was s e l e c t e d f o r h i s p o s i t i o n ; e x p e r i m e n t a l t r e a t m e n t s , i n t h e f o r m o f t r a i n i n g and d e v e l o p m e n t p r o g r a m m e s ; a n d o r g a n i z a t i o n a l r e w a r d s , o r m o t i v a t o r s ) h a v e n e v e r b e e n a b l e t o a c c o u n t f o r much more t h a n h a l f t h e v a r i a b i l i t y i n m e a s u r e s o f m a n a g e r i a l e f f e c t -i v e n e s s . I n t h e m a j o r i t y o f i n s t a n c e s , i t h a s b e e n much l e s s t h a n t h a t . Much o f what r e m a i n s u n e x p l a i n e d must be a f u n c t i o n o f d i f f e r e n c e s i n e n v i r o n m e n t a l o r s i t u a t i o n a l c h a r a c t e r i s t i c s . . . . t h e s k e t c h y e m p i r i c a l e v i d e n c e t h a t d o e s e x i s t s u g g e s t s s i g n i f i c a n t e n v i r o n -m e n t a l e f f e c t s . . . t h e r e s i m p l y seems t o be a c o n s e n s u s t h a t t h e s i t u a t i o n 'makes a d i f f e r e n c e . 1 I t c o u l d n o t be any o t h e r way. ( 1 9 7 0 , pp. 385-6) 4 T h i s i n a b i l i t y t o e x p l a i n i n c r e a s i n g l y m u l t i - d i m e n s i o n e d i n t r a o r g a n i z a t i o n a l phenomena*, c o u p l e d w i t h growing awareness o f the i n t e r d e p e n d e n c e between o r g a n i z a t i o n s and o t h e r s e c t o r s o f s o c i e t y * * , c a l l e d f o r an approach much b r o a d e r i n scope. More and more i n v e s t i g a t o r s t u r n e d to an "open systems" approach as b e t t e r s u i t e d t o the r e q u i r e m e n t s o f modern o r g a n i z a t i o n a l a n a l y s i s . "(Open) systems t h e o r y i s b a s i c a l l y c o n c e r n e d w i t h t h e problems o f r e l a t i o n s h i p s , o f s t r u c t u r e , and o f i n t e r d e p e n d e n c e r a t h e r t h a n w i t h the c o n s t a n t a t t r i b u t e s o f o b j e c t s . " ( K a t z § Kahn, 1966, p. 18) Open systems t h e o r y s u g g e s t s t h a t we v i e w the u n i t under s t u d y , o r f o c a l o r g a n i z a t i o n ( t o borrow W. Evan's t e r m i n o l o g y ) , as o n l y a p a r t o f a l a r g e r system. The v a r i o u s components o f the system are i n a s t a t e o f c o n s t a n t i n t e r a c t i o n w i t h each o t h e r , though i n v a r y i n g degrees o f i n t e n s i t y and f r e q u e n c y . In e s s e n c e , the open systems approach c a l l s f o r an As T u i t e and Chisholm (1972, v-vi) s u c c i n c t l y put i t : "Organizations have grown i n scale and scope of a c t i v i t i e s , generating more complex forms of organizational structure as attempts are made to respond to the problems accompanying growth .... Organizations continue to push out t h e i r boundaries and domains i n terms of sources, markets, tech-nologies and geography such as the growing mu l t i n a t i o n a l conglomerates." Organizations are becoming i n c r e a s i n g l y aware of or s e n s i t i v e to those environmental factors which a f f e c t inputs to the organization as well as outputs of the organization i n terms of i t s a c c e p t a b i l i t y to the community at large. Gone are the days when organizations could act u n i l a t e r a l l y with t o t a l disregard to government p o l i c i e s , actions of labour unions and sentiments o f the p u b l i c . Organizations have to pay l i p service to or act i n accordance with the p r i n c i p l e of corporate r e s p o n s i b i l i t y by taking these sectors i n t o consideration i n the formu-l a t i o n and implementation of corporate goals and o b j e c t i v e s . 5 i n v e s t i g a t i o n o f o r g a n i z a t i o n - e n v i r o n m e n t i n t e r a c t i o n . As Frank Baker (1973) has s t a t e d : -To c o n c e p t u a l i z e an o r g a n i z a t i o n as an open system i s t o emphasize the importance o f i t s environment, upon which the maintenance, s u r v i v a l and growth o f an open system depend, (p. 163) The systems approach, w i t h i t s emphasis on the i m p o r t a n c e o f the en v i r o n m e n t , i s not new t o o t h e r d i s c i p l i n e s o f i n q u i r y . E c onomists have always been concerned w i t h the problem o f o r g a n i -z a t i o n a l a d j u s t m e n t s t o the envir o n m e n t , even though "by and l a r g e t h e s e were t r e a t e d s i m p l y as f o r m a l e x e r c i s e s i n p r o f i t m a x i m i z i n g l o g i c . " ( M i l e s , 1974, p.. 245) However, the sad f a c t was t h a t u n t i l q u i t e r e c e n t l y , e c o n o m i s t s on the one hand, and o r g a n i z a t i o n a l t h e o r i s t s , on the o t h e r , have t a k e n q u i t e s e p a r a t e r o u t e s . C h a n d l e r (1962) lamented:-That the e x p a n s i o n and government o f i n d u s t r i a l e n t e r p r i s e s i n a market economy s h o u l d be c l o s e l y r e l a t e d t o the c h a n g i n g n a t u r e o f the market seems o b v i o u s enough. Y e t many w r i t e r s d e a l i n g w i t h b u s i n e s s a d m i n i s t r a t i o n o f t e n d i s c u s s l e a d e r s h i p , communication, and s t r u c t u r e w i t h o n l y p a s s i n g r e f e r e n c e t o the market. On the o t h e r hand, e c o n o m i s t s , a n t i t r u s t l a w y e r s , and o t h e r e x p e r t s o f market b e h a v i o u r have s a i d l i t t l e about the impact o f the market on c o r p o r a t e a d m i n i s t r a t i o n , (p. 492) T h i s q u o t a t i o n p o i n t s out the f u t i l i t y o f a t t e m p t i n g to under-t a k e o r g a n i z a t i o n a l a n a l y s i s w i t h complete d i s r e g a r d o f the env i r o n m e n t . The source o f many o r g a n i z a t i o n a l problems o r i -g i n a t e s i n the envir o n m e n t , o u t s i d e the o r g a n i z a t i o n . Thus, an o r g a n i z a t i o n a l t h e o r i s t who seeks to acco u n t f o r v a r i a t i o n s i n o r g a n i z a t i o n a l phenomena must i n c o r p o r a t e e n v i r o n m e n t a l v a r i a b l e s as w e l l . An open systems approach p r o v i d e s a framework t h a t i s w e l l s u i t e d f o r such a n a l y t i c a l p u r p o s e s . 6 The open systems approach is i n t u i t i v e l y simple. It postulates that "everything is related to everything e l s e , though i n uneven degrees of tension and r e c i p r o c i t y . . . But as i n t u i t i v e l y simple as i t i s , the systems view has been d i f f i -c u l t to put into p r a c t i c a l use. We s t i l l f i n d ourselves ignor-ing the tenets of the open systems view, pos s i b l y because of the cognitive l i m i t s of our r a t i o n a l i t y . " (Tosi § Hammer, 1974, p. 16) Any researcher who attempts an open systems approach i s confronted with a whole new set of problems. In the f i r s t place, he must come to grips with a multitude of variables which may or may not vary concomitantly. Second, he must deve-lop s a t i s f a c t o r y measures for operationalizing many dimensions which were hitherto unexplored empirically. Third, he must adopt more sophisticated s t a t i s t i c a l techniques for analyzing the data although this l a s t problem has been overcome to a considerable extent by the development of advanced multivariate s t a t i s t i c a l procedures. For example, the Pugh et a l (1968) study showed the f e a s i b i l i t y of a multivariate approach to the study of organizational structure. The preceding discussion may serve to explain, at l e a s t i n part, why there i s such a dearth of empirical research on organization-environment i n t e r a c t i o n . Despite the fact that most books on organizational theory and behaviour published after the mid-sixties have either e x p l i c i t l y stated or alluded to the 7 importance o f the environment*, the sad f a c t remains t h a t i n t e n s i v e analyses or e m p i r i c a l s t u d i e s of o r g a n i z a t i o n e n v i r o n -mental c h a r a c t e r i s t i c s have been few. As B r i n k e r h o f f and Kunz (1972) noted, " t h i s i s s t i l l a r e l a t i v e l y underdeveloped area i n terms of e m p i r i c a l a n a l y s e s . " (p. x i x ) S e v e r a l r e s e a r c h e r s have approached the t o p i c of o r g a n i -zation-environment i n t e r a c t i o n from d i f f e r e n t p e r s p e c t i v e s . Emery and T r i s t (1965) t r i e d to develop a typ o l o g y o f o r g a n i -z a t i o n s based on the degree o f in t e r c o n n e c t e d n e s s and the degree o f tu r b u l e n c e i n the environment. Evan (1966) attempted to d e s c r i b e the environment i n terms of o r g a n i z a t i o n a l s e t s . Other r e s e a r c h e r s (e.g. S e l z n i c k , 1949; Litwak and H y l t o n , 1962) have focused on t r a n s a c t i o n a l i n t e r d e p e n d e n c i e s . Thompson and McEwen (1958) examined the impact of the environment on g o a l -s e t t i n g . D e s p i t e the impressive work of these r e s e a r c h e r s , few attempts have been made to develop a ty p o l o g y comprehensive enough f o r the sy s t e m a t i c i n v e s t i g a t i o n and a n a l y s i s of o r g a n i -z a t i o n a l environments on an e m p i r i c a l b a s i s . Lawrence and Lorsch's (1967) work r e p r e s e n t s a p i o n e e r i n g e f f o r t i n t h i s f i e l d o f endeavour. Lawrence and Lorsch made no claims t h a t t h e i r t y p o l o g y was comprehensive. They acknowledged t h a t they were t r e a d i n g L e a v i t t , P i n f i e l d and Webb noted that t h e i r book, Organizations of the  Future (1974)was a r e s u l t of an i n t e r n a t i o n a l conference attended by s o c i a l s c i e n t i s t s and administrators from the U.S. and Eastern and Western Europe. "Although no guidelines beyond the request f o r orien-t a t i o n to the future were offered, many of the contributed papers and much of the discussion turned out to be c e n t r a l l y concerned with the r e l a t i o n s h i p between the organization and i t s environment", (p. v) 8 on " e x c e e d i n g l y complex" (p.6) t e r r i t o r y , but opted f o r p a r s i -mony by "using as few concepts as p o s s i b l e to f i n d an answer to our fundamental q u e s t i o n . " (p. 5) E m p i r i c a l i n v e s t i g a t i o n s (Lawrence and Lorsch , 1967; Duncan, 1970) u t i l i z i n g the f o u r -c e l l t y p o l o g i e s advanced by Lawrence and L o r s c h and Thompson (1967) have p r o v i d e d u s e f u l i n s i g h t s i n t o the "fundamental" r e l a t i o n s h i p s between the o r g a n i z a t i o n and i t s environment. They have a l s o h i g h l i g h t e d the s i g n i f i c a n c e or impact t h a t environmental c h a r a c t e r i s t i c s have upon the i n t e r n a l s t r u c t u r e , o p e r a t i n g s t r a t e g i e s , and indeed e f f i c i e n c y , o f the o r g a n i z a t i o n . Only when s u i t a b l e groundwork has been e s t a b l i s h e d are the c o n d i t i o n s r i p e f o r new prog r e s s to be made i n the f i e l d . The work of Ray J u r k o v i c h appeared to be a s i g n i f i c a n t move i n tha t d i r e c t i o n . In an a r t i c l e e n t i t l e d "A Core Typology of O r g a n i z a t i o n a l Environments" p u b l i s h e d i n the September 1974 i s s u e o f the A d m i n i s t r a t i v e Science Q u a r t e r l y , he p o i n t e d out th a t the e x i s t i n g f o u r - c e l l t y p o l o g i e s of Lawrence and L o r s c h and Thompson were " e s s e n t i a l l y o v e r s i m p l i f i e d . " As an a l t e r -n a t i v e , he o f f e r e d a 4 x 16 matr i x as a co n c e p t u a l scheme f o r "broadening and r e f i n i n g the e x i s t i n g p a r t s o f a co n c e p t u a l p u z z l e and adding a few others to c o n t r i b u t e to a b e t t e r under-sta n d i n g o f the whole." ( J u r k o v i c h , 1974, p. 380) 9 Figure 1: Jurkovich's Core Typology of Organizational Environments Movement General Characteristics Noncomplex Complex Routine Nonroutine Routine \ o n r o u ! t n e Organized Unorganized Organized Unorganized Organized Unorganized Organized Unorg a n i / e d * D 1 D 1 D 1 D 1 D 1 D 1 D 1 D 1 Low change rate Stable 1 • 16 Unstable High change rate Stable Unstable 49 64 D = direct I = indirect Source: Jurkovich, 1974, p. 381 It should be noted at the outset that no argument was offered for a magic i n numbers, i . e . "the more c e l l s , the better." Nor was i t expected that s t r i k i n g differences in internal structur-ing and operating strategies would exist between organizational units i n two adjoining c e l l s . The most s i g n i f i c a n t differences should c e r t a i n l y exist between organizational units located i n the four extreme corners, namely c e l l s 1, 16, 49 and 64. In general however, one would hope that a more elaborate typology, encompassing more dimensions for characterising the environment, could a s s i s t organizational researchers and pr a c t i t i o n e r s in 10 viewing those u n i t s which f a l l i n t o the "grey" zones, but which h i t h e r t o have been g r o s s l y lumped i n t o one o f f o u r primary c e l l s i n the absence of a more comprehensive t y p o l o g y . There i s pro b a b l y a g r e a t deal of t r u t h i n M i l e s ' (1974, p. 256) a s s e r -t i o n t h a t "the areas which remain incomplete are o b v i o u s l y the most d i f f i c u l t ones, so the l i m i t a t i o n s of p r e v i o u s r e s e a r c h are more o f t e n those o f o m i s s i o n r a t h e r than commission." Any c l a r i f i c a t i o n s i n t h i s r e s p e c t c o u l d a s s i s t i n the g e n e r a t i o n o f more s p e c i f i c and s o p h i s t i c a t e d hypotheses concerning r e l a t i o n -s h i p s between environmental and o r g a n i z a t i o n a l v a r i a b l e s , which h o p e f u l l y c o u l d be subsequently v e r i f i e d i n the f i e l d . The r e s u l t s o f s t u d i e s based on a more comprehensive t y p o l o g y c o u l d g r e a t l y e n r i c h the e x i s t i n g body of knowledge and the range of instruments a v a i l a b l e f o r i n t e r p r e t i n g the environment. These c o n t r i b u t i o n s c o u l d i n t u r n a s s i s t i n the development o f b e t t e r " f i t s " between a giv e n o r g a n i z a t i o n a l u n i t and i t s environment through more a c c u r a t e p e r c e p t i o n of the l a t t e r ' s p e r v a d i n g i n f l u e n c e on the former's success and long-run s u r v i v a l . Any advance i n ' t h i s area a l s o c o u l d f a c i l i t a t e r e s e a r c h i n at l e a s t two other r e l a t e d areas o f i n q u i r y : -(1) A more r e f i n e d b a s i s f o r d i f f e r e n t i a t i n g between e n v i r o n -ments c o u l d l e a d to the development o f a b e t t e r core t y p o l o g y o f o r g a n i z a t i o n s themselves. A f t e r a c r i t i c a l review of e x i s t i n g c l a s s i f i c a t o r y schemes f o r d i f f e r e n t i a t i n g o r g a n i z a t i o n s , H a l l (1972) came to the c o n c l u s i o n t h a t : 11 S i n c e o r g a n i z a t i o n s are h i g h l y complex e n t i t i e s , c l a s s i f i c a t o r y schemes must r e p r e s e n t t h i s com-p l e x i t y . An adequate c l a s s i f i c a t i o n would have t o take i n t o account the a r r a y o f e x t e r n a l c o n d i - t i o n s (emphasis m i n e ) , the t o t a l spectrum o f a c t i o n s and i n t e r a c t i o n s w i t h i n an o r g a n i z a t i o n , and t h e outcome o f o r g a n i z a t i o n a l b e h a v i o u r s , (p. 41) (2) A more comprehensive t y p o l o g y o f o r g a n i z a t i o n a l e n v i r o n -ments c o u l d l e a d a l s o t o the development o f a more s a t i s -f a c t o r y framework f o r a n a l y z i n g or a s s e s s i n g o r g a n i z a t i o n a l e f f e c t i v e n e s s . As E t z i o n i (1960) n o t e d , the o r g a n i z a t i o n a l u n i t has t o a d j u s t to i t s environment i n o r d e r t o s u r v i v e : The changes t h a t an o r g a n i z a t i o n a t t e m p t s t o i n t r o d u c e a r e u s u a l l y s p e c i f i c and l i m i t e d ... Moreover, the o r g a n i z a t i o n ' s o r i e n t a t i o n t o the elements i t t r i e s to change i s a l s o h i g h l y i n f l u e n c e d by t h e i r e x i s t i n g n a t u r e . In s h o r t , a s t u d y o f e f f e c t i v e n e s s has to i n c l u d e an a n a l y s i s o f the e n v i r o n m e n t a l c o n d i t i o n s and o f the o r g a n i z a t i o n ' s o r i e n t a t i o n to them. (1961, p. 463) T h i s s u g g e s t i o n i s i n l i n e w i t h some o f t h e l a t e s t r e s e a r c h i n the a r e a o f o r g a n i z a t i o n a l e f f e c t i v e n e s s . R i c h a r d S t e e r s (1976) f o r i n s t a n c e , i n c o r p o r a t e d o r g a n i z a t i o n a l environment as one o f the d i m e n s i o n s i n h i s m u l t i d i m e n s i o n a l a p p r o a c h t o a n a l y z i n g o r g a n i z a t i o n a l e f f e c t i v e n e s s . However, b e f o r e p r e d i c t i v e s t a t e m e n t s o f h i g h v a l i d i t y can be made, much e m p i r i c a l work must be done. J u r k o v i c h m e r e l y p r e s e n t e d d i m e n s i o n s -- he d i d not o p e r a t i o n a l i z e them, no r d i d he d e m o n s t r a t e e m p i r i c a l l y the v i a b i l i t y o f h i s t y p o l o g y . The p r e s e n t s t u d y sought t o t e s t the v i a b i l i t y o f the J u r k o v i c h t y p o l o g y as an i n s t r u m e n t f o r a n a l y z i n g the environment f a c e d by o r g a n i z a t i o n s -- t o v e r i f y , on an e m p i r i c a l b a s i s , whether 12 t h e d e s c r i p t i v e t y p o l o g y h o l d s and w h e t h e r t h e d i m e n s i o n s c a n be m e a s u r e d . C o n s e q u e n t l y , a m a j o r p o r t i o n o f t h i s s t u d y was d e v o t e d t o t h e i d e n t i f i c a t i o n and m e a s u r e m e n t o f v a r i o u s e n v i r o n m e n t a l c h a r a c t e r i s t i c s . One f i r s t s t e p t o w a r d s t h e a s s e s s m e n t o f J u r k o v i c h ' s t y p o l o g y was t o d e t e r m i n e w h e t h e r t h e e n v i r o n m e n t a l d i m e n s i o n s u n d e r i n v e s t i g a t i o n w e r e i n f a c t i n d e p e n d e n t . I t was r e c o g n i z e d t h a t some o f t h e v a r i a b l e s may be so h i g h l y i n t e r - r e l a t e d t h a t i t w o u l d make more s e n s e t o c o m b i n e them i n a more r e d u c e d t y p o l o g y e n c o m p a s s i n g f e w e r d i m e n s i o n s t h a n t h e one p r e s e n t e d by J u r k o v i c h , w i t h o u t l o s i n g any o f t h e s i g n i f i c a n t r e f i n e m e n t s u g g e s t e d by t h e o r i g i n a l t y p o l o g y . I t must be e m p h a s i z e d t h a t t h e p r e s e n t s t u d y was n o t c o n c e r n e d w i t h t h e a s s e r t i o n a n d t e s t i n g o f c a u s a l r e l a t i o n s * b e t w e e n e n v i r o n m e n t a l p r o p e r t i e s and o r g a n i z a t i o n a l v a r i a b l e s , n o r w i t h t h e i r i m p a c t u p o n o r g a n i z a t i o n a l e f f e c t i v e n e s s o r p e r f o r m a n c e . T h e s e a r e u n d o u b t e d l y v e r y i m p o r t a n t a r e a s f o r r e s e a r c h a n d w o u l d be a l o g i c a l s e q u e l t o t h e s t u d y r e p o r t e d h e r e . H o w e v e r , s u c h an u n d e r t a k i n g was b e y o n d t h e s c o p e o f t h e p r e s e n t s t u d y g i v e n t h e c u r r e n t d e a r t h o f k n o w l e d g e c o n c e r n i n g r e l a t i o n s h i p s b e t w e e n e n v i r o n m e n t a l c h a r a c t e r i s t i c s a n d o r g a n i -z a t i o n a l e f f e c t i v e n e s s . To t r y t o e s t a b l i s h a n o r m a t i v e d e f i n i -* Friedlander § Margulies (1969, p. 173) noted that "although we are using terminology i n d i c a t i v e of causal d i r e c t i o n ( i . e . p r e d i c t i o n of, impact upon, e t c . ) , our measures (correlations) are temporarily concurrent." Although the terms "impact upon", "predictor variables" and other r e l a t e d terminologies were used i n the research reported here, they should not be i n t e r p r e t e d as assertions of causal d i r e c t i o n because of the c o r r e l a t i o n a l nature of the study. 13 t i o n o f the r e l a t i o n s h i p s between e n v i r o n m e n t a l and o r g a n i z a t i o n a l c h a r a c t e r i s t i c s would be premature. The p r e s e n t s t u d y was o f an e x p l o r a t o r y n a t u r e . I t was concerned p r i m a r i l y w i t h e m p i r i c a l i n v e s t i g a t i o n and d e s c r i p t i o n o f e x i s t i n g r e l a t i o n s h i p s between e n v i r o n m e n t a l and o r g a n i z a t i o n a l v a r i a b l e s , u t i l i z i n g a t y p o l o g y which had not been p r e v i o u s l y e x p l o r e d e m p i r i c a l l y ( a t l e a s t to t h i s r e s e a r c h e r ' s knowledge). I t i s b e l i e v e d t h a t the r e s e a r c h r e p o r t e d here (1) p r o v i d e s some e v i d e n c e t h a t J u r k o v i c h ' s t y p o l o g y i s an improvement over p r e v i o u s t y p o l o g i e s as b o t h a c o n c e p t u a l and m e t h o d o l o g i c a l framework f o r i n t e r p r e t i n g and under-s t a n d i n g the e nvironment; and (2) opens a p a t h f o r f u r t h e r ( n o r m a t i v e ) r e s e a r c h and s t u d i e s o f the r e l a t i o n s h i p s between e n v i r o n m e n t a l c h a r a c t e r i s t i c s and o r g a n i z a t i o n a l f u n c t i o n i n g . 14 SUMMARY In t h i s c h a p t e r , a b r i e f o v e r v i e w was p r e s e n t e d o f the l i t e r a t u r e and r e s e a r c h p e r t a i n i n g t o o r g a n i z a t i o n - e n v i r o n m e n t i n t e r a c t i o n , and the l i m i t a t i o n s o f u s i n g a " c l o s e d s y s t e m s " v i e w f o r s t u d y i n g o r g a n i z a t i o n a l phenomena were d i s c u s s e d . The o b j e c t i v e s o f the st u d y were s t a t e d . These were p r i m a r i l y t w o - f o l d : -(1) To v e r i f y , o n an e m p i r i c a l b a s i s , J u r k o v i c h ' s c o r e t y p o l o g y f o r a n a l y z i n g o r g a n i z a t i o n a l e n v i r o n m e n t s . The n e c e s s i t y was noted o f d e v e l o p i n g o p e r a t i o n a l d e f i n i t i o n s f o r mea s u r i n g the e n v i r o n m e n t a l c h a r a c t e r i s t i c s i d e n t i f i e d i n the J u r k o v i c h m a t r i x . (2) To examine the r e l a t i o n s h i p s between e n v i r o n m e n t a l c h a r a c t e r i s t i c s and c e r t a i n o r g a n i z a t i o n a l v a r i a b l e s . F i n a l l y , a r a t i o n a l e was p r o v i d e d f o r u s i n g a more expanded t y p o l o g y f o r a n a l y z i n g and i n t e r p r e t i n g o r g a n i z a t i o n a l e n v i r o n m e n t s . 15 CHAPTER TWO MAJOR CONCEPTS AND PROPOSITIONS The major concept i n t h i s study i s the environment faced by the departmental u n i t i n a l a r g e o r g a n i z a t i o n . T h i s chapter d e s c r i b e s the r a t i o n a l e f o r u s i n g depart-ments as the u n i t s of a n a l y s i s . I t a l s o p r e s e n t s the r a t i o n a l e f o r o p e r a t i o n a l i z i n g the v a r i a b l e s and the measures that were s e l e c t e d and/or developed f o r use i n the study. An i n i t i a l v e r s i o n of the instrument (see Appendix 2) used f o r data c o l l e c t i o n was p r e - t e s t e d w i t h a group of f o u r s e n i o r e x e c u t i v e s . T h i s p i l o t study a s s i s t e d i n the d e t e c t i o n of q u e s t i o n s or areas t h a t respondents had d i f f i c u l t y under-s t a n d i n g or i n t e r p r e t i n g . I n t e r - i t e m a n a l y s i s of the responses gi v e n by the p r e - t e s t s u b j e c t s were performed. The m o d i f i c a t i o n s made as a r e s u l t of the p i l o t study were i n c o r p o r a t e d i n t o the f i n a l v e r s i o n of the instrument (see Appendix 3). 2 . 1 UNIT OF ANALYSIS In t h i s study, major departments i n o r g a n i z a t i o n s , r a t h e r than the o r g a n i z a t i o n s as e n t i t i e s , were used as the u n i t s of a n a l y s i s . The reasons f o r so doing were p r i m a r i l y t w o - f o l d : -(1) To minimize the "wash-out" e f f e c t . I f Thompson's per-s p e c t i v e i s adopted and complex o r g a n i z a t i o n s are viewed as "open systems , hence inde t e r m i n a t e and f a c e d with u n c e r t a i n t y , but at the same time as s u b j e c t to c r i t e r i a 16 o f r a t i o n a l i t y and hence n e e d i n g d e t e r m i n a t e n e s s and c e r t a i n t y " (1967, p. 1 0 ) , we see t h a t o r g a n i z a t i o n s a r e f a c e d w i t h two a p p a r e n t l y c o n t r a d i c t o r y and i n c o n g r u o u s demands. On t h e one hand, t h e y must e x h i b i t a c e r t a i n degree' o f s t a n d a r d i z a t i o n o r s t a b i l i t y i n t h e i r s t r u c t u r e s to reduce the amount o f u n c e r t a i n t y . On the o t h e r , t hey must demonstrate enough f l e x i b i l i t y t o cope w i t h u nexpected changes i n o r d e r to remain v i a b l e . Weick (1969) n o t e d t h a t t h e s e two r e q u i r e m e n t s f o r s t a b i l i t y and f l e x i b i l i t y c o u l d be m u t u a l l y e x c l u s i v e . However, t h e r e are two ways i n w h i c h the o r g a n i z a t i o n c o u l d s a t i s f y t h e s e a p p a r e n t l y c o n f l i c t -i n g demands: ( i ) by a l t e r n a t i n g between s t a b i l i t y and f l e x i -b i l i t y i n i t s s t r u c t u r i n g o f a c t i v i t i e s ; ( i i ) by d i f f e r e n t i a t i o n , i . e . s i m u l t a n e o u s l y e x p r e s s i n g t h e s e two forms i n d i f f e r e n t p a r t s o f the o r g a n i z a t i o n . I t i s r e a s o n a b l e to assume, and t h e r e i s e v i d e n c e t o s u p p o r t the c o n t e n t i o n , t h a t l a r g e and complex o r g a n i z a t i o n s f r e q u e n t l y r e s o r t to the l a t t e r c o u r s e o f a c t i o n . L e a v i t t s u g g e s t e d t h a t an o r g a n i z a t i o n be viewed as a d i f f e r e n t i a t e d s e t o f subsystems, r a t h e r t h a n as a u n i f i e d whole: "... we need t o become more a n a l y t i c a l about o r g a n i z a t i o n s ; we need t o t a k e a more m i c r o s c o p i c l o o k a t l a r g e o r g a n i z a t i o n s and t o a l l o w f o r the p o s s i b i l i t y o f d i f f e r e n t i a t i n g s e v e r a l k i n d s o f s t r u c t u r e s and m a n a g e r i a l p r a c t i c e s w i t h i n them." (1962, p.98) T h i s c o n t e n t i o n was s u p p o r t e d e m p i r i c a l l y by H a l l ( 1 9 6 2 ) , Lawrence and L o r s c h ( 1 967), Duncan (1970) and L o r s c h and A l l e n (1973) , t o c i t e o n l y a few. 17 I f the premise i s a c c e p t e d ( w i t h i t s accompanying e v i d e n c e ) t h a t the environments c o n f r o n t i n g major u n i t s w i t h i n l a r g e o r g a n i z a t i o n s are indeed d i f f e r e n t , t h e n any attempt to sum a c r o s s u n i t s i n o r d e r t o a r r i v e a t an o v e r -a l l i n d e x o f c o m p l e x i t y o r u n c e r t a i n t y f o r t h e o r g a n i z a t i o n as a whole c o u l d prove t o be f r u s t r a t i n g . A t b e s t i t would te n d t o p r e s e n t an i n a c c u r a t e o r d i s t o r t e d p i c t u r e o f the environment f a c e d by the major o p e r a t i n g u n i t s . (2) To i n c r e a s e the sample s i z e i n o r d e r t o r e n d e r the a p p l i -c a t i o n o f many types o f s t a t i s t i c a l a n a l y s e s m e a n i n g f u l . 2.2 COMPOSITION OF ORGANIZATIONAL ENVIRONMENT The concept o f "environment i m p l i c i t l y i n c l u d e s the n o t i o n o f boundary, the ' d i v i d i n g l i n e ' between i n s i d e and o u t -s i e . " (La P o r t e , 1971, p. 10) Once the boundary has been drawn, the s p e c i f i c components and f a c t o r s on e i t h e r s i d e o f the " d i v i d i n g l i n e " have t o be i d e n t i f i e d . * D e s p i t e the volume o f l i t e r a t u r e d e a l i n g w i t h the s u b j e c t o f o r g a n i z a t i o n - e n v i r o n m e n t i n t e r a c t i o n , e i t h e r i n p a s s i n g o r as a p r i n c i p a l f o c u s , few a t t e m p t s have been made to c l e a r l y con-c e p t u a l i z e the environment o r i t s make-up. Emery and T r i s t (1967) In t h i s study, following Duncan's (1970) segmentation of the environment i n t o i t s i n t e r n a l and external components, i t was assumed that the boundary l i n e between the organization and the environment i s e a s i l y determinable. In f a c t , t h i s i s not so. Starbuck (1975) compared the problem o f f i n d i n g the organization's boundary to that of f i n d i n g the boundary of a cloud, and came to the conclusion that the former under-taking was more d i f f i c u l t . Organizations are open systems. Consequently, they are constantly changing and t h e i r boundaries f l u c t u a t e accordingly. However, f o r purposes of the present study, an a r b i t r a r y l i n e had to be drawn between the organizational unit and i t s external environment. Duncan's l i s t of i n t e r n a l and external environments' components provided a t o o l that was useful from an a n a l y t i c a l point of view. \ 18 d e a l t w i t h the c a u s a l t e x t u r e o f the e n v i r o n m e n t , but d i d not s p e c i f y i t s c o n s t i t u e n t components or f a c t o r s . Lawrence and L o r s c h (1967) t r e a t e d the environment as a t o t a l e n t i t y and d i d n ot d i s t i n g u i s h between the o r g a n i z a t i o n ' s i n t e r n a l and e x t e r n a l e n v i r o n m e n t s . Duncan (1970) has made a s i g n i f i c a n t c o n t r i b u t i o n i n t h i s d i r e c t i o n by segmenting the environment i n t o i t s i n t e r n a l and e x t e r n a l components: The i n t e r n a l environment w i l l c o n s i s t o f those r e l e v a n t p h y s i c a l and s o c i a l f a c t o r s w i t h i n the b o u n d a r i e s o f the o r g a n i z a t i o n or s p e c i f i c d e c i s i o n u n i t t h a t are t a k e n d i r e c t l y i n t o c o n s i -d e r a t i o n i n t h e d e c i s i o n making b e h a v i o u r o f i n d i v i d u a l s i n t h a t system, ( w h e r e a s ) . . . The e x t e r n a l environment w i l l c o n s i s t o f t h o s e r e l e -v a n t p h y s i c a l and s o c i a l f a c t o r s o u t s i d e the b o u n d a r i e s o f the o r g a n i z a t i o n or s p e c i f i c d e c i s i o n u n i t t h a t a r e t aken d i r e c t l y i n t o c o n s i -d e r a t i o n i n the d e c i s i o n making b e h a v i o u r o f i n d i v i d u a l s i n t h a t system, (p. 12) Duncan then proceeded f u r t h e r to i d e n t i f y s p e c i f i c e n v i r o n m e n t a l components and the f a c t o r s a s s o c i a t e d w i t h each. (see F i g u r e 2 ) . The e n v i r o n m e n t , b o t h i n t e r n a l and e x t e r n a l , i s t h u s c o n c e p t u a l i z e d and a n a l y z e d w i t h r e s p e c t t o some f o c a l o r g a n i z a t i o n , or i n t h i s s t u d y , o r g a n i z a t i o n a l u n i t . Each o f t h e s e f a c t o r s and components c o u l d be t r e a t e d as a s t i m u l u s t o w hich the f o c a l u n i t i s exposed and which may, a l o n e or i n c o n j u n c t i o n w i t h s e v e r a l o t h e r s , e l i c i t o r a f f e c t the a c t i o n s t a k e n by t h a t u n i t . The t r a n s a c t i o n s t h a t t a k e p l a c e between t h e s e f a c t o r s / c o m p o n e n t s and the o r g a n i z a t i o n a l u n i t s t h e m s e l v e s are complex, v a r i a b l e a c r o s s o r g a n i z a t i o n s , and r e c i p r o c a l i n n a t u r e . 19 Figure 2: Factors and Components Comprising the Organization's Internal and External Environments Internal environment t 1) Organizational personnel component (A) Educational and technological background and sUD» (B) Previous technological and managerial skill (C) Individual lueniber's involvement and commitment to attaining system's goals (D) Interpersonal behavior styles (E) Availability of manpower for utilization within the system (2) Organizational functional and staff units com-ponent (A) Technological characteristics of organiza-tional units (B) Interdependence of organizational units in carrying out their objective* (C) Intra-unit conflict among organizational functional and staff units (D) Inter-unit conflict among organizational functional and staff units (3) Organizational level component (A) Organizational objectives and goals (B) Integrative process integrating individuals and groups into contributing maximally to attaining organizational goals (C) Nature of the organization's product ser-\ice External environment 14) Customer component (A) Distributors of product or service (B) Actual users of product or service (5) Suppliers component (A) Xew materials suppliers (B) Equipment suppliers (C) Product parts suppliers (D) Labor supply Hi) Competitor component (A) Competitors for suppliers (B) Competitors for customers (7) Socio-political component (A) Government regulatory control over the industry (B) Public political attitude towards industry and its particular product (C) Kelationship with trade unions with juris-diction in the organization (8) Technological component (A) Meeting new technological recinirements of own industry and related industries in production of product or service (B) Improving and developing new products by implementing new technological ad-vances in the industry Source: Duncan, Administrative Science Quarterly, 1972, p.315 Duncan's l i s t was developed as the r e s u l t of 'some pre-liminary research" (Duncan, 1970, p. 51), although he did not s p e c i f i c a l l y state how i t was generated. The l i s t incorporates many of the variables -- p r o f e s s i o n a l i z a t i o n and technology, to c i t e only two -- which have been examined by various researchers as they relate to the degree of organizational autonomy, the structuring of a c t i v i t i e s in organizations, c e n t r a l i z a t i o n , etc. "P r o f e s s i o n a l i z a t i o n " which i s included under the "Organizational Personnel Component" has been the subject of extensive i n v e s t i -gation i n recent years (e.g. H a l l , 1968; Montagna, 1968). The 20 "Technological Component" i s another variable that was the focus of attention by many researchers in the f i e l d of organizational analysis. (Woodward, 1965, 1970; Hage and Aiken, 1969; Mohr, 1971) . The l i s t i s f a i r l y comprehensive and was considered to provide s u f f i c i e n t d e f i n i t i o n a l d i s t i n c t i o n for the present study. (Duncan noted that his l i s t was developed s p e c i f i c a l l y for i n d u s t r i a l organizations). Clearly no organizational unit was expected to i d e n t i f y a l l the factors and components as relevant to t h e i r own functioning. This l i s t was used rather "as a master to code the response of decision unit members as they i d e n t i f i e d components Of their environment." (Duncan, 1970, p. 53) Duncan's conceptualization of the components and factors making up the organization's in t e r n a l and external environments could be compared against Osborn's s p e c i f i c a t i o n of the composi-ti o n of an organization's environment. Osborn (1971) categorized an organization's environment into three components: the macro, aggregation and task environments. The macro environment i s the general c u l t u r a l context of a s p e c i f i e d geographical area and contains those forces recognized to have important influences on organizational c h a r a c t e r i s t i c s and outputs... The aggregation environment consists of the associations, interest groups and constituencies operating within a given macro environment (and)... The task environment is defined as that portion of the t o t a l s etting which i s relevant for goal setting and goal attainment. (Osborn $ Hunt, 1974, pp. 231-2) Unfortunately, Osborn f a i l e d to break down the composi-tion of these three sub-dimensions into as much d e t a i l as i n the l i s t provided by Duncan, hence the two c l a s s i f i c a t i o n s may not be u s e f u l l y comparable. Duncan's typology of factors and components comprising the organization's i n t e r n a l and external environments covers the aggregation and task environments, but does not deal with the macro environment (as defined by Osborn) in any e x p l i c i t way. However, the macro environment could be taken as f a i r l y uniform for a l l organizations operating within a given geographic location and could be l a r g e l y ignored where research i s conducted within one given c u l t u r a l environment. Since i t was planned to l i m i t the present research to a large metropolitan area i n Western Canada, Duncan's l i s t appeared to be adequate.* However, i f one were to study organizations or organizational units located across national or c u l t u r a l boundaries, then c l e a r l y the macro environment would have to be taken into consideration. 2.3 ENVIRONMENTAL CHARACTERISTICS Once the components of the i n t e r n a l and external environ-ments have been s p e c i f i e d , one can proceed to the i d e n t i f i c a t i o n and measurement of the dimensions. As stated i n Chapter One, * Duncan's l i s t was used as part of the instrument after some slight modi-fications and re-wording (see Worksheet #1 i n Appendix 3). Since depart-ments were used as the unit of analysis, at f i r s t the author made a further distinction between the internal-internal environment and the internal environment, (see Worksheet # 1 in Appendix 2). The former refers to the environment within the department i t s e l f ; and the latter refers to the inter-departmental environment or the environment within the company but outside the department under investigation. In the pre-test, i t was found that the decision makers had to check a l l the components and factors i n the internal-internal environment as being relevant. This i s understandable because no department could function without taking into consideration the factors that were mentioned in the internal-internal environment. Consequently, this section was eliminated i n the actual sample. Jurkovich's typology was presented as a conceptual scheme to a s s i s t i n understanding the d i f f e r e n t types of environ-ments confronting organizations. His typology encompasses dimensions, such as the degree of complexity and s t a b i l i t y , which have been investigated previously i n the f i e l d and "a few new notions ... that are f e l t to be of importance." (Jurkovich, 1974, p. 380) As stated previously, Jurkovich did not operationalize these dimensions. Consequently, the f i r s t major task was to develop operational d e f i n i t i o n s for these dimensions. Jurkovich i d e n t i f i e d f i v e major dimensions for characterizing the environment faced by the organization. These were:-(1) complexity vs. non-complexity (2) routineness vs. non-routineness of problem/opportunity states (3) organized vs. unorganized sectors (4) d i r e c t l y vs. i n d i r e c t l y related sectors (5) movement which was made up of two sub-dimensions:-(a) high vs. low change rate (b) stable vs. unstable change 23 As w i l l be argued in l a t e r discussions, several of these so-called dimensions could be comprehensively defined and measured only i n terms of two or more v a r i a b l e s . Thus, there arose the question of whether the two or more variables comprising a dimension or sub-dimension could be summed together to arrive at an o v e r a l l measure of that concept. Inter-item r e l i a b i l i t y c o e f f i c i e n t s were calculated for items that made up a variable or sub-dimension. Corre-l a t i o n s between variables or sub-dimensions that made up a dimension were also computed. The environmental dimen-sions derived a f t e r inter-item analysis and computation of c o r r e l a t i o n s were then subjected to p r i n c i p a l components analysis to come up with "the simplest factor structure" (SPSS, 1975, p. 484) to describe the observed data. This i s not meant to imply, however, that factor analysis was u t i l i z e d to generate new theories or constructs. Factor analysis i s not an appropriate method for discovering full-blown theories about the structure of a domain. Armstrong's a r t i c l e on "Derivation of Theory by Means of Factor Analysis or Tom Swift and his e l e c t r i c factor analysis machine" c l e a r l y i l l u s t r a t e s that "factor analysis, by i t s e l f , may be mis- ; leading as far as the development of theory i s concerned." (Armstrong, 1967, p. 17). 24 The p r i n c i p a l objective of factor analysis i s to a t t a i n a more parsimonious description of observed data through i t s data-reduction capacity. In Mulaik's terms, "exploratory factor analysis represents nothing more than a mathematical transfor-mation of the information contained i n the c o r r e l a t i o n matrix into a form which may (or may not) be more interpretable than the c o r r e l a t i o n matrix i t s e l f . " (1972, p. 365) Even Louis Thurstone, one of the e a r l i e s t proponents of the technique, cautioned that exploration with factor analysis required care-f u l l y chosen variables, and that the r e s u l t s obtained should be treated as tentative and pr o v i s i o n a l i n suggesting ideas for further research. 2.4 COMPLEXITY In an a r t i c l e e n t i t l e d "Architecture of Complexity" (cited i n La Porte, 1975, p. 5), Herbert Simon (1965) avoided a formal d e f i n i t i o n of "complexity" and only suggested that complex systems were ones "made up of a large number of parts that inte r a c t i n a nonsimple way." Child (1972, p.3) defined environmental complexity as the "heterogeneity and range of environmental a c t i v i t i e s which are relevant to the organization's operations." La Porte (1975, p. 6) was more s p e c i f i c . He defined complexity as a function of three sets of va r i a b l e s : The degree of complexity of organized s o c i a l systems (Q) i s a function of the number of system components (C-)> the r e l a t i v e d i f f e r e n t i a t i o n or v a r i e t y of these components (D-)> and the degree of interdependency among the components ( I v ) . Then, by d e f i n i t i o n , the 25 the greater C^, D. and I, , the greater the complexity of the-'organized system (Q) . (P- 6) La Porte's d e f i n i t i o n of the concept appeared to be, by f a r , the most comprehensive and adequate. Consequently, i t served as a guideline for operationalization of t h i s concept i n the present study. C^ and D. i n La Porte's d e f i n i t i o n could be investigated under the concept of "pluralism" of the i n t e r n a l and external environments. Thus, a d e f i n i t i o n of complexity c a l l e d f o r : -(1) An examination of the "pluralism" of the i n t e r n a l and external environments, i . e . an i d e n t i f i c a t i o n of the factors/components i n both the i n t e r n a l and external environments that are relevant to the department's opera-tions, namely i t s s p e c i f i c a t i o n of goals, decision making, goal attainment, etc. "A complex environment i s one i n which the number of i n t e r a c t i v e r e l a t i o n s h i p s relevant for decision making require a high degree of abstraction i n order to produce manageable mappings." (Downey and Slocum, 1975, pp. 573-4). It was hypothesized that the greater the number of factors/components that an organi-zational unit has to deal with i n i t s operations, the greater the perceived uncertainty. As the number of d i r e c t l i n k s to organizations, providing primary and secondary resources increases, so does the l i k e l i h o o d of perceived contingency, i . e . more outside units must be taken into account. If the organization's ( i n this case, organizational unit's) c o l l e c t i v e cause-effect b e l i e f s are not able to account for t h i s increase, uncertainty i s also l i k e l y to increase.. Direct dependent connections to outside organizations are compounded by i n d i r e c t dependency connections among 26 supporting organizations. As networks of d i r e c t and i n d i r e c t dependencies expand, they become the roots of considerable uncertainty for an organization. (La Porte, 1971, p. 13) (2) A s p e c i f i c a t i o n of the extent or degree to which these various factors/components a f f e c t or r e s t r i c t the depart-ment's a c t i v i t i e s pertaining to goal s e t t i n g , decision making and goal attainment. This factor compounds the degree of complexity, and hence perceived uncertainty, experienced by an organizational u n i t because i t increases the number of contingencies and constraints that the f o c a l u n i t must cope with. Since organizations or organizational units do not operate i n a vacuum, ... the maintenance of organizations depends upon some degree of exchange with outside p a r t i e s . This dependency upon the environment i s seen to impose a degree of constraint upon those d i r e c t i n g an organi-zation. As Sadler and Barry put i t (1970:58) "an organization cannot evolve or develop i n ways which merely r e f l e c t the goals, motives or needs of i t s members or i t s leaders, since i t must always bow to the constraints imposed on i t by the nature of i t s r e l a t i o n s h i p with the environment." (Child, 1972,p.3) When many organizational outcomes are determined by the actions of others i n the environment, the decision maker experiences contingency. "The greater the extent t h i s determination i s associated with 'outsiders' the greater the perceived contingency or dependency of the units on elements i n i t s environment." (La Porte, 1971, p.5) At the same time, increased interdependency or dependency creates and adds to the problems of i n t e r n a l control and coordination. Interdependency e n t a i l s j o i n t a c t i v i t i e s 27 or e f f o r t s on the part of the two or more p a r t i c i p a t i n g units. This w i l l mean, i n turn, that a set of arrange-ments has to be established and worked out between the pa r t i c i p a n t s . Some autonomy would be l o s t i n the process and t h i s imposes greater constraints on some aspects of functioning within the units. Duncan's operat i o n a l i z a t i o n of the Simple-Complex dimension merely f u l f i l l e d the f i r s t objective, namely the i d e n t i f i c a t i o n of the "pluralism" of the inter n a l and external environments. As Jurkovich noted, "just how the various loca-tions d i f f e r i s assumed rather than e x p l i c i t l y stated." (1974, p. 382) If one i s to argue that environmental complexity i s p o s i t i v e l y related to perceived uncertainty, then c l e a r l y the second objective must be met as well. This would c a l l for some measure of dependency and/or interdependency. "The concept of interdependence helps us focus on the problem of interorgani-zational exchanges." (Aiken and Hage, 1968, p. 270) This i s in l i n e with Osborn and Hunt's conceptualization of environ-mental complexity: "Based on a review of the l i t e r a t u r e , i t i s apparent that environmental complexity may represent the i n t e r -action e f f e c t among three variables: (1) r i s k (2) dependency, and (3) interorganizational r e l a t i o n s h i p s " . (1974, p. 231) In t h e i r study, Osborn and Hunt (1974) operationalized r i s k as the degree of heterogeneity -- "... as heterogeneity among task environment organizations increases, the p r o b a b i l i t y of a stable equilibrium decreases and r i s k increases..."; and environmental dependency as "the degree to which a system r e l i e s upon s p e c i f i c elements i n the environment for growth and survival and the extent to which the important environmental elements a f f e c t each other." (p. 234) Interorganizational relationships were viewed " i n terms of the (departmental) chief executive's o r i e n t a t i o n toward such interaction".(p. 236) The focal unit's i n t e r a c t i o n with other sectors i n the environment i s conceived of as a dynamic, rather than a s t a t i c r e l a t i o n s h i p because i t changes over time. Hence i t should be more appropriately studied under the "Movement" dimension rather than under the "Complexity" dimension. 2.4(A) PLURALISM For the purposes of this study, Duncan's op e r a t i o n a l i -zation of the "pluralism" of the i n t e r n a l and external environ-ments i s more comprehensive than that of Osborn and Hunt. The l a t t e r merely measured the degree of heterogeneity among task environments along the following dimensions: objectives,.goals, output, ownership l o c a t i o n , size and structure. (Osborn and Hunt, 1974, p. 238). Duncan's measure, on the other hand, required the respondent to check the factors and components i n the "Internal and External Environments L i s t " that are relevant to decision making for t h e i r unit and explain why he takes each of these into account i n decision making. (Schedule I I I , Part A, Ques. 1) A s p e c i f i c Simple-Complex environmental index was then computed for each unit under study by multiplying the number of 29 decision factors (F) by the number of components (C^) i d e n t i -f i e d by that unit as being relevant.* This product expresses the contribution of both the number of factors and the degree to whicE they are s i m i l a r (found in one component) or are d i s s i m i l a r (found i n several components)... squaring the number of components i s an indicator of s i m i l a r i t y - d i s s i m i l a r i t y i n that the more components the factors are i n , the more d i s s i m i l a r they are, and this i s then expressed i n (C )... The rationale for squaring (C) i s that the amount of variance between components i s greater than the amount of variance between factors and thus should be weighted as such i n the development of the index. (Duncan, 1970, pp. 54-55) It i s argued that the Simple-Complex index should take into consideration whether the factors/components were located i n the i n t e r n a l environment (within the organization) or the external environment (outside the organization), and that they should be weighted accordingly. Presumably, i f the majority of relevant factors/components are located i n the i n t e r n a l environ-ment, the amount of perceived environmental uncertainty confront-ing such a unit should be lower than that for an organizational unit whose relevant factors/components are located p r i m a r i l y i n the external environment. This should be so because fa c t o r s / components in the organization or organizational unit i t s e l f are presumably easier to control,and cause-effect b e l i e f s about such For the b e n e f i t o f those readers who are not f a m i l i a r with Duncan's (1970) work, h i s formula f o r c a l c u l a t i n g the Simple-Complex Environmental Index i s as follows: (F) x (C ). (p. 54) For example, a d e c i s i o n u n i t that has to take i n t o consideration three f a c t o r s a l l located witijin one component would receive a score of 3 (the computation being 3 x 1 = 3). On the other hand, a d e c i s i o n unit that has to take into consideration 3 f a c t o r s located i n 3 d i f f e r e n t components would receive a score of 27 (the computation being 3 x 3 = 27). 30 group's a c t i v i t i e s should be more accessible and r e l i a b l e . Under Duncan's formulation, both units would receive the same score because his Simple-Complex index merely takes into account the number of factors and components, regardless of t h e i r loca-t i o n . In this study, factors that were located i n the i n t e r n a l environment received a weighting of 1; those that were located i n the external environment were assigned a weight of 2. The number of components was squared as an i n d i c a t o r of s i m i l a r i t y -d i s s i m i l a r i t y as was done i n Duncan's index. This scheme was used to a r r i v e at an o v e r a l l measure of the "Pluralism" dimen-sion. Thus, a unit which had to take into consideration three factors, one of which was located i n the i n t e r n a l environment, and two i n the external environment but i n d i f f e r e n t components, received a Pluralism Index Score of £(1 + 2 + 2) x 3^} =45. The set of figures i n the small brackets represents the weights 2 assigned to each of the three factors. The 3 i s equivalent to 2 the C i n Duncan's formulation of the Simple-Complex Environ-mental Index, i . e . the number of d i f f e r e n t components the r e l e -vant factors are located i n . Compare thi s with a score under Duncan's formulation. Under Duncan's Simple-Complex Environ-2 mental Index, the same unit would receive a score of (3 x 3 = 27). 31 2.4(B) DEGREE OF INTERDEPENDENCY The topic of interorganizational dependency has been discussed and investigated by several researchers using d i f f e r e n t terminologies and with varying degrees of generality. Aiken and Hage (1968) looked into the subject of organizational interdependence; Baker (1971) talked about component i n t e r -dependence; Levine and White (1961) examined exchange and co-operation between organizations; while Warren (1972) was concerned about concerted decision making. There are many ways i n which organizational dependency and interdependency could be viewed. Emerson (1962), for instance, has suggested that power be conceived as the obverse of dependency. The concept of "power" i s a very complex one and by no means e a s i l y operationalized. A more f r u i t f u l way of looking at the variable of environmental dependency i s to adopt Thompson's (1967) perspective and view dependency i n terms of constraints. The extent to which the decision maker of a given organizational unit feels constrained by the a c t i -v i t i e s of other factors/components i s a measure of the unit's dependency upon those elements for i t s continued operations. This dimension was operationalized by c o l l e c t i n g i n f o r -mation on the following:-(1) Asking the decision maker to enumerate and l i s t , where relevant, the number of j o i n t programmes that the organizational unit has been involved with in the course of the past three to four years. Aiken and Hage (1968, p. 272 f f ) used this as one measure of organizational interdependency. The decision maker 32 was asked to indicate (i) the goals of each j o i n t programme and ( i i ) the amount of interdependency that was involved i n each --in terms of the pooling of f i n a n c i a l , technical and personnel resources. Asking the decision maker to state the goals of each j o i n t programme overcome the problem of defining separate j o i n t programmes. In t h e i r study, Aiken and Hage found that the organizations which had "a history of successful r e l a t i o n s h i p s (those that endured for more than two years)" with a p a r t i c u l a r organization would most l i k e l y engage i n a number of j o i n t programmes with the same organization. "This raised the problem of whether d i f f e r e n t j o i n t programmes with the same organization should be counted as separate programmes. (In the present research, the programme was counted as separate) i f i t involved d i f f e r e n t a c t i v i t i e s . Thus a research programme and an education programme with the same organization,... would be counted as separate j o i n t programmes." (Aiken and Hage, 1968, p. 279). Aiken and Hage found that i t was important to ask questions pertaining to the amount of interdependency because they "did discover that organizational leaders tended to think of the purchase of services as a j o i n t programme. To solve t h i s problem (the interview schedule included) a series, of follow-up questions about the amount of s t a f f shared and the amount of funds contributed by each organization involved i n the j o i n t programme." (Aiken and Hage, 1968, p. 279) (2) Asking the decision maker to indicate on a five-point scale (ranging from 1 = Very Seldom to 5 = Very Often), the approximate 33 frequency with which each of the relevant factors/components comprising the in t e r n a l and external environments d i r e c t l y r e s t r i c t the a c t i v i t i e s of his unit - a c t i v i t i e s would be sp e c i f i e d , such as goal setting, decision making, goal a t t a i n -ment, (see Osborn and Hunt, 1974, pp. 238-9). The emphasis here i s on the word " d i r e c t l y " because i n the f i n a l analysis or i n a very broad sense, most i f not a l l factors or components i n the i n t e r n a l and external environments " r e s t r i c t " the a c t i v i t i e s of the f o c a l u n i t . In thi s study, the term " r e s t r i c t " was used i n an immediate sense, i . e . to refer to short-term e f f e c t s , as opposed to medium-, long-term and/or i n d i r e c t e f f e c t s . In the pre-test, i t was found that respondents had some d i f f i c u l t y i n inte r p r e t i n g the word " r e s t r i c t " . Incorporating suggestions from the pre-test subjects, the question was subse-quently rephrased to: "Please indicate the extent to which you depend on them to accomplish your department's objectives." As i n the case of measuring the "pluralism" of the in t e r n a l and external environments, i t i s important to d i f f e r e n -t i a t e between the r e s t r a i n t s imposed by the in t e r n a l environment and the external environment. The reasoning i s si m i l a r to that presented e a r l i e r i n discussing the formulation of the "Pluralism" index. The Aston group f a i l e d to d i f f e r e n t i a t e between i n t e r -organizational dependence and intra-organizational dependence i n t h e i r study of B r i t i s h f a c t o r i e s . Mindlin and A l d r i c h (1975) argued that i t was important to make such a d i s t i n c t i o n . The l a t t e r view was adopted i n thi s study. 34 (3) Asking the decision maker to indicate how serious i s the r e s t r a i n t imposed by these factors/components (identified i n (2) above) upon his department's operations. Restraints were scaled on a range from 1 = "not serious at a l l , i . e . annoying but does not incur any f i n a n c i a l loss whatsoever" to 5 = "very serious, i . e . disrupting organizational goals and plans completely, has the e f f e c t of halting operations altogether." During the pre-test, i t became evident that this question should be elaborated to include the phrase "the seriousness of that variable (upon your department's operations) when i t comes into play." A department may not be frequently r e s t r i c t e d by a p a r t i c u l a r factor/component, but when that factor comes into play (however infrequently), i t could have a tremendous impact upon the department's operations. (4) Asking the executive to indicate the extent to which he could exert some influence over each of those factors/components which he has to take into consideration i n decision making. In the pre-test instrument, there were two questions designed to tap t h i s p a r t i c u l a r variable (see Questions 4 and 5, Schedule III, Part A i n Appendix 2). However, the pre-test subjects f e l t that the two questions were i d e n t i c a l i n that they were tapping opposite ends of the same variable/dimension. Hence the two questions were collapsed into one (see Question 4, Schedule III, Part A i n Appendix 3). A measure of environmental dependency or interdependency was then computed by adding (following inter-item analysis, of course) the respective scores on the four questions above. The 35 score on question (1) was obtained by multiplying each j o i n t programme with i t s respective magnitude ( i . e . amount of pooled resources). The products of a l l j o i n t programmes (derived i n a s i m i l a r manner) that the focal unit had engaged in over the course of the past year or two were then summed. Weights were assigned to each j o i n t programme p r i o r to the m u l t i p l i c a t i o n and summation on a basis s i m i l a r to that used for the Pluralism index, i . e . a j o i n t programme with a sector i n the i n t e r n a l environment received a weighting of 1, while that with a sector i n the external environment received a weighting of 2. The scores on t h i s question were then rank-ordered and converted to a 5-point scale ranging from 1 = very low degree of i n t e r -dependency to 5 = very high degree of interdependency. The score on question (2) was derived by multiplying and then summing the number of factors/components that the f o c a l u n i t depended upon for accomplishing i t s objectives by the extent of such dependence. Each factor or component was weighted as i n (1) above. Consider for example a u n i t which has to take into consideration 3 factors located i n 3 d i f f e r e n t components, one i n the i n t e r n a l environment and the others i n two separate components i n the external environment, and where the responses the decision maker assigns to each of these factors are 2, 4, 5 resp e c t i v e l y . Then the unit's score on t h i s variable would be £(1 x 2) + (2 x 4) + (2 x 5)) = 20. The f i r s t multiple i n each pa i r of small brackets i s the weight assigned to the factor (1 for i n t e r n a l environment; and 2 for external environment), and the second multiple in each pair of small brackets i s the response 36 selected for that p a r t i c u l a r factor. Thus, a high score would indicate high interdependence or low independence. To a r r i v e at a score for question (3), each factor or component upon which the f o c a l unit depended was m u l t i p l i e d by the seriousness of the r e s t r a i n t imposed by that p a r t i c u l a r f a c t o r . The products for a l l factors or components that were derived i n a s i m i l a r manner were then summed. To make things simpler, we w i l l use the example of the same hypothetical unit that has to take into consideration 3 factors located i n 3 d i f f e r e n t components. The responses that the decision maker selects in t h i s instance are 1, 4 and 3 respectively. The unit's score on this variable would be £(1 x 1) + ( 2 x 4 ) + (2 x 3)}= 15. The higher the score, the higher the interdependency. Again, the f i r s t multiple i n each pair of small brackets represents the weights assigned to the factor (1 for i n t e r n a l environment, and 2 for external environment). The score on question (4) was computed by mutliplying each relevant factor or component (with weights assigned i n a s i m i l a r manner) by the amount of influence that the decision maker can exert over that component. Thus, the same hypothetical unit would receive a score of ((1 x 1) + ( 2 x 3 ) + (2 x 5)} = 14 i f the decision maker selects response category 1 for the i n t e r n a l factor and response categories 3 and 5 respectively for the two external factors. The higher the score, the higher the unit's interdependence upon factors i n the i n t e r n a l and external environ-ments 2.5 ROUTINE VS. NON-ROUTINE PROBLEM/OPPORTUNITY STATES "The environment i s always both a threat and a resource". (Perrow, 1970, p. 112). However, i t was not the purpose i n t h i s study to d i f f e r e n t i a t e between cases where the environment constitutes a threat to the f o c a l unit, and those where i t presents i t s e l f as an opportunity. The objective here was to i d e n t i f y whether such problem/opportunity states could be approached as routine (programmed) or non-routine (non-programmed) a c t i v i t i e s . Decisions are programmed to the extent that they are r e p e t i t i v e and routine, to the extent that a d e f i n i t e procedure has been worked out for handling them so that they do not have to be treated de novo each time they occur.... Decisions are non-programmed to the extent that they are novel, unstructured and consequential. There i s no cut-and-dried method for handling the problem because i t has not arisen before, or because i t s precise nature and structure are elusive or complex, or because i t i s so important that i t deserves a custom-tailored treatment. (Simon, 1960, pp. 5-6) Simon's d e f i n i t i o n of the programmability of the task i s quite similar to Perrow's notion of v a r i a b i l i t y and search. Perrow (1970, p. 75 f f ) distinguished between the a n a l y z a b i l i t y and v a r i a b i l i t y of the s t i m u l i or problem/opportunity states. Because no two s t i m u l i ever present themselves i n exactly the same manner, a stimulus i s said to be analyzable when "incre-mental adaptations from exi s t i n g programmes or portions of exist-ing programmes can e a s i l y be made to standardize the new s i t u a t i o n . Where the stimulus i s unfamiliar or unanalyzable, "considerable search behaviour must be i n s t i t u t e d and the search ... must take place without manuals, computers or clerks who have the r e q u i s i t e information and programmes." The v a r i a b i l i t y of the s t i m u l i , on 38 the other hand, takes into consideration the number of s t i m u l i -"sometimes the va r i e t y i s great and every task seems to be a new one demanding the i n s t i t u t i o n of search behaviour of some magni-tude (whether analyzable or unanalyzable.)" It was hypothesized that the more routine the problem/ opportunity state, the lower the degree of uncertainty. Where the decision i s r e p e t i t i v e , i . e . where si t u a t i o n s of a s i m i l a r nature have occurred before i n the past, the cognitive load required i s reduced considerably. In this study, the "routineness/non-routineness of problem/opportunity states" dimension was operationalized along the d e f i n i t i o n s put forward by Simon and Perrow. This c a l l e d f o r : -(1) An examination of the discrepancy between environmental demands and the organizational unit's capacity. This required an i d e n t i f i c a t i o n of the unit's capacity i n terms of knowledge, c a p i t a l and other physical/material resources, including personnel, together with an assessment of how well these stand up to the demands made by the environment. A decision maker can approach an opportunity or problem by asking whether his organization possesses the technologies, people, cash reserves and other resources to handle or solve a s i t u a t i o n without disturbing current a c t i v i t i e s . (Jurkovich, 1974, p. 383) This assessment was conceptually s i m i l a r to Duncan's notion of "perceived influence over the environment". A decision unit's perceived influence over the environment i s a function of "the decision unit's a b i l i t y to (a) a f f e c t the demands made on i t , (b) a f f e c t the expectations of performance made on i t , (c) deal 39 with alt e r n a t i v e s to, and (d) have some control over the factors and components taken into consideration by the decision unit in the decision making process." (Duncan, 1970, p. 36) Thus, in t e r n a l resources possessed by the f o c a l unit w i l l determine, to a large extent, not only whether i t w i l l be able to e f f e c t the demands made on i t by the environment; but also whether i t could resort to al t e r n a t i v e courses of action and/or exercise some control to e f f e c t changes or ameliorate the demands imposed by the environment. (2) An investigation of the amount of search for c r i t i c a l information to c l a r i f y the decision problem at hand. Where the decision problem i s f a m i l i a r , i . e . problems of a s i m i l a r nature have arisen before in the past and have been successfully re-solved, the amount of search e f f o r t exerted would be minimal. Where the problem i s unanalyzable or non-routine however, the focal unit would have to expand a considerable amount of e f f o r t to search for a l t e r n a t i v e courses of actions or ways of resolving the problem. 2.5(A) AMOUNT OF DISCREPANCY To measure the amount of discrepancy between environ-mental demands and the organizational unit's capacity, the researcher c o l l e c t e d information along the following lines,some of which were adapted from the Lawrence and Lorsch questionnaire, and some of which were taken from Duncan's instrument for measur-ing the degree of perceived influence over the environment. (1) Asking the decision maker to l i s t the major kinds of problems 40 related to technological know-how, market information, personnel and other s p e c i f i e d issues encountered by his unit i n competing (operating) i n the industry. To make sure that the decision maker remembered to put down a l l the major kinds of problems, he was asked to r e c a l l the problem or opportunity states that had arisen for his unit in the course of the past year. (2) For each of the problem/opportunity states indicated above, the decision maker was asked to indicate on a 5-point scale the extent to which he perceives his unit measures up to these demands i n terms of:- techological know-how, market information, personnel, etc. Point "5" would indicate that he had no problem whatsoever in that respect, i . e . his unit possessed the f u l l c a p a b i l i t i e s to meet that demand. Point "1", on the other hand, would indicate that the environmental s i t u a t i o n completely threw his unit o f f balance and there would be no way that his unit could ever s a t i s f y such demands. (3) Asking the decision maker to indicate on a 5-point scale the d i f f i c u l t y of achieving e f f e c t i v e solutions to each of them. The scale ranged from 1 = very d i f f i c u l t to 5 = very easy. (4) Asking the decision maker to indicate the frequency of occurrence of such problems i n terms of:-(a) the s p e c i f i c number of times problems of a sim i l a r nature have arisen i n the course of the past year; and (b) 'an estimate of the l i k e l i h o o d for each problem that i t w i l l a r i s e again i n the future. (5) For each of the problems i d e n t i f i e d above, the decision maker was requested to indicate which of the various decision procedures 41 (b) (c) he used to arrive at the decision or recommendation. If he used more than one procedure, he was requested to s p l i t up the percentages accordingly. It was expected, however, that usually he would be l i k e l y to put 100 next to one of the four alte r n a t i v e s enumerated below:-(a) % Relied on routine/standardized procedures which had been used successfully i n the past % Made incremental adaptations from e x i s t i n g procedures e a s i l y (with minimal amount of search e f f o r t ) — % Made step-by-step modifications to e x i s t i n g proce-dures with d i f f i c u l t y (d) No cut-and-dried method for dealing with the problem. Considerable search for a l t e r n a t i v e (i.e.new) ways of approaching/solving the problem. 2 . 5 ( B ) AMOUNT OF SEARCH FOR CRITICAL INFORMATION To measure the amount of search f o r c r i t i c a l information, the following questions were asked:-(1) The amount of search e f f o r t exerted by the f o c a l unit ( i n terms of man-hours, or weeks/months) to gain c r i t i c a l information to c l a r i f y each of the major problems enumerated i n the previous section. The decision maker was asked to indicate whether any sp e c i a l task force was set up for the purpose and/or whether outside help (such as consultants, etc.) was sought. (2) The decision maker's evaluation of the degree to which such search e f f o r t s proved f r u i t f u l i n terms of the degree of t r u s t he placed upon a s i g n i f i c a n t portion of the information acquired. 42 The decision maker was asked to assign a p r o b a b i l i t y figure ranging from 0.0 = "not confident at a l l " to 1.0 = "completely confident." During the pre-test, the respondents indicated that the questions i n t h i s section (Schedule I I I , Part B i n Appendix 2) were too laborious. After several interview sessions, i t became apparent to the author that respondents, i n general, appeared to have an aversion for questionnaires that contained a great number of items even though each item c a l l e d for r e l a t i v e l y short answers. The author re-arranged the questions to come up with a revised questionnaire that contained few broader content questions, each of which sought to cover several items contained i n the o r i g i n a l instrument, (see Schedule I I I , Part B i n Appendix 3). Thus, the author was able to come up with a more condensed instrument without, i n actual f a c t , l o s i n g much of the information asked for i n the o r i g i n a l pre-test instrument. Question 2 i n Schedule I I I , Part B in Appendix 3, for instance, encompasses questions 7 through 10 i n the pre-test instrument. (Appendix 2). Only two questions, namely items 4 and 5 i n the o r i g i n a l pre-test instrument (Appendix 2) were deleted from the revised version. The respondents had d i f f i c u l t y enumerating the number of past occurrences and they were generally at a loss when assigning p r o b a b i l i t i e s about future occurrences. It was f e l t that the information c a l l e d for i n question 6 i n the o r i g i n a l instrument (or question 1 i n the revised instrument, Appendix 3) was s u f f i -cient for the purposes of c a l c u l a t i n g a "routineness" index. The revised version was used i n obtaining data for the research reported here. 43 The routineness dimension was thus measured i n terms of three variables:- frequency of routine procedures, search for c r i t i c a l information and programmability. Each of these variables was tapped by one or more items. The items i n a given variable were subjected to inter-item analysis before being added to form an o v e r a l l score for that p a r t i c u l a r v a r i a b l e . The f i r s t variable or frequency of routine procedures was tapped by Question 1 i n the revised instrument (Schedule III, Part B, Appendix 3). The score on t h i s question was obtained by c a l c u l a t i n g the frequency of routine procedures. Thus, i f a respondent r e p l i e d by assigning 50% to Procedure A ("relied on routine/standardized procedures which had been used successfully i n the past") and 10%, 30% and 10% res p e c t i v e l y to Procedures B ("made incremental adaptations from e x i s t i n g procedures e a s i l y " ) , C ("made step-by-step modifications to exist i n g procedures with d i f f i c u l t y " ) , and D ("no cut-and-dried method for dealing with the problem"), his frequency count for routine procedures would be 60% (summation of frequency counts for A and B). In order to make summation easy with scores obtained on the other two variables, the frequency count was converted to a five - p o i n t scale by di v i d i n g the frequency count into 20. Thus, the same respondent would receive a scaled routine score of (60 '- 20) = 3. The higher the scaled routine score, the greater the reliance upon routine procedures i n that p a r t i c u l a r department. 44 The "search for c r i t i c a l information" variable was i n i t i a l l y hypothesized to consist of scores on questions 2 and 3. (Schedule III, Part B, Appendix 3). Each respondent i n d i -cated the number of task force(s) that were set up in his depart-ment. These were rank-ordered and s p l i t into f i v e e/en categories. A department which received a score of 5 engaged i n very few or no task force e f f o r t s , i . e . the nature of t h e i r work was highly routine and no elaborate task force was necessary to solve problems/opportunities a r i s i n g in their department. The response to the part pertaining to "outside help" was scored in a s i m i l a r manner. The "degree of trust i i i a s i g n i f i c a n t portion of the information obtained" (question 3) was converted into a f i v e -point scale by d i v i d i n g the subject's response to this question by 20. Thus a score of 5 would indicate a response of 0.8 to 1.0, or a high trust i n the information gained. As w i l l be discussed i n greater d e t a i l i n Chapter Four, the score on "degree of t r u s t " did not correlate highly with the scores on the other two items i n the "search for c r i t i c a l information" v a r i a b l e . Hence this item was eliminated i n the c a l c u l a t i o n of the overall score for "search for c r i t i c a l information" v a r i a b l e . The "programmability" variable was hypothesized to consist of scores on questions 4 through 6 (Appendix 3). In order to come up with an o v e r a l l " a b i l i t y to measure up to demands" score, the subject's response to question 4 was multi-p l i e d by the scaled frequency of routine procedures and then added to the response to question 5 m u l t i p l i e d by the scaled frequency of non-routine procedures. This sum was then divided by 5 to end up with a 5-point scale ranging from 1 = low pro-grammability to 5 = high programmability. The formula could thus be written as:-Overall /Score on a b i l i t y to measure\/Scaled frequency A b i l i t y to _ ( up to demands made by J{ of routine Measure up \routine problems /\procedures score/ to Demands (Score on a b i l i t y to measured/Scaled frequency up to demands made by Ij of non-routine non-routine procedures M procedures score 5 Thus, i f a respondent checked 5 and 4 to questions 4 and 5 respectively, and his scaled frequency of routine procedures score was 3.5, his "Overall a b i l i t y to measure up to Demands" score would be (5)(5.5) + (4)(1.5) _ 17.5 + 6 = 4 < ? > This score was then correlated with that f o r question 6 to come up with an o v e r a l l "programmability index". The scores on the three variables were then correlated to determine whether they could be added to form a "routineness 1 dimension. 46 2.6 ORGANIZED VS. UNORGANIZED SECTORS According to Jurkovich, "an organized sector r e f e r s to another organization or c l u s t e r of organizations covered by a formal rule set that i s legitimate only for the r o l e set intended by those rules...(whereas) an unorganized sector r e f e r s to those actual or p o t e n t i a l customers who use the organization's goods and services but are not bound together by formal or informal rules requiring patterned coordinated i n t e r a c t i o n to reach formally defined goals." (Jurkovich, 1974, p. 385) Jurkovich hypothesized that because organized sectors are generally easier to come to grips with, they would presum-ably lower the f o c a l unit's degree of perceived uncertainty. The actions of organized sectors are u s u a l l y planned and/or stated formally. Hence the focal unit could more e a s i l y predict the outcomes that such actions would have upon i t s own operations, and/or develop plans or strategies to counteract or meet t h e i r actions. While i t i s true that organized sectors would lower the f o c a l unit's degree of perceived uncertainty i n t h i s sense, Jurkovich has f a i l e d to consider that organized sectors do pose a threat i n other ways which might r e s u l t i n increased o v e r a l l uncertainty. Organized sectors, as opposed to unorganized groups such as consumers, can impose serious constraints upon the a c t i v i t i e s of the focal unit which the l a t t e r could not ignore. Although corporations t a l k a l o t about s o c i a l responsi-b i l i t y , i n p r a c t i c e , most p r o f i t - o r i e n t e d i n s t i t u t i o n s s t i l l 47 appear to be guided by the "public be damned" p r i n c i p l e . The unorganized or consumer groups simply do not possess the "bar-gaining c l o u t " v i s - a - v i s the focal unit to ensure that t h e i r views and well-being w i l l be taken into consideration. The organized sectors, on the other hand, have r e a l bargaining power, with the amount varying, according to how dependent the f o c a l unit i s upon them. The focal unit has to coordinate i t s p o l i c i e s with those of the organized sectors for fear of r e p r i s a l s , or for mutual gain. This thus imposes greater c o n t i -gencies upon the focal unit and hence increases perceived uncertainty. Whether the uncertainty described above o f f s e t s the advantages accrued from dealing with organized sectors was not known and was investigated i n t h i s study. The r e s u l t s of t h i s analysis w i l l be discussed i n Chapter Five. The "organized vs. unorganized sectors" dimension was measured by asking the decision maker to supply information on the following:-(1) Indicate whether each of the factors or components that are taken into consideration i n the unit's functioning i s organized or unorganized. Organized or unorganized would be defined i n terms of whether the factor or component could i n t r o -duce r e a l and d i r e c t threats to or r e s t r a i n t s upon the a c t i v i t i e s of the focal u n i t . The emphasis here i s on the words "r e a l and d i r e c t " . "Real and d i r e c t " imply that the sector possesses the "bargaining c l o u t " v i s - a - v i s the focal unit to ensure that i t s views and well-being w i l l be taken into consideration. Thus, 48 consumer groups would generally be c l a s s i f i e d as unorganized sectors. As in the examination of the "pluralism" of the i n t e r n a l and external environments, the terms "threats and r e s t r a i n t s " were used i n an immediate sense. In the f i n a l analysis, or i n a very broad sense, most, i f not a l l , factors or components i n the i n t e r n a l and external environments can, however i n d i r e c t l y , be said to impose "threats and r e s t r a i n t s " upon the a c t i v i t i e s of the f o c a l u n i t . (2) The decision maker was asked to indicate which category, organized or unorganized, presented him with more uncertainty i n decision making. Each respondent's score on t h i s dimension was calculated by d i v i d i n g the number of relevant factors/components he i d e n t i -f i e d as being "organized" into the t o t a l number of f a c t o r s / components that he has to take d i r e c t l y into consideration i n decision making. Thus, a respondent who i d e n t i f i e d 4 out of the 7 factors that he had to take into consideration as being "organized" would receive a score of 57.141. The higher the percentage, the more the unit's transactions were with organized sectors 2.7 DIRECTLY VS. INDIRECTLY RELATED SECTORS Jurkovich defined d i r e c t l y related sectors as those with which the focal unit "exchanges without the use of i n t e r -mediaries", and i n d i r e c t l y related sectors as "those which produce goods and services or provide resources that must be acquired through intermediaries." (Jurkovich, 1974, p. 385) It was hypothesized that ( i ) the more i n d i r e c t an exchange with a given sector and hence the less the unit's control over i n t e r a c t i o n , and ( i i ) the more a f o c a l unit's dealings were with i n d i r e c t l y related sectors, the greater the degree of perceived environmental uncertainty experienced by the focal unit. This dimension has further reaching ramifications for an organization's functioning and strategies than are usually at t r i b u t e d to i t i n the l i t e r a t u r e of organizational theory. I n d i r e c t l y r e l a t e d sectors are capable of generating so much uncertainty for the f o c a l organization or unit that i t often resorts to "buying up" or merging with such sectors where possible, so as to reduce the amount of uncertainty. In a study of the increasing trend for merger of hospitals i n the United States, Kimberley (1975) c i t e d the desire to seek d i r e c t control as one of the primary reasons: It would appear on the basis of the r e s u l t s here, that factors over which organizational members have very l i t t l e d i r e c t control are very important i n determining s t r u c t u r a l outcomes. Recent develop-ments in the organization of health services i n the United States suggest that external factors play an important role i n other kinds of organizations as well. The increasingly large number of hospital mergers and the development of community-wide integrated health care delivery systems are two examples to reduce environmental uncertainty by increasing the amount of d i r e c t control by organi-zational members of certain segments of the environment, (pp. 7-8) This trend i s not unique to health and welfare organizations alone. Industrial organizations often resort to such strategies when faced with problems of control and resource a c q u i s i t i o n . However, i t was beyond the scope of the present study to examine merger a c t i v i t i e s which r e s u l t d i r e c t l y or i n d i r e c t l y from the organization or organizational u n i t ' s desire to control factors/components external to the organization. To come up with a measure of whether a unit's dealings were predominantly with d i r e c t l y or i n d i r e c t l y r e l a t e d sectors, information was gathered on the following:-Using Duncan's in t e r n a l and external environments' l i s t , the respondents were asked to indicate whether t h e i r unit's dealings with each of these factors were d i r e c t , or whether they were c a r r i e d out through an intermediary or intermediaries*; and i f so, was more than one intermediary involved. In general, the greater the number of intermediaries for one p a r t i c u l a r transaction, and the greater the t o t a l number of intermediaries that the f o c a l unit had to contend with as a whole; then the greater the amount of perceived uncertainty because of increas-ing problems of control and coordination. In t h i s study, an intermediary i s defined as a middle-man — a t h i r d p a r t y or person who i s not a d i r e c t p artner i n the exchange r e l a t i o n -s h i p F o r example, a t r a d i n g agency that markets the goods o f s m a l l e r manufacturers (who do not s e l l d i r e c t to the consumers) i s an i n t e r -mediary. Each respondent's score on this dimension was calculated in a manner si m i l a r to that for the "organized" dimension. The number of relevant factors/components that the decision maker i d e n t i f i e d as being " d i r e c t l y r e l a t e d " are divided into the t o t a l number of factors/components that he has to take into consideration i n decision making.Thus, a respondent who i d e n t i -f i e d 2 out of the 7 factors that he had to take into consideration i n decision making as being " d i r e c t l y r e l a t e d " would receive a score of 28.571. The higher the percentage, the more the unit's transactions were performed on a " d i r e c t l y r e l a t e d " basis. 52 2.8 MOVEMENT The l a s t , but by no means least important, dimension i n Jurkovich's core typology has to do with the movement i n the organizational environment. Most researchers on organization-environment i n t e r a c t i o n have focused on t h i s dimension because i t i s hypothesized to be highly related to the amount of per-ceived environmental uncertainty experienced by the organization or organizational u n i t . ( D i l l , 1958; Burns and Stalker, 1958j Emery and T r i s t , 1965; Lawrence and Lorsch, 1967; Duncan, 1970; Osborn and Hunt, 1974). The movement c h a r a c t e r i s t i c takes into consideration two dimensions:-(1) The change rate, which includes the frequency and magni-tude of change; and (2) The s t a b i l i t y of change, or the p r e d i c t a b i l i t y of the change pattern. It i s important to d i s t i n g u i s h between these dimensions and not merely equate the two as some researchers have done. It i s quite possible for an organization or organizational unit to experience rapid but la r g e l y predictable change i n the environ-ment. In such instances, the amount of uncertainty confronting the organization i s r e l a t i v e l y low as " i t knows reasonably well what environmental conditions i t w i l l face i n the future." (Miles, 1974, p. 248) Child (1972, p.3) argued that the "degree of change may be seen as a function of three v a r i a b l e s : (1) the frequency 53 of changes i n relevant a c t i v i t i e s ; (2) the degree of difference involved at each change; (3) the degree of i r r e g u l a r i t y i n the ov e r a l l patterns of change - in a sense the ' v a r i a b i l i t y of change.'" Jurkovich himself noted that the f i r s t two variables could be viewed as the change rate, whereas the t h i r d v a r i a b l e "involves the s t a b i l i t y or i n s t a b i l i t y of an environment". (1974, p. 388) It was hypothesized that both these dimensions a f f e c t to varying extents the degree of perceived environmental uncer-t a i n t y experienced by the foc a l u n i t . When the factors and components comprising the focal unit's i n t e r n a l and external environments are i n a continual state of flux, the unit finds i t d i f f i c u l t , i f not impossible at times, to keep i t s e l f up-to-date on a l l the changes and th e i r implications for i t s own operations and a c t i v i t i e s . High rates of change ... makes i t d i f f i c u l t (for the focal unit) to construct and tes t cause-and-e f f e c t b e l i e f s about the character and behaviour of dependency re l a t i o n s h i p and the consequences of t h e i r change. If modifications of cause-effect b e l i e f s proceed more slowly than the changes i n the environment, uncertainty i s greatly heightened. (La Porte, 1971, p. 18) Changing cause-and-effeet b e l i e f s impose constraints and "pre-clude the tes t i n g and reuse of conceptual maps by the i n d i v i d u a l over time." (Downey and Slocum, 1975, p. 573 f f ) . When conceptual mappings or rel a t i o n s h i p s between objects are i n a state of constant f l u x , the decision maker cannot r e a d i l y a v a i l himself of routines which were t r i e d out and worked i n the past. "This constant state of map obsolescence can be expected to increase the perception of uncertainty." (Downey and Slocum, 1975, p. 574). 54 2.8(A) CHANGE RATE In t h i s study, the change rate dimension focused on the frequency and magnitude of changes that, took place i n the factors and components which made up the focal unit's i n t e r n a l and external environments. This dimension was measured by c o l l e c t -ing information on the following:-(1) The decision maker was asked to indicate on a 5-point scale, ranging from 1 = very seldom to 5 = very often, the frequency of changes ( i n goals, p o l i c i e s and programmes) that took place i n each of the relevant factors/components comprising the i n t e r n a l and external environments' l i s t i n the course of the past year or two. A study of goals w i l l provide i n s i g h t into where the organization i s going. As E t z i o n i (1964) noted: "On the sur-face, an organizational goal may be defined as a desired state of a f f a i r s that organizations attempt to r e a l i z e , " However, goal reorientation i s by no means the sole way through which one could observe changes i n another organization. In general, the formal or o f f i c i a l goals remain r e l a t i v e l y f i x e d and stable over a given period of time. What change more frequently are the paths to the goals -- or i n other words, the p o l i c i e s and programmes designed and implemented by an organization to a t t a i n goals. As Buck (i n Thompson and Vroom, 1966, p. 117) notes, "paths become goals for the subsequent l e v e l s of the organi-zational hierarchy." However, i t i s by no means easy to study goal and 55 programme changes i n the sectors that the focal u n i t has deal-ings with, either because they are not always v i s i b l e or well known to the focal unit, or simply because they do not e x i s t for some groups. "Unorganized sectors, however -- made up of customers, for example -- have no such things as formal goals." (Jurkovich, 1974, p. 386). Consequently, a more f r u i t f u l strategy was to ask the top decision maker i n the focal unit to enumerate the frequency of goal,policy and programme changes i n each of the f a c t o r s / components comprising the internal/external environments' l i s t , where they are known. This was supplemented by s i m i l a r i n f o r -mation concerning any kinds of "ongoing changes" i n those sectors which were perceived to be relevant to the f o c a l unit's operations and a c t i v i t i e s . This included a study of changes i n consumers' preferences, the general r i s e i n standard of l i v i n g , etc. (Schedule III, Part A, Question 8 i n Appendix 3). (2) After estimating the frequency of changes i n each of these factors and components, the chief executive was asked to specify on a 5-point scale the magnitude of each change i n terms of the seriousness of the impact i t had upon the focal unit's operations. The scale ranged from 1 ="not serious at a l l = may be annoying but does not require any reorientation or modification to e x i s t -ing departmental goals, p o l i c i e s or courses of action pursued by the department" to 5 = "very serious = disrupting e x i s t i n g departmental goals and plans very seriously. Major reorientation or modifications to e x i s t i n g goals and plans are required as a r e s u l t of the change." A rate of change score was then computed for each unit by multiplying the frequency of changes by the magnitude o f each change. As stated previously, a d i s t i n c t i o n was made between factors and components in the internal and external environments because elements i n the internal environment are presumably easier to come to grips with, and hence the amount of perceived uncertainty posed by such factors/components should be lower. In a s i m i l a r vein, changes i n elements i n the i n t e r n a l environ-ment are presumably more e a s i l y manageable because information about such changes, and knowledge about ways and means of coping with such changes are more abundant and f a i r l y well-defined. For example, i t would be much easier for a de c i s i o n maker to cope with his own company's new p o l i c i e s pertaining to the marketing and sale of i t s products than i t would be for him to stay on top of the new marketing strategies adopted by his competitors i n the industry. The change rate score for each departmental unit should therefore take into consideration whether such changes occurred i n the internal or external environments. Changes i n the in t e r n a l environment received a weighting of 1; while those i n the external environment received a weighting of 2. The formula for ca l c u l a t i n g the change rate score for each respondent i s : -Change Rate _y(/Frequency of Magnitude\ x Weighting assigned Index llchange of Change./ to change depend-ing on i t s location 57 Thus, a respondent who indicated that the frequency with which his departmental unit had to contend with changes i n each of the relevant sectors and factors (assuming the f i r s t two are located i n the external environment and the remaining i n the in t e r n a l environment) are 2, 4 and 5 r e s p e c t i v e l y , and estimated the magnitude of such changes to be 5, 4 and 3 r e s p e c t i v e l y , would receive a change rate score of £(2 x 5) (2) + (4 x 4) ( 2 ) + ( 5 x 3)(1) ) = 6 7 . 2.8(B) STABILITY OF CHANGE The s t a b i l i t y of change focused on the s t a b i l i t y , and hence p r e d i c t a b i l i t y , of contingencies confronting the foc a l u n i t . Under the complexity dimension, the f o c a l unit's relationships/interdependencies with other factors and com-ponents i n the i n t e r n a l and external environments were discussed. It was also hypothesized that the more factors and components the f o c a l unit has to take into consideration, and the higher the interdependence with such sectors, the greater the complexity confronting the unit . However, i t was noted that the i n v e s t i -gation of the complexity dimension would be p r i m a r i l y a s t a t i c one. "The degree of homogeneity/heterogeneity was viewed at a single point in time. But another important c h a r a c t e r i s t i c i s i t s s t a b i l i t y , a c h a r a c t e r i s t i c that i s bound to a time dimension." (Ebert, 1975, pp. 40-41). An i n v e s t i g a t i o n of the s t a b i l i t y of change rate took into consideration:-(1) The degree to which the factors/components i n the i n t e r n a l and external environments that are relevant to the foc a l unit's functioning remain stable " i . e . remain the same over time, or are i n a process of change." This would involve determining the "frequency with which decision unit members take into considera-tion new and d i f f e r e n t i n t e r n a l and/or external factors i n the decision making process." (Duncan, 1970, pp. 17-18) (2) Duncan's operationalization of the static/dynamic dimension merely revolved round the i d e n t i f i c a t i o n of whether the sectors that the focal unit deals with remain stable, and the frequency with which new factors were taken into consideration i n the decision making process. It i s argued that this was not s u f f i -c i e n t . Any oper a t i o n a l i z a t i o n of the " s t a b i l i t y of change r a t e " dimension had to incorporate some measure of the p r e d i c t a b i l i t y of the change rate, i . e . did the change follow a trend, or did the change come from "out of the blue", so to speak. In the l a t t e r instance,however, the change would be so sudden and completely unpredictable that the focal u n i t would, i n most pr o b a b i l i t y , be far less l i k e l y to possess the c a p a b i l i t i e s to cope with the change. It was hypothesized that changes of the l a t t e r sort would greatly increase the f o c a l unit's degree of perceived environmental uncertainty. Duncan's operationalization of the Static-Dynamic dimension f u l f i l s the f i r s t objective and was used for tapping this component in the present study. Duncan's questionnaire asked the respondents to indicate on a 5-point scale "how often do new and/or d i f f e r e n t things have to be considered by you i n 59 decision making." * (Duncan, 1970, p. 192) The p r e d i c t a b i l i t y of change rate or trend was assessed by: -(1) Asking the decision maker to indicate on a fiv e - p o i n t scale the adequacy or inadequacy of the warning period preceding the onset of the change. The scale ranged from 1 = "inadequate = there was some advance notice about the change. However, the warning period was so short that your department was not able to gather s u f f i c i e n t information to deal with the change" to 5 = "adequate = s u f f i c i e n t for gathering adequate information to deal with the change." A l l organizations face changing environments to a c e r t a i n extent. Whether an organization can successfully respond and adapt to such changes depends to a large extent on whether there i s a considerable lead time so that the organizational unit can gather "reasonably adequate information as to what might be expected to plan the adaptation." (Haas, 1973, p. 267). Each unit's score on this variable was obtained by sum-ming and then averaging the subject's response to each of the relevant factors/components i n the in t e r n a l and external environ-ments. Thus, a respondent who has to take 3 factors into consi-deration i n decision making and who indicated the "adequacy of warning period" associated with each of these factors as 3, 2 * Duncan's 5-point scale ranged from 1= never to 5 = very often. This was reversed and slightly modified in the present study to coincide with the direction of the other scales. In this study, 1 = very often and 5 = very seldom. 60 and 4 r e s p e c t i v e l y would receive an o v e r a l l score of ((3 + 2 + 4) V 3) = 3. (2) Asking the d e c i s i o n maker to i n d i c a t e on a 5-point s c a l e , ranging from 1 = very l i t t l e knowledge"to 5 = very high know-ledge, the extent to which h i s department knows what to expect a f t e r the change takes p l a c e . Considerable overlap was expected between the responses to t h i s q u e stion and the one f o r determining discrepancy between environmental demands and o r g a n i z a t i o n a l c a p a c i t i e s . But the emphasis here was on knowledge of what to expect, on p r e d i c t a b i l i t y w h i l e the " r o u t i n e n e s s " dimension encompassed knowledge as w e l l as other m a t e r i a l resources. The u n i t ' s score on t h i s v a r i a b l e was c a l c u l a t e d i n a manner s i m i l a r to that f o r the "adequacy o f warning p e r i o d . " Each departmental u n i t ' s score on the s t a b i l i t y dimension was c a l c u l a t e d by adding and then averaging the respondent's sub-scores ( f o l l o w i n g i n t e r - i t e m a n a l y s i s , o f course) on:- ( i ) f r e -quency w i t h which new and d i f f e r e n t elements have to be taken into c o n s i d e r a t i o n , ( i i ) adequacy of warning p e r i o d and ( i i i ) know-ledge of what to expect. 2.9 UNCERTAINTY The concept of " u n c e r t a i n t y " i s one of the most w i d e l y used and misused terms i n every day language as w e l l as i n o r g a n i z a t i o n a l theory and d e c i s i o n making l i t e r a t u r e . On the one hand, d e c i s i o n t h e o r i s t s have adopted a micro approach when viewing u n c e r t a i n t y . Researchers such as Knight (1921), March and Simon (1958, p. 137) and Morris (1964), for instance, usually talked about uncertainty i n terms of the i n d i v i d u a l ' s i n a b i l i t y to assign p r o b a b i l i t i e s with respect to the occur-rence of s p e c i f i c events. Although this notion of uncertainty i s important, the usage of the term i n ordinary language c a r r i e s a much broader connotation than the mere a b i l i t y or i n a b i l i t y to assign p r o b a b i l i t i e s . On the other hand, researchers such as Lawrence and Lorsch (1967) have adopted a more macro approach and defined uncertainty with respect to three components:"(1) the lack of c l a r i t y of information; (2) the long time span of d e f i n i t e feedback; and (3) the general uncertainty of causal r e l a t i o n s h i p s ? (p. 27). Lawrence and Lorsch's uncertainty measure "was vague in i t s d e f i n i t i o n of lack of information and general uncertainty of causal r e l a t i o n s h i p s . This lack of c l a r i t y i n definition, then i n h i b i t s the development of s p e c i f i c operational measures of uncertainty." (Duncan, 1970, p. 8). In my opinion, the best measure of perceived environ-mental uncertainty available to date i s that developed, by Duncan.* The measure was developed em p i r i c a l l y by asking res-pondents at various l e v e l s and positions i n a large i n d u s t r i a l manufacturing organization to explain what uncertainty meant to them. Although Duncan experienced some d i f f i c u l t y i n getting the executives to verbalize t h e i r conception of uncertainty, * Duncan explained the rationale behind the development of his measure as follows: "The objective in developing this new measure of uncertainty was to formulate some scales of the various components of perceived uncertainty that would link the concept to the empirical level that then could be assessed for their reliability and validity. An additional rationale for this empirical approach in defining the concept was to provide a definition that organizational members could understand and verbalize about in the dissertation research it s e l f . " (1970, p. 61) 62 "there was a remarkable degree of s i m i l a r i t y with regard to the way i n which the concept was ultimately defined." (1970, p. 9). The merits of Duncan's measure lay i n i t s o p e r a t i o n a l i t y and i n i t s a b i l i t y to embrace dimensions from both the macro and micro d e f i n i t i o n s of the concept. In his terminology, the three components which make up or contribute to a decision maker's degree of perceived uncer-ta i n t y are: -(1) the lack of information regarding the environ-mental factors associated with a given decision making s i t u a t i o n (2) not knowing the outcome of a s p e c i f i c decision in terms of how much the organization would lose i f the decision were incorrect (3) not being able to assign p r o b a b i l i t i e s with regard to how environmental factors are going to a f f e c t the success or f a i l u r e of the decision unit in performing i t s function. (Duncan, 1970, p. 10). Components (1) and (2) are s i m i l a r to Lawrence and Lorsch's formulation i n t h e i r emphasis on the general lack of information that prevails i n decision making. Component (3) i s more akin to the micro mathematical d e f i n i t i o n s i n i t s focus upon the decision maker's a b i l i t y or i n a b i l i t y to assign p r o b a b i l i t i e s to events i n the decision making process. However, th i s com-ponent i s broader than the usual mathematical formulations i n that i t assesses not only the decision maker's a b i l i t y to assign p r o b a b i l i t i e s , but also "how confident i s the i n d i v i d u a l about the assignment of the p r o b a b i l i t y . " (Duncan, 1970, p. 10). In Duncan's study, a l l three scales, p a r t i c u l a r l y the f i r s t two, exhibited high r e l i a b i l i t y and homogeneity for "scales of such small s i z e . " (Duncan, 1970, p. 99). 6 3 In t h i s study, the perceived environmental uncertainty questionnaire developed by Duncan was used with minor modifi-cations. ( see Appendix 4). Since Duncan (1970) s p e c i f i c a l l y stated how the scores on the three components of uncertainty were computed, and his basic approach was followed i n the present research, Duncan's formulae are not repeated here. Those readers who are not f a m i l i a r with Duncan's scoring proce-dures are referred to Appendix 5. 2,10 GENERATION OF PROPOSITIONS As noted i n the Introduction, t h i s study was concerned only with examinations of re l a t i o n s h i p s , and not s p e c i f i c a l l y causal ones, between environmental c h a r a c t e r i s t i c s and uncer-t a i n t y . It was merely asserted that where such environmental conditions p r e v a i l , one was l i k e l y to f i n d a high or low degree of perceived uncertainty. Given the present state of our under-standing about the r e l a t i o n s h i p between environmental charac-t e r i s t i c s and uncertainty, and the fact that t h i s study was only c o r r e l a t i o n a l i n nature, i t would be impossible to assert c a u s a l i t y i n either d i r e c t i o n . Before proceeding to s t i p u l a t i o n of the hypotheses r e l a t i n g environmental c h a r a c t e r i s t i c s to the degree of per-ceived environmental uncertainty, i t i s important to point out that the degree of perceived environmental uncertainty experienced by the decision maker i s not so l e l y the function of environmental c h a r a c t e r i s t i c s . As Downey and Slocum (1975, pp. 566-67) noted, " v a r i a b i l i t y i n perceptions of uncertainty are a function of 64 environment, i n d i v i d u a l differences, the var i e t y of an indiv i d u a l ' s experience and s o c i a l expectations." Several researchers (Andrews, 1970; Duncan, 1970; Anderson and Paine, 1975) pointed to the importance of i n d i v i d u a l d i f f e r e n c e s , such as the degree of tolerance for ambiguity, i n t e r n a l and external c o n t r o l , etc. i n determining the degree of perceived environ-mental uncertainty experienced. However, i t was not within the scope of the present study to examine the impact of these other variables and how they i n t e r a c t with each other to produce a r e s u l t i n g degree of perceived uncertainty. Throughout the d e f i n i t i o n of the various environmental dimensions, i t has been postulated that these environmental c h a r a c t e r i s t i c s could influence the amount of perceived environmental uncertainty experienced by the decision maker. I n t u i t i v e l y , the three components comprising the degree of perceived uncertainty are d i f f e r e n t , although related, concepts. However, i n th i s study (see Chapter Four) as well as i n Duncan's (1970), i t was found that a l l three components were highly r e l a t e d . This high i n t e r c o r r e l a t i o n could be due to the res-pondents' i n a b i l i t y to c l e a r l y separate the components, or i t could simply be that the instrument i s not s e n s i t i v e enough to pick up such differences. Given the hypothesized r e l a t i o n s h i p s between environ-mental c h a r a c t e r i s t i c s and perceived environmental uncertainty, the f i r s t four propositions that were investigated i n this study could be stated as follows:-65 Hypothesis 1 : An organizational unit located i n the extreme north-west corner c e l l ( i . e . low complexity, high routineness, low and stable change rate, and whose transactions are- p r i m a r i l y with organized sectors on a d i r e c t l y related basis) would experience the lowest amount of uncertainty. Hypothesis 2: An organizational unit located i n the extreme north-east corner c e l l ( i . e . high complexity, low routineness, low and stable change rate, and whose transactions are p r i m a r i l y with un-organized sectors on an i n d i r e c t l y r e l a t e d basis) would experience a moderately high degree of uncertainty. Hypothesis 3: An organizational uni t located i n the extreme south-west corner c e l l ( i . e . low complexity, high routineness, high and unstable change rate, and whose transactions are pr i m a r i l y with organized sectors on a d i r e c t l y related basis) would experience a moderately low degree of uncertainty. Hypothesis 4: An organizational unit located i n the extreme south-east corner c e l l ( i . e . high complexity, low routineness, high and unstable change rate, and whose transactions are p r i m a r i l y with un-organized sectors on an i n d i r e c t l y related basis) would experience the highest degree of uncertainty. 66 It should be noted that one would n a t u r a l l y expect the differences i n the degree of perceived environmental uncertainty to be most marked between organizational units located i n the extreme north-west and south-east corner c e l l s . The differences i n perceived environmental uncertainty between organizational units located i n the extreme north-east and south-west corners would be more subtle. An organizational unit located i n the extreme north-east corner c e l l would be operating i n an environ-ment that i s highly complex, non-routine, whose transactions are predominantly with unorganized sectors on an i n d i r e c t l y r e l a t e d basis, but the change rate i s low and stable. On the other hand, an organizational unit located i n the extreme south-west corner c e l l would be operating i n an environment that i s low i n complexity, highly routine, whose transactions are predominantly with organized sectors on a d i r e c t l y related basis, but where the change rate i s high and unstable. 2.11 ORGANIZATIONAL VARIABLES In order to cope with environmental uncertainty, the manager has to adapt the in t e r n a l structuring of the unit, and adopt strategies for monitoring or coping with the environment. As J.D. Thompson stated: "... we w i l l conceive of complex organizations as open systems, hence indeterminate and faced with uncertainty, but at the same time as subject to c r i t e r i a of r a t i o n a l i t y and hence needing determinateness and c e r t a i n t y . " (1967, p. 10). Internal structuring and planned strategies are some of the means by which organizations seek to approach some 67 degree of r a t i o n a l i t y . The success, and indeed survival of the unit i s dependent upon the choice and adoption of structures and strategies suitable for the p a r t i c u l a r s i t u a t i o n with which i t i s confronted. It i s argued that the environment confronting organi-zations i n d i f f e r e n t industries and units within the same organization do d i f f e r , although i n varying degrees and along d i f f e r e n t dimensions. Given this premise, then there i s no one best way of structuring internal a c t i v i t i e s and operations, and no one best strategy that would be applicable across a l l units and i n d u s t r i e s . As Burns and Stalker (1961> P- 125) noted: "The beginning of administrative wisdom i s the awareness that there i s no one optimum type of management system." This i s i n c o n t r a d i s t i n c t i o n to the approach previously advocated by s c i e n t i f i c management and the early human rel a t i o n s schools which sought to prescribe the "one best way". In the past decade or so, the trend has been towards the use of structure as a dependent variable which i s developed i n response to environmental constraints. In essence, t h i s c a l l s for a contingency approach to handling environmental uncertainty. Most organizations a v a i l themselves of one of two strategies for dealing with environmental uncertainty. One of these i s passive and involves adaptation. The other i s non-passive and involves a c t i v e l y managing or monitoring the environ-ment to reduce the l e v e l of uncertainty. No one organization can resort to either strategy exclusively a l l the time. Under 68 some circumstances where the environment f a l l s into Emery and -T r i s t ' s category of "turbulent f i e l d " , " i n d i v i d u a l organizations, hottfever large, cannot expect to adapt successfully simply through t h e i r own d i r e c t actions." (Emery and T r i s t , 1965, p. 28). This study only dealt with the way in which organi-zational units sought to adapt to environmental demands by means of i n t e r n a l structuring, time perspective taken i n plan-ning and frequency of changes/modifications to plans and p o l i c i e s . Burns and Stalker (1958), Woodward (1965), Thompson (1967) and Perrow (1970), to c i t e only a few, have presented evidence to support their contention that under r e l a t i v e l y stable conditions, where the degree of perceived environmental uncertainty i s low, a more r i g i d or mechanistic structure would be more appropriate. On the other hand, under conditions of high uncertainty, a more f l e x i b l e or organic structure would be more suitable. Duncan's three basic components co n s t i t u t i n g the uncertainty concept are a l l " e x p l i c i t l y or i m p l i c i t l y grounded i n the concept of information as a counterpart of uncertainty." (Downey and Slocum, 1975, p. 570). Thus, i n order to deal with environmental uncertainty, the organizational u n i t was hypothe-sized to structure i t s i n t e r n a l components i n such a manner as to f a c i l i t a t e the a c q u i s i t i o n and dispersion of information needed for decision making and functioning. The various elements of i n t e r n a l structuring that have frequently been investigated by researchers are standardization, formalization, p a r t i c i p a t i o n in decision making or decentralization, and role s p e c i a l i z a t i o n . 69 (Hage and Aiken, 1967; Pugh et a l , 1968; Burns and Stalker, 1961). A l l or most of these variables have been used at d i f f e r e n t times in the i d e n t i f i c a t i o n of organic or mechanistic structures. It should be noted that the organizational structure implemented by a given unit could not be assumed to be constant and unchanging over time. In his study, Duncan went beyond the usual contingency approach of i d e n t i f y i n g d i f f e r e n t types of structures for d i f f e r e n t functional u n i t s . He tested and indeed found some support for his hypothesis that "the same organizational unit may implement d i f f e r e n t organizational structures at d i f f e r e n t points i n time .... These d i f f e r e n t structures may be implemented in making d i f f e r e n t types of decisions to gather and process the necessary information to adapt e f f e c t i v e l y to the p a r t i c u l a r degrees of perceived uncertainty associated with the d e c i s i o n . " (Duncan, 1970, p.26). In this study, however, the more t r a d i t i o n a l approach was followed by examining the predominant structure that prevailed within a given functional u n i t . Thus an organizational unit that was exposed to a very high degree of environmental uncertainty would be more l i k e l y to adopt a more f l e x i b l e or organic structure to deal with the high uncertainty and r e s u l t i n g high information demands. Standardization and formalization of rules and procedures would be kept to a minimum because each new case or s i t u a t i o n would be assumed to be so d i f f e r e n t that routines and procedures which had been t r i e d out before are rendered inapplicable for the present circumstances. Heydebrand (1973, p. 27 f f ) i n s i s t e d that i t i s important to make a d i s t i n c t i o n between two types of r u l e s : operative and regulative. "Operative" rules are "usually an i n t e g r a l part of job descriptions, blue-prints for s p e c i f i c technical operations (e.g. how to assemble a c e r t a i n machine, or check i t s performance, e t c . ) , and generally of f u n c t i o n a l l y s p e c i a l i z e d a c t i v i t i e s within a larger system of d i v i s i o n of labour. Such rules are t y p i c a l l y embedded already i n the nature of the production process, i . e . i n the task structure." "Regulative rul e s " , on the other hand, are generally "seen as the core element of bureaucratic red tape (and) r e f e r to highly formalized procedures of legal-bureau-c r a t i c administration. Regulative rules are thus e x p l i c i t l y part of the organizational control structure." Thus, i n units which employ professional p r a c t i t i o n e r s or craftsmen ( s p e c i a l i s t s ) , operative rules may be prevalent. These "may have i n t e r n a l i z e d highly s p e c i f i c operative rules as well as standards of workmanship and quality without engaging i n 'bureaucratic' behaviour. S i m i l a r l y , the 'professional' administrator may have enough d i s c r e t i o n and decision making autonomy to be ' f l e x i b l e ' about the l e g a l i s t i c a p p l i c a t i o n of regulative r u l e s . " (Heydebrand, 1973, p. 28). In t h i s study, the degree of standardization and formalization of rules and procedures, as they appeared i n mechanistic structures, only applied to regulative rules and not to operative ones. Under conditions of high perceived environmental uncertainty, greater p a r t i c i p a t i o n in decision making i s encouraged because the novelty of the s i t u a t i o n c a l l s for v a r i e t y i n approaches. Hage and Aiken (1969), for instance, found that the product-moment c o r r e l a t i o n between degree of routineness of the work and the degree 'of p a r t i c i p a t i o n i n organizational decisions was -.72, i n d i c a t i n g that the more routine and hence more certa i n the work performed by the organization, the less broadly based was decision making. (Also see L e a v i t t , 1951; Shaw, 1954). Thompson (1967, pp. 11-13) argued that one of the ways by which organizations could hope to approach some degree of r a t i o n a l i t y i n t h e i r operations would be by s p e c i a l i z a t i o n of roles and functions. Thus, organizations subdivide into d i f f e r e n t functional departments and d i f f e r e n t departments employ s p e c i a l i s t s , in the hope that t h e i r greater expertise in a p a r t i c u l a r f i e l d w i l l help to reduce the amount of uncertainty. Child (1973, p. 178) for example, hypothesized that s p e c i a l i z a t i o n i s a function of the task and technology of the organization. Conversely, an organizational unit that i s confronted with a low degree of perceived environmental uncertainty could resort to a more mechanistic structure because the information gathering and processing needs for decisions are assumed or expected to be minimal. The decisions that w i l l a r i s e i n the unit are assumed to be f a i r l y routine and information on how to handle and dispose of such cases i s assumed to be well-known or e a s i l y accessible. Thus, the establishment and imposition of rules and procedures through standardization and formalization 72 are possible. In addition, the extra amount of time and e f f o r t that i s involved i n p a r t i c i p a t o r y decision making i s assumed to be unnecessary and uncalled for because the solution i s thought to be f a i r l y well-known. Also, where decisions and procedures are generally of a routine nature, s p e c i a l i z a t i o n needs are reduced to a minimum. It should not be construed, however, that a l l organi-zations or organizational units f a l l into one of either extreme forms. Burns and Stalker (1961) noted that neither the mechanistic nor the organic types exist i n pure form i n the r e a l world, but rather organizations, or organizational units i n t h i s instance, f a l l along a continuum bounded by these two extreme forms. It was also hypothesized that the amount of perceived environmental uncertainty confronting the organizational unit also influenced the time perspective taken i n planning and the frequency of changes to plans and programmes for that p a r t i c u l a r u n i t . Departments confronted with a f a i r l y stable and c e r t a i n environment were able to adopt longer-range planning strategies with ease, and with few modifications along the way. On the other hand, organizational units operating i n a highly unstable and uncertain environment were forced to resort to shorter-range planning strategies, and we would expect major and f r e -quent modifications as changes intrude upon plans. Thus the dependent variables investigated i n this study were: -(1) The extent of structuring of operating a c t i v i t i e s within 73 the u n i t . This was measured by the degree of standardization, formalization, role s p e c i a l i z a t i o n and amount of p a r t i c i p a t i o n i n decision making. In t h i s study, standardization was defined as "the extent to which a c t i v i t i e s and'roles are subject to procedural r u l e s " ; formalization was used to indicate the extent to which "communications and procedures in a (department) were written down and f i l e d away"; role s p e c i a l i z a t i o n r e f e r r e d to the " d i v i s i o n of labour within the department"; and d e c e n t r a l i -zation in decision making referred to the actual amount of p a r t i c i p a t i o n i n decision making that was allowed i n the u n i t . Hage and Aiken's (1967) instrument for measuring job c o d i f i c a t i o n and rule observation, which could be used as an index of standardization, was adapted for use i n this study, (see Schedule I I , Part B, Appendix 1). Pugh et a l (1968) have developed f a i r l y comprehensive measures for r o l e s p e c i a l i z a t i o n and formalization. Their approach was adopted i n t h i s study with s l i g h t modifications, (see Schedule II, Parts A and C, Appendix 1). The operationalization of the "degree of decen-t r a l i z a t i o n i n decision making" variable developed by the Institute of Social Research, University of Michigan, was used as they were more appropriate for the purposes of the present study, (see Schedule II, Part D, Appendix 1). (2) The time perspective taken by the d e c i s i o n u n i t under consideration i n planning for i t s future courses of a c t i v i t i e s . This variable was tapped by Question 1 i n Schedule II, Part E in Appendix 1. 74 (3) The frequency of changes to e x i s t i n g p o l i c i e s and programmes over the course of such p o l i c i e s and programmes. This l a s t v a r i a b le was tapped by Question 2 i n Schedule I I , Part E i n Appendix 1. Thus, the second set of hypotheses that was i n v e s t i -gated i n this study sought to examine the re l a t i o n s h i p s between environmental c h a r a c t e r i s t i c s , on the one hand, and organizational var i a b l e s , on the other. S p e c i f i c a l l y , they were:-Hypothesis 5: An organizational unit located i n the extreme north-west corner c e l l would most l i k e l y possess a mechanistic structure and engage i n long-range planning with few modifications to plans along the way. Hypothesis 6: An organizational unit located i n the extreme north-east corner c e l l would most l i k e l y possess a more f l e x i b l e structure and engage i n long-range planning with few modifications to plans. Hypothesis 7: An organizational unit located i n the extreme south-west corner c e l l would most l i k e l y possess a mechanistic structure and engage i n short-range planning with more changes to plans. Hypothesis 8: An organizational unit located i n the extreme south-east corner c e l l would most l i k e l y possess an organic structure, engage in short-range planning with frequent and major modifications as changes intrude upon plans. 75 Again, the d i f f e r e n c e s i n departmental s t r u c t u r e , time p e r s p e c t i v e taken i n p l a n n i n g and frequency o f changes to plans would n a t u r a l l y be more d i s t i n c t and s i g n i f i c a n t between o r g a n i -z a t i o n a l u n i t s l o c a t e d i n the extreme north-west and south-east c o r n e r c e l l s ; w h i l e the d i s t i n c t i o n should be more s u b t l e between those o r g a n i z a t i o n a l u n i t s l o c a t e d i n the extreme n o r t h -east and south-west corner c e l l s . To f u r t h e r e l a b o r a t e and c l a r i f y the r e l a t i o n s h i p s between environmental c h a r a c t e r i s t i c s and o r g a n i z a t i o n a l v a r i a b l e s , s i z e and p e r c e i v e d environmental u n c e r t a i n t y were in t r o d u c e d as t e s t f a c t o r s i n t h i s study. K e n d a l l and L a z a r s f e l d (1950) i d e n t i f i e d the r o l e o f t e s t f a c t o r s ( t ) i n s o c i a l r e s e a r c h : T e s t f a c t o r s p l a y a c r u c i a l r o l e i n s o c i a l r e s e a r c h .... A n a l y s i s of survey m a t e r i a l means e s s e n t i a l l y a c l a r i f i c a t i o n o f the r e l a t i o n s h i p s between two v a r i a b l e s i n the l i g h t of one or more a d d i t i o n a l f a c t o r s . (1950, p. 167) Although the concept of t e s t f a c t o r s (which c o u l d be used as i n t e r v e n i n g or moderator v a r i a b l e s ) i s not new, t h e r e seems to be a g r e a t d e a l of c o n f u s i o n s u r r o u n d i n g the d e f i n i -t i o n , d i s t i n c t i o n s and use of such v a r i a b l e s . Zedeck (1971) i d e n t i f i e d some o f the problems with the use of "moderator" v a r i a b l e s and noted t h e i r d i f f e r e n t i a l usage i n r e s e a r c h : The term moderator v a r i a b l e i s used to d e s c r i b e the n o t i o n o f " p o p u l a t i o n c o n t r o l v a r i a b l e " , "subgroup-ing v a r i a b l e " , " r e f e r r e n t v a r i a b l e " , " p r e d i c t a b i l i t y v a r i a b l e " , " m o d i f i e r v a r i a b l e " , and "homologizer v a r i a b l e " . In a d d i t i o n , Saunders 1 (1955) o r i g i n a l d e f i n i t i o n o f t h e t e r m m o d e r a t o r v a r i a b l e has been g e n e r a l i z e d by Banas t o i n c l u d e q u a l i t a t i v e as w e l l as q u a n t i t a t i v e v a r i a b l e s . The procedures used f o r the above concepts are d i f f e r e n t and, c o nsequently, o f t e n l e a d t o d i s s i m i l a r r e s u l t s . (Zedeck, 1971, pp. 295-296). 76 Because o f the m u l t i p l e u s a g e s , mis-uses and abuse o f "moderator" and " i n t e r v e n i n g " v a r i a b l e s , I s h a l l d i g r e s s f o r a moment from the main t o p i c under i n v e s t i g a t i o n and be s p e c i f i c about e x a c t l y how s i z e and p e r c e i v e d e n v i r o n m e n t a l u n c e r t a i n t y were u t i l i z e d as t e s t f a c t o r s i n t h i s s t u d y . K e n d a l l and L a z a r s f e l d (1950) i d e n t i f i e d t h r e e ways i n w h i c h t e s t f a c t o r s c o u l d be used t o e l a b o r a t e the r e l a t i o n s h i p s between the s e t s o f independent and dependent v a r i a b l e s . The f i r s t two t y p e s o f e l a b o r a t i o n were c a l l e d the "M t y p e " . The M type o f e l a b o r a t i o n i s used where "one i s i n t e r e s t e d i n n o t i n g whether the p a r t i a l r e l a t i o n s h i p s become s m a l l e r t h a n t h e o r i g i n a l r e l a t i o n s h i p s . " (p. 157). The M t y p e o f e l a b o r a t i o n c o u l d be s u b d i v i d e d i n t o two c a t e g o r i e s depending upon th e p l a c e -ment o f the t e s t f a c t o r . Where the t e s t f a c t o r i s p l a c e d a f t e r the independent v a r i a b l e , x, the t e s t f a c t o r i s c a l l e d an i n t e r v e n i n g v a r i a b l e . " I n M t y p e , i f a f t e r i n t r o d u c i n g the t e s t f a c t o r , the p a r t i a l r e l a t i o n s h i p s between x and y i s s m a l l e r on the a v e r a g e , then we say t i n t e r p r e t s the o r i g i n a l  c o r r e l a t i o n s . (emphasis m i n e ) " ( p . 155). Where the t e s t f a c t o r p r e c e d e s the independent v a r i a b l e , t i s c a l l e d an a n t e c e d e n t v a r i a b l e and i s used f o r " e x p l a n a t i o n o r c o n t r o l o f s p u r i o u s f a c t o r s " . The t h i r d type o f e l a b o r a t i o n i s known as the P type (pp. 164-5). Under t h i s type o f e l a b o r a t i o n , "we ask o u r s e l v e s what v a r i a b l e s m ight p r o v i d e t h e l i n k between the 'cause' and the ' e f f e c t ' or what c o n d i t i o n s might show the o r i g i n a l r e l a t i o n s h i p t o be even more pronounced than we o r i g i n a l l y saw i t to be." 77 The status of size as a predictor of organizational variables i s by no means clear and d e f i n i t i v e . On the one hand, there are t h e o r i s t s and researchers who argue for the overriding importance' of size i n determin-ing structure. Weber (1958, p. 211) for example, commented on the "role of sheer quantity as a leverage for the bureau-c r a t i z a t i o n of a s o c i a l structure." Pugh et al (1969) con-cluded that "size causes structuring through i t s e f f e c t on intervening variables such as the frequency of decisions and s o c i a l c o n t r o l " . On the other hand, there are researchers who argue that other variables, l i k e technology for instance, are more s a l i e n t determinants of structure. Woodward (1965), Perrow (1970), and A l d r i c h (1972) a l l made a case for the importance of technology. After a rather comprehensive review of the l i t e r a t u r e published on the topic of size as i t r e l a t e s to structure, Hall (1972) was of the opinion that: There are no 'laws' regarding size and other organi-zational c h a r a c t e r i s t i c s ... Size, while related to some important c h a r a c t e r i s t i c s , i s not as important as other factors i n understanding the form organi-zations take. When size (and growth) i s taken i n conjunction with technological and environmental fac t o r s , predictions regarding organizational struc-tures and processes can be made. (p. 139) One possible reason for such diverse findings could be attributed to the fact that size was often used as a predictor variable i n most previous research. From H a l l ' s statement above, we could see that size could not and should not be used as a "simple predictor". Rather i t should be examined i n conjunction with other vari a b l e s . 78 In t h i s study, size was used as a test factor under the P type of elaboration. As pointed out e a r l i e r , the author was not concerned with the assertion of causal relationships i n this study. Rather the objective here was to examine how the o r i g i n a l r elationships between environmental c h a r a c t e r i s t i c s and organizational variables would change when s i z e , as measured by the number of people i n the department, was held constant. Thus the next hypothesis that was investigated was stated as:-Hypothesis 9: Size changes the degree of relationships between environmental c h a r a c t e r i s t i c s and organizational v a r i a b l e s . In other words, the relationships between environmental properties and organi-zational c h a r a c t e r i s t i c s i s a conditional one, depending on the size of the unit under in v e s t i g a t i o n . The l a s t hypothesis that was investigated i n th i s study used perceived environmental uncertainty as an intervening variable under the M type of elaboration. S p e c i f i c a l l y , i t stated that: Hypothesis 10: Uncertainty interprets the relationships between environmental c h a r a c t e r i s t i c s and organizational v a r i a b l e s . That i s , i f we hold perceived environmental uncertainty constant, the p a r t i a l r e l a t i o n s h i p s between environmental c h a r a c t e r i s t i c s and organi-zational variables would decrease, because i t i s only when uncertainty is perceived and recognized that there would be subsequent changes i n the structure. 79 Although the l a s t hypothesis was s t a t e d i n such a manner as to suggest d i r e c t i o n o f c a u s a l l i n k a g e s between environmental c h a r a c t e r i s t i c s , p e r c e i v e d environmental u n c e r t a i n t y and o r g a n i -z a t i o n a l s t r u c t u r e , i t should not be c o n s t r u e d as such. The three dependent v a r i a b l e s that were i n v e s t i g a t e d i n t h i s study c o u l d v e r y w e l l i n f l u e n c e the amount of u n c e r t a i n t y e x p e r i e n c e d by the d e c i s i o n maker. One o f the v a r i a b l e s examined under departmental s t r u c t u r e was r o l e s p e c i a l i z a t i o n . T h i s component, f o r example, c o u l d a c t u a l l y lower the amount of p e r c e i v e d environmental u n c e r t a i n t y experienced by the d e c i s i o n maker. I f there was a g r e a t d e a l o f r o l e s p e c i a l i z a t i o n i n a p a r t i c u l a r department, i . e . more employees were as s i g n e d s p e c i f i c f u n c t i o n s , these employees co u l d more e f f i c i e n t l y gather i n t e l l i g e n c e about environmental c o n d i t i o n s and demands. Consequently, the per-c e i v e d environmental u n c e r t a i n t y p e r t a i n i n g to t h a t s p e c i f i c f u n c t i o n or a c t i v i t y f o r the department as a whole would be lower than i t would have been i f no employee was a s s i g n e d to s o l e l y perform that f u n c t i o n . The model t h a t was i n v e s t i g a t e d i n t h i s study c o u l d be summarized by means o f the diagram on the f o l l o w i n g page. Figure 3: Model Hypothesizing Relationships between Environmental  C h a r a c t e r i s t i c s and Organizational Variables Environmental C h a r a c t e r i s t i c s P l u r a l i s m Environmental ) Complexity Dependency ) Routine vs. Non-routine Organized vs. Unorganized Sectors D i r e c t l y vs. I n d i r e c t l y Related Sectors Change Rate ) S t a b i l i t y of ) Movement Change ) Small Size Perceived Environmental Uncertainty: lack o f information not knowing outcome i n a b i l i t y to assign p r o b a b i l i t i e s Large Size Departmental Structure: . Standardization . Formalization . Role S p e c i a l i z a t i o n . P a r t i c i p a t i o n i n Decision Making Time P e r s p e c t i v e T a k e n i n  P l a n n i n g : Short-range Medium-range Long-range 00 o 81 2,12 SUMMARY This chapter presented the major concepts and proposi-tions that were investigated i n this study. Major departments i n organizations, rather than organi-zations as e n t i t i e s , were used as the units of analysis. The p r i n c i p a l reason for so doing was to minimize the "wash-out" e f f e c t . Environmental c h a r a c t e r i s t i c s were used as the indepen-dent variables in this study. These environmental dimensions were operationalized along the following l i n e s : -(1) Complexity was defined in terms of:-(a) Pluralism of the int e r n a l and external environments. (b) Degree of environmental dependency or interdependency. (2) Routineness of Problem/Opportunity States dimension was based on:-(a) an examination of the discrepancy between environmental demands and the organizational unit's capacity in terms of technological know-how, c a p i t a l and other ph y s i c a l / material resources, including personnel. (b) an inves t i g a t i o n of the amount of search e f f o r t undertaken by the focal unit to gather c r i t i c a l information to c l a r i f y the decision problem at hand. (c) frequency of routine procedures. (3) Organized sectors dimension was defined i n terms of whether the sectors that the f o c a l unit has to take into considera-t i o n i n i t s functioning are organized or unorganized. "Organized"was defined i n terms of whether the sector could introduce r e a l and d i r e c t threats to or r e s t r a i n t s upon the a c t i v i t i e s of the focal unit. ( 4 ) D i r e c t l y Related sector dimension was defined i n terms of whether the focal unit's dealings with a sector were d i r e c t , or whether they were carried out through an intermediary or intermediaries. (5) The movement c h a r a c t e r i s t i c took into consideration two sub-dimensions:-(a) The change rate which included the frequency and magnitude of changes to goals, p o l i c i e s and programmes in those sectors which are relevant to the f o c a l unit's functioning and decision making. (b) The s t a b i l i t y of change or the p r e d i c t a b i l i t y of change patterns i n each of these relevant sectors. Organizational variables were used as dependent variables The three dependent variables investigated i n t h i s study were:-(1) Departmental structure which was measured i n terms of the following v a r i a b l e s : formalization, role s p e c i a l i z a t i o n , standardization, and p a r t i c i p a t i o n in decision making. (2) Time perspective i n planning. (3) Frequency of changes to plans and programmes over the l i f e -time of such plans and programmes. Size and uncertainty were used as test factors to elaborate the relationships between environmental c h a r a c t e r i s t i c s on the one hand, and organizational v a r i a b l e s , on the other. Size was defined i n terms of the number of employees i n the 83 department. Duncan's operationalization of the perceived environ-mental uncertainty concept was used. Under Duncan's formulation, uncertainty was defined i n terms of three components: (a) lack of information (b) not knowing outcome and (c) i n a b i l i t y to assign p r o b a b i l i t i e s . The hypotheses that were investigated i n this study were:-1: An organizational unit located in the extreme north-west corner c e l l would experience the lowest amount of uncertainty. 2: An organizational unit located i n the extreme north-east corner c e l l would experience a moderately high degree of uncertainty. 3: An organizational unit located in the extreme south-west corner c e l l would experience a moderately low degree of uncertainty. 4: An organizational unit located in the extreme south-east corner c e l l would experience the highest degree of uncertainty. 5: An organizational unit located in the extreme north-west corner c e l l would most l i k e l y possess a mechanistic structure and engage in long-range planning with few modi-f i c a t i o n s to plans along the way. 6: An organizational unit located i n the extreme north-east corner c e l l would most l i k e l y possess a more f l e x i b l e structure and engage in long-range planning with few modifications to plans. 7: An organizational unit located i n the extreme south-west corner c e l l would most l i k e l y possess a mechanistic structure and engage i n short-range planning with more changes to plans. An organizational unit located in the extreme south-east corner c e l l would most l i k e l y possess an organic structure, engage i n short-range planning with frequent and major modifications as changes intrude upon plans. Size changes the degree of relationships between environ-mental c h a r a c t e r i s t i c s and organizational v a r i a b l e s . Uncertainty interprets the relationships between environ-mental c h a r a c t e r i s t i c s and organizational v a r i a b l e s . 85 CHAPTER THREE SAMPLE AND METHODOLOGY This chapter describes the sample and method used to c o l l e c t data for the present study. 3.1 SAMPLE SELECTION Since major departments were used as the units of analysis and i t was assumed that there was considerable differences i n environmental c h a r a c t e r i s t i c s between depart-ments i n a given organization, the organizations that were selected for study had to be f a i r l y large. Many of the large organizations located i n the Lower Mainland of B r i t i s h Columbia are regional o f f i c e s or plants of organizations whose headquarters are located either else-where in Canada or i n the United States. In order to achieve some v a r i a t i o n i n the sample, q u a l i f y i n g s i z e was defined i n terms of: (a) number of employees -- a minimum of 500 employees could be used as a cut-off point; or (b) assets of parent company; or (c) d i v e r s i t y of products and/or services rendered by the company. The rationale for including the l a t t e r two c r i t e r i a was that regional plants of o f f i c e s of big i n d u s t r i a l corporations do not normally employ many people. I f these were omitted, i t might not be possible to find a sample which varied s i g n i f i c a n t l y in terms of d i f f e r i n g environmental c h a r a c t e r i s t i c s , organizational structure, goals and types of a c t i v i t i e s . 86 A l l the departments selected for study met the following two c r i t e r i a as well:-(1) Each performed a function that was d i s t i n c t l y d i f f e r e n t from that c a r r i e d out by the rest of the organization --for example, sales, production, research and development departments would be d i s t i n c t i v e l y d i f f e r e n t units. (2) Each department was f a i r l y autonomous. The l e v e l of auto,-nomy was ascertained by asking the f o c a l u n i t whether i t had the authority to make c e r t a i n decisions of a pre-sp e c i f i e d s i g n i f i c a n c e . These included budgetary inde-pendence, provision for a l t e r i n g p o l i c i e s and strategies for pursuing departmental goals, etc. Inkson, Pugh and Hickson (in Price, 1972, p. 37 f f ) developed a measure for determining organizational autonomy. Their instrument was adapted for measuring organizational unit autonomy. (See Schedule I, Appendix 1). The basis of se l e c t i o n was non-random i n view of the lim i t e d number of firms i n the Lower Mainland area which f i t t e d the requirements of the study. 3.2 COMPOSITION OF TOTAL SAMPLE (. A l l firms included i n the study, both those in the pre-te s t and actual sample, met either one or a l l three c r i t e r i a pertaining to s i z e . Of the twenty-one companies studied, seven of them were among B r i t i s h Columbia's ten largest companies i n terms of assets, revenues and net incomes. (1975 f i g u r e s ) . 87 The sample included business and i n d u s t r i a l firms that were engaged in the production of a v a r i e t y of products and services. A breakdown of the a c t i v i t i e s engaged by the p a r t i c i pating companies i s as follows:-Type of A c t i v i t y No. of Companies Forestry 5* Misc. Manufacturing 4 Mining 3 Public U t i l i t i e s 3 Realty 2 Engineering Service 1 Department Store ' 1 F i n a n c i a l I n s t i t u t i o n 1 Fishery 1 Total 21 Given the fact that B r i t i s h Columbia i s not the i n d u s t r i a l centre i n Canada ( a s compared to Toronto and Montreal), the firms that were used i n the study represented as much va r i e t y as any researcher could reasonably obtain i n t h i s region. As pointed out in Chapter Two, departments rather than organizations as e n t i t i e s were used as the units of analysis. An analysis of covariance was performed across depart-ments in an organization to determine whether there were s i g n i f i -cant differences between them. The s i g n i f i c a n c e values associated with the three organizational variables investigated i n t h i s study were: departmental structure (.017), time perspective taken in planning (.087) and frequency of changes to plans (.054). These figures provide j u s t i f i c a t i o n for using departments, rather than organizations, as units of analysis. * Forestry i s the top ranking industry i n B r i t i s h Columbia. This accounts f o r the r e l a t i v e l y large number of firms (23.8%) included i n the sample which f e l l i nto t h i s category. 88 The environment confronting d i f f e r e n t departments i n an organization varied as evidenced by the f a c t that departments within a given company were assigned to d i f f e r e n t c e l l s i n the Jurkovich 64-cell matrix. In some instances, the differences were very marked. For example, a Finance Department of a company may f a l l into a c e l l 1 type of environment, while the Research and Development Department of the same company would be assigned to a c e l l 62 type of environment. A l l the departments included i n the study s a t i s f i e d the two se l e c t i o n c r i t e r i a pertaining to independence of functional a c t i v i t y and departmental autonomy. Each performed a function that was d i s t i n c t l y d i f f e r e n t from that c a r r i e d out by the rest of the organization. Results were obtained from 64 departments i n 21 d i f f e r e n t companies. A breakdown of the major a c t i v i t i e s performed by these departments i s as follows:-Functional A c t i v i t y No. of Departments Marketing 18 Finance 12 Operations/Planning 10 Personnel 9 Production 8 Research and Development 6 Legal Counsel 1 Total 64 Although i t would be more desirable to obtain an equal number of departments engaged i n each of the a c t i v i t i e s , given the fact that (i) the study involved considerable time and cooperation on the part of p a r t i c i p a t i n g executives, and ( i i ) the 89 organizational chart of the organizations varied considerably, i t was not possible to achieve such an objective. The organizational units studied were also checked for departmental autonomy. The adapted version of Inkson et a l ' s instrument consisted of thirteen decision issues. Each respon-dent received a score of 1 when he indicated that the "authority to decide" on that p a r t i c u l a r issue resided within his own department. The scores for each respondent were summed. The higher the score, the more decisions made within the department, or the more autonomous the u n i t . In this study, the range was 7 to 13 with a mean of 9.5. This indicated that a l l the depart-ments included i n the study were f a i r l y autonomous. 3,3 METHOD OF DATA COLLECTION As mentioned i n Chapter One, operational measures for many of the variables that were studied were non-existent. For this reason, a semi - structured questionnaire format was used for c o l l e c t i n g information on many of these variables along with some of the more standardized items which have been used in the f i e l d before by other researchers. The questionnaire was f i l l e d out by the senior executive i n each of the organizational units studied. The questions were developed such that only the most senior man i n the department would have s u f f i c i e n t knowledge and insight into the areas probed i n t h i s study. The people who reported d i r e c t l y to him were not included in the sample 90 for two reasons:-(1) In large organizations, each i n d i v i d u a l who reports d i r e c t l y to the senior departmental executive i s usually assigned to one p a r t i c u l a r area of s p e c i a l t y . Thus, he would not have the perspective necessary to answer the questions posed i n this study. (2) The organizational or departmental charts varied from company to company. In some instances, there were as many as six or seven people reporting d i r e c t l y to the senior departmental executive, while i n other instances, there were only two i n d i v i d u a l s . As noted e a r l i e r , semi-structured questionnaires were used. The advantages of using semi-structured questionnaires were primarily two-fold:-(1) The interviewer was able to c l a r i f y any points which a respondent raised i n the context of a s p e c i f i c area of i n t e r e s t . (2) Respondents f e l t free to add information which they thought was relevant to the problem under study. It i s stressed again that some of the concepts under in v e s t i g a t i o n were vague and had not been operationally defined or empirically measured i n the f i e l d before. The free probing and discussion provided by a semi-structured interview format not only ensured more accurate communication of both question and response, but also aided the detection and i d e n t i f i c a t i o n of "problem questions" i n the instrument i t s e l f -- questions . and issues that subjects experienced some d i f f i c u l t y i n respond-ing to and/or understanding. This permitted modifications to the questionnaire which, hopefully, resulted i n i t s becoming a more r e l i a b l e and v a l i d instrument for future research purposes. One of the chief disadvantages i n using semi-structured questionnaires was that i t was more d i f f i c u l t to code responses. However, many of the problems i n t h i s respect were surmounted by care i n coding and by ensuring consistency by having one researcher code a l l responses. These precautionary measures at l e a s t ensured greater homogeneity and uniformity i n the coding of responses. 3.4 PERCEPTUAL VS. OBJECTIVE MEASURES As i n the measurement of other concepts in organizational theory and behaviour, researchers are divided as to whether perceptual or objective measures should be used for the phenomena under in v e s t i g a t i o n . Objective measures have the obvious v i r t u e s of accuracy and r e l i a b i l i t y because they e x i s t independently of the i n d i v i d u a l ' s perceptions. However, in instances where objective data are not available or measurable, or where sub-j e c t i v e data appear to be more relevant and suitable for the concepts under study, then researchers must resort to perceptual measures. The concepts of the environment and uncertainty as understood and used i n this study f a l l into t h i s l a t t e r category. Most researchers who have explored the concepts of the environment and uncertainty as they a f f e c t decision making have i n fact argued for the use of perceptual measures. Koffka (1935) 92 was of the opinion that behaviour could best be understood by-reference to the behavioural environment, or the environment as perceived and reacted to by i n d i v i d u a l s , rather than by reference to the objective and physical environment. This i s reasonable in that the environment i s viewed as a set of s t i m u l i which i s devoid of meaning or "information value" u n t i l perceived by an i n d i v i d u a l . In the terminology of Secord and Backman (1964), perception i s the process whereby in d i v i d u a l s "organize and evaluate s t i m u l i . " Child (1972) suggested that perceptions are responsible for the st r a t e g i c choices which managers make in f i t t i n g the organization to i t s environment. Thus, Downey and Slocum (1975, p. 567), af t e r reviewing the measures of uncertainty currently in use i n empirical research, concluded that "uncertainty, as a counterpart to information, should be considered as perceptually based." Further, R e s t r i c t i o n of uncertainty to a perceptual concept does contain the inherent problem that variations in uncertainty are related to c h a r a c t e r i s t i c s of the i n d i v i d u a l . It does not however, preclude the expectation that uncertainty i s also related to environmental a t t r i b u t e s . S p e c i f i c attributes of physical environments tend to e l i c i t s i m i l a r per-ceptions of uncertainty by i n d i v i d u a l s . These simi l a r perceptions of uncertainty by i n d i v i d u a l s , however, stem from s i m i l a r i t i e s i n i n d i v i d u a l perceptual processes rather than from the existence of uncertainty as an attribute of the physical environment. (Downey and Slocum, 1975, pp. 567-568) Another reason for the use of perceptual measures was that the uncertainty concept was u t i l i z e d i n a contingency approach framework i n the present study. "... i f uncertainty i s to be a useful construct i n contingency theory, o p e r a t i o n a l i -zations must r e f l e c t this notion." (Downey and Slocum, 1975, p. 570). 93 Most researchers who advocate the use of perceptual measures i n i d e n t i f y i n g environmental properties are not postu-l a t i n g that environments do not e x i s t . Rather, they are arguing that the examination of objective properties i n i s o l a t i o n i s e s s e n t i a l l y meaningless and uninterpretable i n the context of organizational functioning. As Forehand and Gilmer (1964, p.365) put i t : "Studies that examine in i s o l a t i o n s p e c i f i c objective properties of an organization leave unanswered the questions of how the properties are related to one another and how they are related to useful constructs of organizational functioning." To overcome th i s l i m i t a t i o n , i t would be necessary to demon-strate how these objective properties are interpreted and reacted to by the actors who make up the organization. The perception of environmental s t i m u l i i s an i n t e r p r e t i v e process. This i n t e r p r e t a t i o n process i s a function of the lack of inherent meaning of signals associated with environmental c h a r a c t e r i s t i c s and the less than i n f i n i t e data processing capacity of the human organism. Man cannot inter a c t d i r e c t l y with his environment; instead, he must map i t . (Downey and Slocum, 1975, p. 571). In commenting upon organizational climate (which was stated previously as a subset of organizational environment), Campbell, Dunnette et a l (1970) drew an analogy between that concept and the weather. P r e c i p i t a t i o n , wind v e l o c i t y and temperature are a l l objective r e a l i t i e s , but they mean d i f f e r e n t things to d i f f e r e n t people. "For example, heavy snow means more indoor a c t i v i t y for most people but increased outdoor a c t i v i t y for some, and what i s a 'warm' day for one person may be a 'comfortable' day for another." (1970, p. 386). 94 This reasoning i s c l e a r l y in l i n e with the arguments advanced by other researchers. Perrow (1970), for example, argued that environments are neither c e r t a i n nor uncertain, but are simply perceived d i f f e r e n t l y by d i f f e r e n t organizations. Weick (1969) was of the opinion that the "important organizational environments are those which are enacted or created through the process of attention." Hence, i t i s the perceptions of environ-mental c h a r a c t e r i s t i c s , rather than the "objective" components, which are the important determinants i n decision making and i n strategy formulation processes in organizations. There i s , indeed, abundant evidence to support the contention that i t i s perceptions, rather than objective r e a l i t y ( i f the l a t t e r could be measured at a l l ) that determine behaviour and actions taken by ind i v i d u a l s in an organizational s e t t i n g . Child (1972), for example, found that the strategies adopted by an organization to respond to or counteract the environment are l a r g e l y influenced by managerial perceptions. "The exercise of (strategic) choice implies a p r i o r evaluation of the s i t u a t i o n ... (D)ecisions about organizational structure depend upon the p r i o r processes of perception and evaluation." (Child, 1972, pp. 4-5). Cyert and March (1963, pp. 118-120), and Duncan (1970) came up with e s s e n t i a l l y s i m i l a r findings. Without belaboring the point, i t i s s u f f i c i e n t to note that perceptions of r e a l i t y , rather than objective r e a l i t y i t s e l f , are "capable of changing the sensory input" (to borrow Pervin's terminology, 1966, p. 60) of the i n d i v i d u a l s within the u n i t . They also interact with the i n d i v i d u a l ' s needs, etc. to produce 95 a r e s u l t i n g set of behaviour, which in turn contributes to the perceived composition or nature of the environment. This i s not to assert, however, that managers are always accurate i n thei r perceptions of the environment, or that discrepancies do not ex i s t between managerial perceptions of the environment and the objective environment i t s e l f . As Miles (1974, p. 249) noted, "Cl e a r l y , the organization w i l l ultimately be victimized by per-ceptions which ignore or d i s t o r t c r u c i a l environmental elements..." And researchers such as Richards (1973) reported instances of organizations which experienced severe f a i l u r e i n parts or a l l of t h e i r operations when they were misguided i n the long-run by "benign optimism". However, i t was beyond the scope of this study to examine the consequences that long-term misperceptions of the environment would have on the long-run effectiveness and sur v i v a l of the company. As noted i n Chapter One, investigations of t h i s nature w i l l have to be reserved for l a t e r research. In l i g h t of the arguments for the use of perceptual measures in i d e n t i f y i n g environmental properties as they a f f e c t the amount of uncertainty experienced by the decision maker, and consequently the actions adopted by the focal unit, the bulk of the data c o l l e c t e d on environmental properties and uncertainty i n t h i s study were of a subjective nature. Objective data, however, were c o l l e c t e d where applicable and possible. These pertained to information on departmental s i z e , the degree of role s p e c i a l i z a t i o n , standardization and formalization. One of the most serious methodological problems i n using perceptual measures i s the degree of homogeneity of perceived a t t r i b u t e s among a l l individuals within a given u n i t . As pointed 96 out e a r l i e r , the questionnaire was administered only to the top man i n each department as only he had the necessary perspective to answer the questions probed in this study. Thus the problem of homogeneity of perceived attributes among respondents within a given unit does not arise in this p a r t i c u l a r study. 3 . 5 SUMMARY This chapter contained a review of the sample and methodology that was used i n this study. Data were co l l e c t e d from 64 organizational units which came from 21 d i f f e r e n t companies engaged i n seven d i f f e r e n t types of business/industrial a c t i v i t i e s . A semi-structured questionnaire was administered to senior executives i n each of the 64 organizational u n i t s . The advantages and disadvan-tage of using a semi - structured questionnaire format were discussed. The debate among researchers on the use of perceptual vs. objective measures to investigate environmental c h a r a c t e r i s t i c s and uncertainty was b r i e f l y reviewed. Based on the cogent arguments of well-respected researchers in the f i e l d and the fact that the model under investigation here was of a c o n t i -gency nature, i t was decided that perceptual measures of environmental c h a r a c t e r i s t i c s and uncertainty were more appro-pri a t e for purposes of this study. 97 CHAPTER FOUR ASSESSMENT OF MEASUREMENT INSTRUMENTS As stated in Chapter One, one of the primary objectives of the present study was to develop and v a l i d a t e the instruments for measuring environmental c h a r a c t e r i s t i c s . In order to be operationally u s e f u l , any instrument has to meet the dual c r i t e r i a of v a l i d i t y and r e l i a b i l i t y . The question of v a l i d i t y i s the question of good-ness of mapping (correspondence) between concept and operation. The v a l i d i t y questions asks, i n e f f e c t , whether the measure used i n the operational d e f i n i t i o n i s " t r u l y " a measure of the correspond-ing property as conceptually defined. The r e l a t e d question of r e l i a b i l i t y asks whether the measure used as the operational d e f i n i t i o n can be depended upon to y i e l d the same value i n repeated indepen-dent assessments of the same actor or object.... V a l i d i t y and r e l i a b i l i t y of measures are inex-t r i c a b l e parts of the bridge between operational and conceptual d e f i n i t i o n s . (Runkel and McGrath, 1972, p. 152). The concept of v a l i d i t y i s not a singular one. The fi v e forms of v a l i d i t i e s that are most commonly investigated by students of psychological measurement are construct, pre-d i c t i v e , concurrent, convergent and discriminant v a l i d i t i e s . Campbell and Fiske (1959) proposed a generalized paradigm for assessing the v a l i d i t y and r e l i a b i l i t y of a set of measures. This i s generally referred to as the "multitrait-multimethod matrix". This paradigm e s s e n t i a l l y c a l l s for the c r o s s - v a l i -dation of data obtained on the same set of t r a i t s by means of several d i f f e r e n t methods. However, as pointed out i n Chapter 98 One, measures of many of the environmental dimensions explored in t h i s study did not exist (at least to the author's knowledge) Hence, i t would be impossible to apply a paradigm,as rigorous as that proposed by Campbell and Fiske (1959), to assess the measures used i n the present study. In Chapter Two, i t was shown how the measures used i n the present study were si m i l a r to or adapted from e x i s t i n g instruments. Where such measures were non-existent,an attempt was made to demonstrate the relevance of the measures developed to the t h e o r e t i c a l concepts under i n v e s t i g a t i o n . A l l the questions developed for the interview protocol are f a i r l y straightforward and could be assessed f o r t h e i r face v a l i d i t y . Cronbach's c o e f f i c i e n t alpha (a s p e c i a l case of which i s the Kuder-Richardson formula 20 which i s applicable to dichotomous items only) was calculated for a l l the measures used i n the study. The reasons for choosing t h i s p a r t i c u l a r index of homo-geneity over others were three-fold:-(1) Nunnally argued that Cronbach's c o e f f i c i e n t alpha " i s the basic formula for determining the r e l i a b i l i t y based on i n t e r n a l consistency. It, or the special version applicable to dichoto-mous items (KR-20) should be applied to a l l new measurement methods." (1967, p. 210) In his 1951 a r t i c l e , Cronbach demonstrated by means of mathematical equations that:-(a) alpha i s the mean of a l l possible s p l i t - h a l f c o e f f i c i e n t s . 99 (b) alpha i s the value expected when two random samples of items from a pool ... are correlated. (c) alpha i s the lower bound for the c o e f f i c i e n t of pre c i s i o n (the instantaneous accuracy of t h i s test with these p a r t i c u l a r items). Alpha i s also a lower bound for c o e f f i c i e n t s of equi-valence obtained by simultaneous administration of two tests having matched items. But for reasonably long tests not d i v i s i b l e into a few f a c t o r i a l l y d i s t i n c t subtests, alpha i s nearly equal to " p a r a l l e l - s p l i t " and " p a r a l l e l -forms" c o e f f i c i e n t s of equivalence. (d) alpha estimates, and i s a lower bound to, the proportion of test variance a t t r i b u t a b l e to common factors among the items. That i s , i t i s an index of common-factor concentration. This indeed serves purposes claimed for indices of homogeneity... (Cronbach, 1951, p. 331). (2) The formula for c a l c u l a t i n g c o e f f i c i e n t alpha i s based on assumptions more r e a l i s t i c than those presumed by the Spear-man-Brown formula, which had been a "standard method of test a n a l y s i s " i n the f i r s t half of the 20th century. G h i s e l l i (1964, pp. 284-286) demonstrated by means of mathematical equations that i f the Spearman-Brown formula was revised to r e f l e c t assumptions that were more r e a l i s t i c a l l y based, then the formula would be i d e n t i c a l to that for c a l c u l a t i n g Cronbach's c o e f f i c i e n t alpha. (3) Cronbach (1951, p. 323) demonstrated that c o e f f i c i e n t alpha could be used for c a l c u l a t i n g a r e l i a b i l i t y c o e f f i c i e n t that i s independent of test length. The formula for c a l c u l a t i o n of t h i s index i s : r i j ( e s t ) n + (1 - n)<* 100 The formula for c a l c u l a t i n g Cronbach's c o e f f i c i e n t alpha i s as follows:-= n 2C n - 1 ' where C. i s the t o t a l covariances of a l l item p a i r s within the t e s t , and V i s the variance of the t o t a l t e s t . The i n t e r c o r r e l a t i o n s among items i n a given scale or dimension are presented i n f u l l below, and the c o e f f i c i e n t alphas and r~"- , ' •> for each scale/sub-dimension are also r 1 j(estJ presented. As pointed out i n Chapter Two, a separate analysis of the pre-test subjects (n = 4) was performed p r i o r to the use of the instrument on the f u l l sample. Since the responses obtained from the pre-test subjects were complete and v a l i d , t h e i r responses were also included i n the f u l l sample analysis (n •= 64). As w i l l be noted i n the concluding chapter, one of the major l i m i t a t i o n s of t h i s present study i s the r e l a t i v e l y small sample si z e . However, given the f a c t s that (a) the number of firms located i n the Lower Mainland region of B r i t i s h Columbia that met the s e l e c t i o n c r i t e r i a i s not great which consequently li m i t e d the a v a i l a b i l i t y of subjects for a study which required a substantial portion of senior executives' time (each interview ran for an hour and a h a l f ) ; (b) a sample of 64 i s large enough to render the a p p l i c a t i o n of most s o p h i s t i -cated s t a t i s t i c a l techniques appropriate; and (c) this study i s only exploratory i n nature, the researcher had l i t t l e choice 101 but to accept a sample of 64 respondents or organizational u n i t s . 4.1 ASSESSMENT OF SUB-DIMENSIONS P l u r a l ism The Pluralism index was calculated on the basis of response to a single question. (Schedule I I I , Question 1 ) . Consequently, no inter-item analysis could be performed on i t . Environmental Dependency of Interdependency As pointed out i n Chapter Two, an index of environ-mental dependency or interdependency was to be calculated on the basis o f scores to Questions 2, 3, 4 and 5 i n Schedule III, Appendix 3. The c o r r e l a t i o n matrix for these four items i s presented below: Dependence R e s t r a i n t I n f l u e n c e J t . Programmes Dependence 1.0000 (.001) R e s t r a i n t 0.8568 (.001) 1.0000 ( .001) I n f l u e n c e 0.8534 (.001) 0.8291 ( .001) 1.0000 (.001) J t . P r o g . 0.8907 (.001) 0.8559 (.001) 0.8922 (.001) 1.0000 (.001) No t e : The f i r s t f i g u r e i s t h e P e a r s o n c o r r e l a t i o n c o e f f i c i e n t . The f i g u r e i n b r a c k e t s i s t h e s i g n i f i c a n c e l e v e l . C o e f f i c i e n t alpha .96 T i j ( e s t ) 102 Search for C r i t i c a l Information This sub-dimension was hypothesized to consist of scores to Questions 2 (which encompasses two items) and 3, Schedule III, Part B, Appendix 3. The co r r e l a t i o n matrix for these three items is as follows:-Task Force Outside Help Trust i n Information Task Force 1.0000 (.001) Outside Help 0.8964 (.001) 1.0000 (.001) Trust 0.3013 0.2783 1.0000 (.016) (.026) (.001) The t h i r d item does not correlate highly with the other two items. Hence i t was decided to eliminate t h i s item from this sub-dimension. Thus, the c a l c u l a t i o n of c o e f f i c i e n t alpha was based on two items. C o e f f i c i e n t alpha = .94 i j (est) .8867 Programmability This sub-dimension was hypothesized to consist of scores to Questions 4, 5 and 6, Schedule I I I , Part B, Appendix 3. Responses to Questions 4 and 5 were summarized to form an over-a l l scale of " a b i l i t y to measure up to demands." This averaged score was then correlated with the score obtained for Question 6. A b i l i t y to Measure Up E f f e c t i v e Solutions to Demands A b i l i t y to Measure 1.0000 Up (.001) E f f e c t i v e 0.9213 1,0000 Solutions (.001) (.001) 103 C o e f f i c i e n t alpha = .95 r T r o c t 1 = .9047 l i ( e s t ) Organized Sector The index for this dimension was calculated on the basis of response to a single question (Schedule I I I , Part A, Question 6) . Hence no inter-item analysis could be performed. D i r e c t l y Related Sector The index for this dimension was also based on the response to a single question. (Schedule III, Part A, Question 7) . Consequently, no inter-item analysis could be performed. Change Rate As pointed out in Chapter Two, the change rate index was computed by multiplying the frequency of change rate by the magnitude of change rate. This index does not lend i t -s e l f to inter-item analysis. S t a b i l i t y of Change Rate This sub-dimension was hypothesized to consist of scores to Questions 10, 11 and 12, Schedule I I I , Part A, Appendix 3. The c o r r e l a t i o n matrix for these three items i s as follows:-New and/or D i f f e r e n t Adequacy of Knowledge Things Warning Period About Events New Things 1.0000 (.001) Adequacy of 0.8780 1.0000 Warning (.001) (.001) Knowledge 0.7777 0.8645 1.0000 About Events (.001) (.001) (.001) 104 C o e f f i c i e n t a l p h a = .94 F T . , ^ = .8392 i j ( e s t ) U n c e r t a i n t y : Component # 1 T h i s s u b - d i m e n s i o n was h y p o t h e s i z e d t o c o n s i s t o f s c o r e s t o Q u e s t i o n s 2, 3 and 9, S c h e d u l e IV i n A p p e n d i x 4. The c o r r e l a t i o n m a t r i x f o r t h e t h r e e i t e m s i s : -Adequate D i f f i c u l t y of Feedback Information C o l l e c t i n g Info. Adequate 1.0000 Information (.001) D i f f i c u l t y of 0.9293 1.0000 C o l l e c t i n g Info. (.001) (.001) Feedback 0.8353 0.8552 1.0000 (.001) (.001) (.001) C o e f f i c i e n t a l p h a = .95 r i j ( e s t ) U n c e r t a i n t y : Component # 2 T h i s s u b - d i m e n s i o n was h y p o t h e s i z e d t o c o n s i s t o f s c o r e s t o Q u e s t i o n s 1, 6, 7 and 8, S c h e d u l e IV i n A p p e n d i x 4. Able to Consider Consider Able to Predict A l t e r n a t i v e s Consequences Consider E f f e c t Able to 1.0000 Predict (.001) Consider 0.8950 1.0000 Al t e r n a t i v e s (.001) (.001) Consider 0.8972 0.9498 1.0000 Consequences (.001) (.001) (.001) Able to 0.8979 0.9526 0.9607 1.0000 Consider (.001) (.001) (.001) (.001) Ef f e c t 105 C o e f f i c i e n t alpha = .98 ^TjCest) = - 9 2 4 5 Uncertainty: Component # 3 The score on this component was computed by multiply-ing the p r o b a b i l i t y figure by the range of numbers, and then summing them for a l l factors. Hence i t does not lend i t s e l f to inter-item analysis. Role S p e c i a l i z a t i o n This index was computed by d i v i d i n g the number of a c t i v i t i e s that the respondent i d e n t i f i e s as being performed by "at least one person on a f u l l - t i m e b a s i s " by the t o t a l number of a c t i v i t i e s s p e c i f i e d i n the questionnaire, namely 13. This percentage was then converted to a f i v e - p o i n t scale. Thus, a score of 1 would represent an i n d i c a t i o n of 0 to 201 role s p e c i a l i z a t i o n . This index does not lend i t s e l f to i n t e r -item analysis. Job C o d i f i c a t i o n The f i r s t f i v e questions i n Schedule II, Part B, Appendix 1 were used for measuring the amount of job c o d i f i -cation. A low score on this variable would indicate low standardization. 106 The c o r r e l a t i o n matrix of the f i v e items i s : -Codif. 1 Codif. 2 Codif. 3 Godif. 4 Codif. 5 Codif. 1 1.0000 (.001) Codif. 2 0.7816 (.001) 1.0000 (.001) Codif. 0.7870 0.6584 1.0000 3 (.001) (.001) (.001) Codif. 0.6830 0.5944 0.7099 1.0000 4 (.001) (.001) (.001) (.001) Codif. 0.7256 0.6622 0.7275 0.7720 1.0000 5 (.001) (.001) (.001) (.001) (.001) C o e f f i c i e n t alpha = .92 rT. , .. = .6969 i i (est) Rule Observation The remaining f i v e questions i n Scedule II, Part B, Appendix 1, were used for measuring the amount of rule observa-t i o n . The responses to questions 6 and 7 were reversed to correspond with the d i r e c t i o n of responses to the other questions in t h i s section. A low score on thi s variable would indicate low standardization. The c o r r e l a t i o n matrix of the five items i s : -Rule 1 Rule 2 Rule 3 Rule 4 Rule 5 Rule 1.0000 1 (.001) 0.8462 1.0000 Rule 2 (.001) 0.6919 (.001) 0.7034 1.0000 Rule 3 (.001) (.001) (.001) Rule 0.7394 0.7827 0.7463 1.0000 4 (.001) (.001) (.001) (.001) Rule 0.7079 0.7133 0.6880 0.7095 1.0000 5 (.001) (.001) (.001) (.001) (.001) 107 C o e f f i c i e n t alpha = .926 FT. r = .7145 i j ( e s t ) Formalization As i n "role s p e c i a l i z a t i o n " , this index was computed by d i v i d i n g the actual number of communications and procedures that "were written down and adhered to" by the t o t a l number of such communications and procedures, namely 10. This percentage was then added to the percentage obtained by d i v i d i n g the actual number of "written records that were f i l e d away somewhere" by the t o t a l number of such a c t i v i t i e s as enumerated i n the question naire, namely 20. The summed percentages were then converted to a five-point scale. Thus a low score would indicate a low degree of formalization. This index does not lend i t s e l f to inter-item analysis. P a r t i c i p a t i o n i n Decision Making Five questions were used to measure the degree of p a r t i -c i p a t i o n i n decision making. The responses were coded such that a score of 1 would indicate a high amount of p a r t i c i p a t i o n a c t u a l l y allowed i n decision making. This necessitated revers-ing the responses to Questions 3 and 4 i n t h i s section. The c o r r e l a t i o n matrix for these f i v e items i s : -108 P a r t i e . 2 P a r t i e . 3 P a r t i e . 4 1.0000 (.001) 0.6144 1.0000 (.001) (.001) 0.7594 0.7355 1.0000 (.001) (.001) (.001) 0.8442 0.7493 0.8035 (.001) (.001) (.001) P a r t i e . 5 1.0000 (.001) C o e f f i c i e n t alpha r i j ( e s t ) .95 .7916 4.2 ASSESSMENT OF DIMENSIONS Complexity In Chapter Two, i t was hypothesized that the "complexity" dimension should be defined i n terms of pluralism and degree of interdependency. However, the correlations between the scaled pluralism score and those items comprising the i n t e r -dependency sub-dimension are not high. Their correlations are presented below. P l u r a l i s m Dependence Restraint Influence J t . Pr. Interdependen P a r t i e . 1 P a r t i e . 2 Pa r t i e . 3 P a r t i e . 4 P a r t i e . 5 P a r t i e . 1 1.0000 (.001) 0.8488 (.001) 0.8134 (.001) 0.8869 (.001) 0.9293 (.001) 0.1333 (.294) 0.1292 ;(.309) 0.1061 (.404) 0.2448 (.051) 0.1628 (.199) Pluralism 1.0000 (.001) Based on these low co r r e l a t i o n s , i t was f e l t that the two sub-dimensions were in fact independent and could not be combined to form an o v e r a l l "complexity" index. This inde-pendence was further v e r i f i e d in p r i n c i p a l components analysis. 109 Routineness of Problem/Opportunity States In Chapter Two, i t was hypothesized that this dimension would consist of the following three variables:- (1) scaled frequency of routine procedures, (2) search for c r i t i c a l i n f o r -mation, and (3) programmability. The c o r r e l a t i o n matrix for the items comprising these three variables i s : -Routineness Task Force Outside Help Measure Up to Demands E f f e c t i v e Solutions Routineness 1.0000 (.001) Task Force 0.9476 (.001) 1.0000 (.001) Outside 0.9297 0.8964 1.0000 Help (.001) (.001) (.001) Measure Up 0.9328 0.8881 0.9118 1.0000 To Demands (.001) (.001) (.001) (.001) E f f e c t i v e 0.8809 0.8479 0.8883 0.9213 1.0000 Solutions (.001) (.001) (.001) (.001) (.001) On t h e b a s i s o f t h e h i g h c o r r e l a t i o n s b etween t h e s e i t e m s , t h e s c o r e s on t h e s e i t e m s were summed and a v e r a g e d t o form an ov e r a l l "Routineness" dimension score. 110 Uncertainty The correlations among the three components of uncer-tainty are: -Uncertainty 1 Uncertainty 2 Uncertainty 3 Uncertainty 1 1.0000 (.001) Uncertainty 2 0.7011 (.001) 1.0000 (.001) Uncertainty 3 0.6763 (.001) 0.9806 (.001) 1.0000 (.001) Given the high correlations among the three components of uncertainty, they were summed and then averaged to form an o v e r a l l uncertainty index. A score of 5 indicated high c e r t a i n t y . Structure The co r r e l a t i o n s between the scores on job c o d i f i c a t i o n and rule observation were as follows:-Job C o d i f i c a t i o n Rule Observation Job C o d i f i c a t i o n 1.0000 0.8876 (.001) (.001) The high correlations between the two scores provide j u s t i f i -cation for combining them (and then averaging) to form an ov e r a l l standardization score. Correlations between the several v a r i a b l e s comprising departmental structure were also computed. These are reported on the following page:-I l l S p e c i a l i z a t i o n Standardi zation Formalization P a r t i c i p a t i o n S p e c i a l i z a t i o n 1.0000 (.001) Standardization 0.8167 (.001) 1.0000 (.001) Formalization 0.7572 (.001) 0.9192 (.001) 1.0000 (.001) P a r t i c i p a t i o n 0.8145 (.001) 0.9060 (.001) 0.8781 (.001) 1.0000 (.001) B a s e d on t h e h i g h i n t e r c o r r e l a t i o n s b etween t h e s e v a r i a b l e s , i t was d e c i d e d t h a t t h e s c o r e s on t h e s e f o u r sub-dimensions .should be combined (and then averaged) to form an o v e r a l l departmental structure score. Thus, an organizational unit that scores low on this dimension would be c l a s s i f i e d as possessing an organic structure, while an organizational unit that scores high on t h i s dimension would be considered as having a mechanistic structure. 4 . 3 SUMMARY This chapter presented a detailed assessment of the measurement instruments used i n the study. Inter-item r e l i a b i l i t y c o e f f i c i e n t s :;are calculated for items that made up a variable or sub-dimension. Cronbach's c o e f f i c i e n t alpha was used as a measure of inter-item r e l i a b i l i t y . These c o e f f i c i e n t s were also adjusted for test length. Corre-l a t i o n s between variables;, or sub-dimensions that made up a dimension were also computed. 112 CHAPTER FIVE ANALYSIS OF RESULTS It w i l l be r e c a l l e d that Jurkovich hypothesized that the organizational environment could be viewed in terms of f i v e major dimensions. However, he did not demonstrate, on an empirical basis, whether there was any overlap between these dimensions, and whether more or fewer dimensions than the ones he postulated were necessary for explaining the v a r i a t i o n s i n uncertainty, departmental structure, time perspective taken i n planning, and frequency of changes to plans. This chapter seeks to shed l i g h t on these topics on the basis of results obtained from analysis of data c o l l e c t e d on 64 organizational u n i t s . As noted i n Chapter Two, factor analysis was used to a s s i s t i n detecting the underlying structure of the observed data. The seven environmental dimensions (pluralism, degree of interdependency, routineness of problem/opportunity states, organized sectors, d i r e c t l y related sectors, change rate,and stability of change) that were obtained a f t e r inter-item analysis were subjected to p r i n c i p a l components an a l y s i s . The r e s u l t s of t h i s analysis are presented i n this chapter. The factors generated by such analysis were subsequently used as the inde-pendent variables for testing the hypotheses that were i n v e s t i -gated i n this study. The re s u l t s of these tests also are discussed i n t h i s chapter. 113 5,1 FACTOR ANALYSIS ON ENVIRONMENTAL DIMENSIONS The seven environmental dimensions computed a f t e r i n t e r -item analysis were subjected to p r i n c i p a l components an a l y s i s . The three methods of rotation used were (1) d i r e c t oblimin oblique, (2) orthogonal quartimax, and (3) orthogonal varimax. In oblique ro t a t i o n , the requirement of orthogonality among the factor axes i s relaxed. Thus, factors are allowed to be correlated i f such correlations do e x i s t i n the data. Since the "ultimate goal of any rot a t i o n i s to obtain some th e o r e t i -c a l l y meaningful factors and, i f possible, the simplest factor structure" (SPSS, 1975, p. 484), and the assumptions of oblique r o t a t i o n are more r e a l i s t i c "because the t h e o r e t i c a l l y important underlying dimensions are not assumed to be unrelated to each other " (SPSS, 1975, p. 483), only the res u l t s obtained under oblique rotation need be presented here. When six factors were s p e c i f i e d , the factor pattern obtained after rotation i s presented in Table 1 below:-Table 1: Factor Pattern obtained when 7 dimensions were subjected to d i r e c t oblimin oblique r o t a t i o n and 6 factors were s p e c i f i e d  Factor 1 Factor 2 Factor 3 Factor 4 Factor 5 Factor 6 Pluralism -0. 01753 -0 .01152 -0. 07468 0 .00011 -0 .64091 0. 05188 Interdep. 0. 01313 0 .55772 -0. 03175 -0 .00898 0 .02280 0. 03507 Organized -0. 00137 0 .02789 0. 01518 0 .01413 -0 .02294 0. 54505 D i r e c t l y 0. 00559 -0 .06958 0. 60301 -0 .02537 0 .07914 0. 04055 Change Rate -0. 08900 0 .17088 0. 41008 0 .14834 -0 .38828 -0. 09212 S t a b i l i t y 0. 82784 -0 .00154 0. 16177 -0 .21929 -0 .04384 0. 07979 Routineness 0. 89532 0 .02255 -0. 10147 0 .12522 0 .04956 -0. 02580 114 The factor pattern i s by no means c l e a r . One thing was evident, however. The S t a b i l i t y of Change Rate dimension loaded highly with the Routineness of Problem/Opportunity States dimension. (Loadings of .82784 and .89532 respectively; r = .72956, S = .001). Consequently, the two dimensions were com-bined and then averaged to form a new Routineness of Problem/ Opportunity States dimension. This new dimension was used i n a l l subsequent analysis. An investigation of the items comprising the S t a b i l i t y of Change Rate and o r i g i n a l Routineness of Problem/Opportunity States dimensions would show that the high c o r r e l a t i o n between these dimensions i s not sur p r i s i n g . The items i n the S t a b i l i t y of Change Rate dimension seek to i d e n t i f y the frequency with which "new and d i f f e r e n t " elements have to be taken into consi-deration i n decision making, and the " p r e d i c t a b i l i t y of such changes" (measured i n terms of "knowing what to expect" and "length of warning period"). Where the i n t e r n a l and external environments are stable, i . e . where the elements that have to be taken into consideration i n decision making remain r e l a t i v e l y constant and fixed over time, and where the organizational unit possesses a high degree of knowledge as to what to expect, coupled with a reasonably long and adequate "warning period", the unit under in v e s t i g a t i o n could more e a s i l y (and therefore more l i k e l y ) resort to routine procedures i n i t s operations and functions. Conversely, where the inte r n a l and external environ-ments are i n a state of f l u x , and where the organizational unit i s not very capable of facing up to such changes (either due to 115 lack of knowledge or inadequacy of warning period or both), i t would be d i f f i c u l t , i f not impossible, for the unit under investi g a t i o n to resort to routine procedures i n i t s decision making and functioning. In short, the S t a b i l i t y of Change Rate determines the organizational unit's a b i l i t y or i n a b i l i t y to resort to routine procedures. After the two dimensions ( S t a b i l i t y of Change Rate and o r i g i n a l Routineness of Problem/Opportunity States) were combined and averaged, the r e s u l t i n g scores on the new Routine-ness of Problem/Opportunity States dimension were submitted to factor analysis along with the other f i v e dimensions. In th i s analysis, six factors were s p e c i f i e d . The factor pattern that emerged after rotation i s presented in Table 2 below. T a b l e 2: F a c t o r P a t t e r n o b t a i n e d when 6 d i m e n s i o n s were s u b j e c t e d t o d i r e c t o b l i m i n o b l i q u e r o t a t i o n and 6 f a c t o r s were s p e c i f i e d Factor 1 Factor 2 Factor 3 Factor 4 Factor 5 Factor 6 Pluralism -0 .00001 -0.00000 0.00000 0.00001 0.00001 0.65295 Interdep. -0 .00001 -0.00001 0.00001 -0.58000 -0.00000 -0.00001 Organized -0 .00001 0.54727 -0.00002 0.00010 -0.00008 -0.00005 D i r e c t l y -0 .00006 -0.00002 0.56544 -0.00005 0.00000 0.00003 Change Rate 0 .78500 -0.00001 -0.00005 0.00004 0.00009 -0.00009 Routineness 0 .00004 -0.00003 0.00000 0.00001 0.68876 0.00003 The factor pattern i n the above matrix i s very c l e a r . Each dimension loaded on one and only one f a c t o r . The Change Rate dimension loaded highly on Factor 1. The Organized Sector, D i r e c t l y Related Sectors, Degree of Interdependency, Routineness of Problem/Opportunity States, and Pluralism dimensions each loaded s i n g u l a r l y on factors 2, 3, 4, 5 and 6 respectively. 116 An e x a m i n a t i o n o f the c o r r e l a t i o n c o e f f i c i e n t s between the s e s i x d i m e n s i o n s show t h a t t h e r e are some minor c o r r e l a t i o n s between some o f the d i m e n s i o n s . However, none o f the c o r r e l a -t i o n s i n the m a t r i x exceed + .364. T h i s c o r r e l a t i o n m a t r i x i s p r e s e n t e d i n T a b l e 3 below. T a b l e 3: C o r r e l a t i o n M a t r i x o f 6 E n v i r o n m e n t a l Dimensions Pluralism Interdep. Organized D i r e c t l y Change Rate Routineness P l u r a l . 1.00000 Interdep. 0.16279 1.00000 Organ'd 0.10605 0.19805 1.00000 D i r e c t l y -0.07824 -0.10442 0.03209 1.00000 Change 0.34669 0.14264 0.03381 0.17539 1.00000 Routine -0.25442 0.07412 0.19123 -0.00468 -0.36317 1.00000 D e s p i t e the minor c o r r e l a t i o n s , i t was deemed a d v i s a b l e to t e s t whether the number o f f a c t o r s c o u l d be f u r t h e r r e d u c e d . C o n s e q u e n t l y , f o u r and f i v e f a c t o r s were r e q u e s t e d i n two sub-sequent r u n s . The f a c t o r p a t t e r n s o b t a i n e d under t h e s e i n s t a n c e s ar e p r e s e n t e d i n T a b l e s 4 and 5. T a b l e 4: F a c t o r P a t t e r n o b t a i n e d when 6 di m e n s i o n s were s u b j e c t e d t o d i r e c t o b l i m i n o b l i q u e r o t a t i o n and 4 f a c t o r s were s p e c i f i e d Factor 1 Factor 2 Factor 3 Factor 4 Pluralism 0.49139 0.09854 -0.14334 -0.10386 Interdep. 0.04026 0.53777 -0.09951 -0.16752 Organized 0.00423 0.02712 0.05973 -0.53082 Di r e c t l y -0.00921 -0.04324 0.61123 -0.06381 Change Rate 0.71139 0.27499 0.27664 0.12608 Routineness -0.48488 0.25880 0.00510 0.00770 117 Table 5' Factor Pattern obtained when 6 dimensions were subjected to dire c t oblimin oblique r o t a t i o n and 5 factors were sp e c i f i e d Factor 1 F a c t o r 2 Factor 3 Factor 4 Factor 5 Plu r a l i s m Interdep. Organized D i r e c t l y Change Rate Routineness 0.67198 -0.01124 0.04050 -0.05179 0.26760 0.01139 •0.02813 0.58307 0.05264 -0.05936 0.36855 0.04147 -0.04797 -0.10188 0.04703 0.59048 0.34989 0.03707 -0.04295 -0.13108 -0.48787 -0.05330 0.18714 0.03165 0.01516 0.08953 -0.03109 0.03667 -0.25816 0.62267 Since the factor patterns presented i n the above tables were not as clear-cut as that obtained under the s i x - f a c t o r pattern matrix (Table 2), i t was decided that s i x f a c t o r s or dimensions should be used i n a l l subsequent an a l y s i s f o r te s t -ing the ten propositions developed i n Chapter Two. The matrix based on these s i x environmental dimensions, which were obtained on an empirical basis, i s presented i n Figure 4 on the following page. Compare t h i s with the one hypothesized by Jurkovich on a t h e o r e t i c a l basis, (page 9) Figure 4: Typology of Environmental C h a r a c t e r i s t i c s Obtained on an Empirical Basis  Low Pl u r a l i s m High P l u r a l i s m Low Interdep High Interdep. Low Interdep. High Interdeo. R NR R NR R NR R NR 0 u 0 U 0 U 0 U 0 U 0 U 0 U 0 U D I D i : ) I D I D I D I D I D I D I D I D I D I D I D I D I P I Low Change Rate 1 32 High Change Rate 3: 64 R = Routineness; NR = Non-Routineness; 0 = Organized; U = Unorganized; D = D i r e c t l y Related; I = I n d i r e c t l y Related. 119 5 . 2 REGRESSION ANALYSES As stated previously, one of the primary objectives of thi s study was to determine whether an expanded typology was necessary to account for variations i n perceived environmental uncertainty, departmental structure, time perspective taken i n planning, and frequency of changes to plans. To a s s i s t i n th i s assessment, regression analyses (multiple step-wise, multivariate regression and ordinary regression) were performed. The results of these analyses are presented below. The organizational u n i t s ' score on the six environmental dimensions were regressed against their respective o v e r a l l perceived environmental uncertainty score. The beta weights or standardized regression c o e f f i c i e n t s , t h e i r associated F values with 6, 57 degrees of freedom and si g n i f i c a n c e l e v e l s are reported in Table 6 on the following page. 120 T a b l e 6: R e l a t i o n s h i p between E n v i r o n m e n t a l C h a r a c t e r i s t i c s ' and P e r c e i v e d E n v i r o n m e n t a l U n c e r t a i n t y (P.E.U.) Multi p l e R Squared* Pluralism Interdep. Routine Org'd D i r e c t l y Change Ra' P.E.U. .70776 (.68257) -.34074 (18.828) <.005> -.09508 (1.569) < N.S.>. .17661 .11198 .11908 (5.341) (2.502) (2.572) <.005> <.05> <.05> -.56495 (48.009) <.005> Note: The figures i n brackets i n the M u l t i p l e R Squared column represent R . The figures without brackets i n the other columns are the beta weights. The f i g u r e s between round brackets are the F values. The f i g u r e s between pointed brackets are the s i g n i f i c a n c e l e v e l s . Where the s i g n i f i c a n c e l e v e l i s designated by "N.S.", i t means that p^.10 f o r more t h a n 70% o f t h e v a r i a n c e i n p e r c e i v e d e n v i r o n m e n t a l u n c e r t a i n t y . A l l t h e e n v i r o n m e n t a l d i m e n s i o n s , w i t h t h e e x c e p -t i o n o f t h e D e g ree o f I n t e r d e p e n d e n c y f a c t o r , were s t a t i s t i c a l l y s i g n i f i c a n t a t t h e .05 l e v e l o r l e s s . The Change R a t e d i m e n s i o n was t h e s i n g l e g r e a t e s t c o n t r i b u t o r t o t h e amount o f v a r i a t i o n i n p e r c e i v e d e n v i r o n m e n t a l u n c e r t a i n t y . T h i s was i n a c c o r d w i t h t h e f i n d i n g s o f most p r e v i o u s r e s e a r c h e r s who u t i l i z e d t h e f o u r -c e l l t y p o l o g i e s ( L a w rence and L o r s c h , 1967; Duncan, 1 9 7 0 ) . The Change R a t e , P l u r a l i s m and D e g ree o f I n t e r d e p e n d e n c y d i m e n s i o n s * Since the sample s i z e was not large (although c e r t a i n l y large enough to render a p p l i c a b l e the s t a t i s t i c a l procedures used), i t was decided to attenuate the Mu l t i p l e R Squared obtained from n = 64 by applying the formula to estimate "the shrinkage i n going from a sample of any p a r t i c u l a r s i z e to an i n f i n i t e l y large sample." (Nunally, 1967, pp. 163-164). The formula i s T h e s e s i x e n v i r o n m e n t a l d i m e n s i o n s were a b l e t o a c c o u n t where R R k unbiased estimate of population m u l t i p l e c o r r e l a t i o n multiple c o r r e l a t i o n found i n sample o f s i z e N number of independent variables 121 were negatively related to the amount of perceived environmental uncertainty. As measured i n this study, an uncertainty score of 5 indicates a high degree of certainty or low uncertainty; where-as scores of 5 on the Change Rate, Pluralism and Degree of Inter-dependency dimensions indicate high change rate, high degree of pluralism, and high degree of interdependency respectively. Thus, where the change rate i s high, and the amount of pluralism and interdependency are high, the organizational unit would experience a high degree of uncertainty. The Routineness of Problem/Opportunity States, Organized Sectors and D i r e c t l y Related Sectors are measured such that a score of 5 indicates high amount of routineness, and transactions with units that are predominantly "organized" on a " d i r e c t l y related basis". Thus an organizational unit that scores high on these three dimensions would experience low uncertainty or enjoy a high degree of certainty i n i t s decision making a c t i v i t i e s . In Chapter Two, the researcher questioned whether organized or unorganized sectors, as a whole, present the f o c a l unit with more uncertainty i n decision making. The second part of Question 6, Schedule III, Part A (Appendix 3) was designed to shed l i g h t on this topic. While the r e s u l t s of regression analysis showed that the Uncertainty and Organized Sectors dimensions were p o s i t i v e l y related, i t should be borne i n mind that the "organized sector" index for each organizational unit was calculated on the basis of response to the f i r s t part of the question only ( i . e . , the number of sectors that the f o c a l unit has transactions with that are organized). The response 122 to the second part of the question could not be included i n the ca l c u l a t i o n of the index because approximately f i f t y percent of the respondents indicated that either (a) i t did not r e a l l y matter whether they had to deal with organized or unorganized sectors, or (b) they had no opinion on the issue. Those subjects who were able to verbalize t h e i r opinion were almost evenly divided between those who f e l t that the organized sectors present them with greater uncertainty i n decision making and those who f e l t otherwise. Some of the t y p i c a l reasons mentioned by those respon-dents who view organized sectors, as a whole, as presenting greater uncertainty appear below: Governments and organized sectors, as a whole, present us with more uncertainty. This has to do with the question of scale and co n t r o l . (Planning Department in a Public U t i l i t i e s Company). Organized groups present us with more uncertainty. We have no control over their p r o d u c t i v i t y or the l e g i s l a t i o n under which they work. (Production Department i n a Manufacturing company). The organized sector poses the greater uncertainty. The fact that they are u n i f i e d i s why. ( Production Department i n a Forest Products Company). The organized sectors present us with more uncertainty ... i n view of the increased emphasis on the le g a l aspects of being organized. (Sales Department i n a Forest Products Company). Some of the t y p i c a l reasons c i t e d by those respondents who view unorganized sectors, as a whole, as presenting more uncertainty i n decision making appear below:-Organized groups have c e r t a i n guidelines which they follow. Therefore, they are more predictable. 123 Unorganized sectors, on the other hand, are un-predictable. (Finance Department i n a Public U t i l i t i e s company). ... with respect to customers, i t i s very d i f f i -c u l t to predict what their general f e e l i n g w i l l be tomorrow. Organized sectors tend to have long-range plans, although they do not always s t i c k to i t . Nevertheless, this makes th e i r a c t i v i t i e s more orderly and predictable. (Operations Planning Department i n a Public U t i l i t y company). Thus, the r e l a t i o n s h i p between Organized Sectors and Uncertainty obtained by means of regression analysis i n t h i s study i s far from conclusive and f i n a l . The r e l a t i o n s h i p needs to be explored further in a much larger and more varied sample. Stepwise multiple regression was next performed using the six environmental dimensions as the independent variables and departmental structure, time perspective taken i n planning, and frequency of changes to plans as the dependent varia b l e s . Uncertainty and size were used as test factors i n each of these functions. In Table 7, f i v e sets of beta weights are reported for each regression function. The f i r s t set i s l a b e l l e d " T o t a l " . These are the beta weights obtained when the whole sample (n=64) was used i n the analysis. The median for. the 64 rank-ordered uncertainty scores was 3.59. This score was used as the basis for s p l i t t i n g the sample into two. almost equal-sized groups. The sample was also s p l i t into two almost equal-sized groups on the basis of size or the number of people i n the department. The median for size was 60. Hence th i s figure'was used as a d i v i d i n g point. The regression c o e f f i c i e n t s obtained as a r e s u l t of such s p l i t s are reported below those obtained from the f u l l sample and are designated accordingly. 124 Table 7: Stepwise Multiple Regression of Environmental Variables vs. Departmental Structure, Time Perspective Taken in Planning, and Frequency of Changes to Plans STRUCTURE R 2 PLURALISM INTERDEP. ROUTINE' ORGANIZED DIRECTLY CHANGE I Total (n = 64) .48956 (.4456) -.42246 (16.571) .000 -.08420 ( .705) N.S. .25060 (6.157) .000 .02374 ( .060) N.S. .09452 ( .928) N.S. -.26112 (5.872) .000 Uncertainty GE 3.6 (n = 33) .38261 (.3294) -.50698 (9.487) .000 -.10778 ( .391) N.S. .30327 (3.528) .01 .05538 ( .104) N.S. .09282 ( .332) N.S. .30980 (3.293) .01 uncertainty LE 3.59 (n = 31) .39321 (.3409) -.44975 (6.644) .000 .09086 ( .281) N.S. .24909 (1.895) .10 -.05911 ( .123) N.S. .11936 ( .458) N.S. -.19790 (1.405) N.S. Size GE 61 (n = 31) .52697 (.4862) -.43309 (7.215) .000 .05543 ( .126) N.S. .25723 (2.997) .05 -.07985 ( .223) N.S. -.06803 ( .224) N.S. -.34256 (3.433) .01 Size LE 60 (n = 33) .62887 (.5969) -.37345 (7.529) .000 -.16233 (1.410) N.S. .21239 (2.052) .10 .11650 ( .792) N.S. .24942 (3.579) .001 -.44774 (9.050) .000 TINE PERS. Total .22015 (.1529) .06518 ( .258) N.S. .14952 (1.454) N.S. .17842 (2.043) .10 .11952 ( .993) N.S. .06128 ( .255) N.S. -.32707 (6.030) .000 Uncertainty GE 3.6 .39334 (.3411) -.21293 (1.703) N.S. .50353 (8.677) .000 .08236 ( .265) N.S. .11439 ( .453) N.S. .13352 ( .699) N.S. .32691 (3.730) .000 Uncertainty LE 3.59 .08440 (.0055) .08312 ( .150) N.S. .22618 (1.155) N.S. .12088 ( .296) N.S. .04924 ( .056) N.S. .06987 ( .104) N.S. -.04434 C -047) N.S. Si ze GE 61 .31082 (.2514) .30550 (2.464) .05 -.04665 ( .061) N.S. .18308 (1.042) N.S. -.04735 (.054) N.S. .14250 ( .676) N.S. -.50661 (5.153) .000 Si ze LE 60 .44510 (.3973) -.41316 (6.163) .000 .39320 (5.534) .000 -.11624 ( .411) N.S. .11821 ( .545) N.S. -.10740 ( .444) N.S. -.33153 (3.322) .01 125 Table 7 (continued) R PLURALISM INTERDEP. ROUTINE ORGANIZED DIRECTLY CHANGE RATI CHANGE Total .66216 .25379 .10207 -.15866 . -, 05200 -.04339 .60824 (.6639) (9.036) (1.564) (3.728) ( .434) ( .295) (48.136) .000 N.S. .005 N.S. N.S. .000 Uncertainty .26794 .27364 .03144 -.23952 _ 02638 .04522 .25364 GE 3.6 (.2049) (2.330) ( .028) (1.855) (' .020) ( .067) (1.861) .05 N.S. .10 N.S. N.S. .10 Uncertainty .38488 .33785 .14259 -.16083 -.17768 .48216 LE 3.59 (.3319) (3.853) ( .712) ( .874) (1.053) (8.656) .005 N.S. N.S. N.S. .000 Size .66081 .34972 .09040 -.25088 _ 04795 -.10237 .44679 GE 61 (.6316) (6.561) ( .469) (3.976) (' .112) ( .709) (8.144) .000 N.S. .005 N.S. N.S. .000 Size .74727 .21835 .06701 .04709 13741 .03453 .81166 LE 60 (.7255) (3.780) ( .353) ( -148) ( i .618) ( .101) (43.717) .005 N.S. N.S. N.S. N.S. .000 N.S. = p > .10 2 ^ 2 Figures presented i n brackets under R column are R 126 The correlations among the dependent variables under investigation were also examined to determine t h e i r degree of re l a t i o n s h i p . If they were highly related or correlated with each other, then multivariate regression analysis should be more appropriate because th i s procedure takes into considera-t i o n the relationships between the dependent variables as we l l . The correlations among these three variables are presented i n Table 8 below. Table 8: Correlations Among Dependent Variables Structure Time Perspec-tive Frequency of Changes Structure 1.0000 (.001) Time Perspec tive 0.4880 (.001) 1.0000 (.001) Frequency of Changes -0.7493 (.001) -0.4618 (.001) 1.0000 (.001) Given the above correlations among the dependent variables, multivariate regression was performed on the same set of dependent and independent variables as a check against the r e s u l t s obtained from stepwise multiple regression which were reported i n Table 7. The standardized regression c o e f f i -c i e n t s , t s t a t i s t i c s with 6, 57 degrees of freedom and s i g n i -ficance l e v e l s obtained from multivariate regression are presented i n Table 9. 1 2 7 Table 9: Multivariate Regression Analysis S t r u c t u r e Time Perspec-t i v e Frequency o f Changes P l u r a l i s m -0.424 (4.06) .000 -0.065 (0.51) .614 0.253 (3.00) .004 Interdep. -0.081 (0.80) .427 0.150 (1.21) .233 0.103 (1.26) .214 Organized 0.022 (0.23) .819 0.121 (1.01) .317 -0.054 (0.68) .501 D i r e c t l y 0.093 (0.94) .350 0.060 (0.50) .622 -0.042 (0.53) .598 Change Rate -0.256 (2.37) .021 -0.330 (2.48) .172 0.609 (6.96) .000 Routineness 0.250 (2.46) .071 0.173 (1.38) .146 -0.158 (1.93) .059 The r e s u l t s obtained from multivariate regression and stepwise multiple regression were f a i r l y consistent. These r e s u l t s provided j u s t i f i c a t i o n for the use of regression c o e f f i -cients obtained from univariate regression to test the hypotheses investigated i n the present study. To further corroborate the r e s u l t s obtained under uni-variate and multivariate analyses of regression, canonical c o r r e l a t i o n was performed on these two sets of variables. The re s u l t s obtained from canonical c o r r e l a t i o n are presented in Appendix 6. These re s u l t s were consistent with those obtained from univariate and multivariate regression analyses. 128 Given the fact that certain organizational dimensions did not appear to be s i g n i f i c a n t predictors of departmental structure, time perspective taken i n planning, and frequency of changes to plans, ordinary multiple regression was performed with the objective of eliminating or excluding those variables that were not s i g n i f i c a n t . Table 10 presents the results obtained from ordinary multiple regression. In Table 10, 11 sets of beta weights are reported for each function. These are designated accordingly on the l e f t hand side of the Table. 129 Table 10: Ordinary Multiple Regression of Environmental Variables vs. Departmental S t r u c t u r a l , Time Perspective Taken i n Planning, and Frequency of Changes to Plans  R 2 PLURALISM INTERDEP. ORGANIZED DIRECTLY CHANGE RATE ROUTINE STRUCTURE Total (6) (n = 64) .48956 (.4456) -.42246 (16.571) .000 -.08420 ( .705) N.S. .02374 ( .060) N.S. .09452 ( .928) N.S. .26112 (5.872) .000 .25060 (6.157) .000 Total (4) .48040 (.4544) -.43373 (18.217) .000 -.09105 ( .881) N.S. .23818 (5.239) .000 .2529 (6.379) .000 Uncertainty GE 3.6 (4) .37134 (.3400) -.49556 (9.862) .000 -.10829 ( .482) N.S. .33853 (4.511) .000 .32008 (4.266) .000 Uncertainty LE 3.59 (4) .37721 (.3461) -.49910 (10.271) .000 .09492 ( .324) N.S. -.17678 (1.215) N.S. .24642 (2.161) .10 Size GE 61 (4) .51764 (.4935) -.45805 (9.547) .000 .03885 ( .071) N.S. -.30789 (4.081) .000 .24130 (2.895) .025 Size LE 60 (4) .56661 (.5450) -.46193 (11.807) .000 -.15947 (1.339) N.S. -.34057 (5.670) .000 .16700 (1.198) N.S. Total (3) .47264 (.4554) -.44120 (19.799) .000 -.25125 (5.948) .000 .23656 (5.767) .000 Uncertainty GE 3.6 (3) .36051 (.3396) -.51491 (10.979) .000 .35130 (5.013) .000 .29821 (3.933) .005 Uncertainty LE 3.59 (3) .36944 (.3488) -.49862 (10.515) .000 -.19603 (1.604) .10 .27910 (3.220) .01 Size GE 61 (3) .51632 (.5005) -.45123 (9.880) .000 -.29957 (4.176) .000 .23814 (2.941) .025 Size LE 60 (3) .54589 (.5311) -.48263 (12.970) .000 .36930 (6.794) .000 .0917 ( .437) N.S. T a b l e 10 ( c o n t i n u e d ) TIME PERSP. Total (6) .22015 (.1529) -.06518 ( .258) N.S. .14952 (1.454) N.S. Total (4) .20210 (.1623) -.06377 ( .256) N.S. .16453 (1.873) .10 Uncertainty GE 3.6 (4) .36320 (.3314) -.19424 (1.469) N.S. .51343 (10.704) .000 Uncertainty IE 3.59 (4) .07880 (.0328) .05712 ( .091) N.S. .22568 (1.240) N.S. Size GE 61 (4) .29039 (.2549) .29239 (2.644) .025 -.06487 ( .135) N.S. Size LE 60 (4) .42395 (.3952) -.38901 (6.300) .000 .43253 (7.410) .000 Total (3) .17676 (.1498) -.03942 ( .099) N.S. Uncertainty GE 3.6 (3) .11977 (.0910) -.10250 ( .316) N.S. Uncertainty LE 3.59 (3) .03488 (.0033) .05827 ( .094) N.S. Size GE 61 (3) .28671 (.2634) .28101 (2.600) .025 Size LE 60 (3) .27150 (.2477) -.33288 (3.846) .005 .11952 ( .993) N.S. .06128 ( .255) N.S. CHANGE RATE ROUTINE -.32707 .17842 (6.030) (2.043) .000 .10 -.31433 .18043 (5.942) (2.114) .000 . 10 .37701 .11098 (5.524) ( .506) .000 N.S. -.04129 .09667 ( .045) ( .225) N.S. N.S. -.45973 .20668 (6.186) (1.444) .000 N.S. -.32044 -.10181 (3.776) ( .335) .005 N.S. -.29072 .20997 (5.101) (2.910) .000 .025 .31649 .21468 (2.956) (1.481) .025 N.S. -.08706 .17436 ( .207) ( .821) N.S. N.S. -.47363 .21195 (7.078) (1.580) .000 N.S. -.24253 .10234 (1.827) ( .339) .10 N.S. 131 T a b l e 10 ( c o n t i n u e d ) R 2 PLURALISM INTERDEP. ORGANIZED DIRECTLY CHANGE RATE ROUTINE CHANGE Total (6) .66216 (.6339) .25379 (9.036) .000 .10207 (1.564) N.S. -.05200 . ( .432) N.S. -.04339 ( .295) N.S. .60824 (48.136) .000 -.15866 (3.728) .005 Total (4) .65754 (.6405) .25553 (9.593) .000 .09753 (1.534) N.S. .59855 (50.200) .000 -.15992 (3.870) .005 Uncertainty GE 3.6 (4) .26568 (.2290) .27578 (2.567) .05 .01481 ( .008) N.S. .25419 (2.177) .10 -.23814 (2.022) .10 Uncertainty LE 3.59 (4) .35898 (.3270) .40829 (6.678) .000 .13957 ( .681) N.S. .460505 (8.013) .000 -.13308 ( .612) N.S. Size GE 61 (4) .64874 (.6312) .33417 (6.978) .000 .08326 ( .450) N.S. .45876 (12.444) .000 -.2715 (5.036) .000 Size LE 60 (4) .73055 (.7171) .21882 (4.262) .000 .03042 ( .078) N.S. .77431 (47.137) .000 .0454 ( .143) N.S. Total (3) .64864 (.6372) .26996 (10.829) .000 .61254 (53.061) .000 -.14241 (3.137) .01 Uncertainty GE 3.6 (3) .26548 (.2414) .27843 (2.795) .025 .25245 (2.254) .05 -.23515 (2.129) .10 Uncertainty LE 3.59 (3) .34218 (.3207) .40901 (6.782) .000 .43219 (7.474) .000 -.0850 ( .286) N.S. Size GE 61 (3) .64266 (.6310) .34878 (7.997) .000 .47659 (14.307) .000 -.2783 (5.437) .000 Size LE 60 (3) .72979 (.7210) .22277 (4.644) .000 .77979 (50.909) .000 .0598 ( .310) N.S. N.S. = p> .10 2 „ 2 Figures presented i n brackets under R column are R . The figures i n brackets i n column (1) i n d i c a t e the number of independent v a r i a b l e s that were used i n the re g r e s s i o n . 132 From Table 10, i t could be observed that two dimensions, the Organized Sectors and D i r e c t l y Related Sectors dimensions were least s i g n i f i c a n t i n explaining the v a r i a t i o n s in the dependent variables. The Degree of Interdependency dimension was a border-line case. It was s i g n i f i c a n t i n two of the func-tions using Time Perspective Taken i n Planning as the dependent varia b l e . This i s understandable from a conceptual point of view. As defined i n the study, the Degree of Interdependency dimension was measured by the number of j o i n t programmes or e f f o r t s with outside companies. Thus, the organizational u n i t under consideration could not act independently. The time perspective that i t takes has to coincide with that adopted by the groups or organizations with which i t i s collaborating; otherwise th e i r e f f o r t s would appear d i s j o i n t e d and unsynchro-nized. Given the respective contributions of each environmental dimension, i t was concluded that a 64-cell typology may be unduly r i c h or over-expanded. Based on the data c o l l e c t e d in t h i s study, i t was decided that a 16- or 8 - c e l l typology* was quite capable of explaining the variations i n departmental structure, time perspective taken i n planning, and frequency of changes to plans. However, this decision should not be construed as f i n a l and conclusive. * I f only the Organized Sectors and D i r e c t l y Related Sectors dimensions are deleted from the typology, we end up with a 1 6 - c e l l typology. I f the Degree of Interdependency dimension i s also eliminated, then we end up with an 8 - c e l l typology. 133 The adequacy of an 8- or 16-cell typology could very well be a feature of the l i m i t e d sample s i z e . If a much larger sample were available (e.g., 400 to 500), i t might be necessary to u t i l i z e a more expanded typology. The reason-ing behind this speculation i s two-fold:-(1) When the environmental c h a r a c t e r i s t i c s were regressed against perceived environmental uncertainty, f i v e out of the six dimensions were s t a t i s t i c a l l y s i g n i f i c a n t at the .05 l e v e l or l e s s . (2) Where environmental c h a r a c t e r i s t i c s were regressed against organizational variables, r e l a t i v e l y high multiple R squared values were obtained i n most of the regression functions. 5 . 3 HYPOTHESES TESTING For the following reasons, only the r e s u l t s of analysis of covariance and discriminant analysis performed on 16- and 8 - c e l l typologies are presented here. The r e s u l t s obtained from a 64-cell typology are presented i n Appendix 7.* (1) Given the fact that only 64 organizational units \\rere studied, i t would be impossible to f i l l up a l l 64 c e l l s with s u f f i c i e n t number of units in each c e l l to render meaningful comparison on a s t a t i s t i c a l basis. * Under a 64-cell typology, certain of the cells remained empty and a sizeable portion of them did not have enough units in each cell to render comparison meaningful and valid on a statistical basis. However, in light of the reasons for speculating that the adequacy of a 16- or 8-cell typology could very well be a feature of the limited sample size, analysis was performed on a 64-cell matrix and the results are reported so that they may be compared against future results obtained from much larger and more varied samples. These results should be read and inter-preted with these limitations in mind. 134 (2) Based on the data obtained i n this study, i t was found that an 8- or 16-cell typology was quite capable of explaining the vari a t i o n s i n the three organizational variables investigated i n this study. Hypotheses 1 through 8 sought to determine whether the perceived environmental uncertainty, departmental structure, time perspective taken in planning,and frequency of changes to plans of organizational units located i n d i f f e r e n t c e l l s varied s i g n i f i c a n t l y i n a s t a t i s t i c a l sense. A series of univariate analysis of covariance was performed. The researcher would l i k e to use multivariate analysis of covariance as a check against the r e s u l t s obtained from univariate analysis. However, t h i s was not t e c h n i c a l l y f e a s i b l e . The programmes that are currently av a i l a b l e at this i n s t i t u t i o n are not capable of handling the number of c e l l designs that would be c a l l e d for i n such a study. Since the relationships between the three dependent variables were not so strong as to render the use of univariate analysis inapplicable (as can be seen from the section on regression a n a l y s i s ) , i t was believed that the r e s u l t s obtained under uni-variate analysis should be equally as interpretable. When analysis of covariance was performed on a 16-cell design ( i . e . a typology consisting of the following four dimen-sions: Pluralism, Degree of Interdependency, Routineness, and Change Rate), the s i g n i f i c a n c e levels associated with uncertainty and each of the dependent variables were as follows: uncertainty (S = .001), structure (S = .001), time perspective taken i n planning (S = .004), and frequency of changes to plans (S = .001). The means scores for perceived environmental uncertainty, depart-135 mental structure, time perspective taken i n planning, and frequency of changes to plans are presented i n Table 11 (p.136). It should be noted that there are three empty c e l l s i n the 16-cell typology and six of the c e l l s had under 5 cases i n each of them. These l i m i t a t i o n s should be taken into consi-deration when inte r p r e t i n g the r e s u l t s . When analysis of covariance was performed on an 8- c e l l design ( i . e . a typology consisting of the following three dimensions: Pluralism, Routineness, and Change Rate), the sign i f i c a n c e levels associated with uncertainty and each of the dependent variables were as follows: uncertainty (S = .001), structure (S = .001), time perspective taken i n planning (S = .031) and frequency of changes to plans (S = .001). The sig n i f i c a n c e l e v e l associated with time perspective taken in planning i s greater than that obtained i n a 16-cell design. This i s understandable because the Degree of Interdependency dimension was observed to be a s i g n i f i c a n t contributor i n the time perspective function. The mean scores for perceived environmental uncertainty, departmental structure, time per-spective taken i n planning,and frequency of changes to plans are presented i n Table 12 (p. 137). Table 11: Mean Scores for Dependent Variables i n a 16 - c e l l design Low P l u r a l i s m Low Interdependency Routine Non-Routine High Interdependency Routine tNon-Routine High P l u r a l i s m Low Interdependency Routine Non-Routine High Interdependency Routine Non-Routine Low Change Rate n S T C U 5 4.75 3.5 1.8 4.6732 n S T C U 1 4.05 2.0 1.5 4.066 n = 16 n S = 4.31 S T = 4.5 T C = 1.26 C U = 3.8809 U 5 4.05 4.5 1.6 4.186 n S T C u 2 3.8 3.25 1.75 3.9665 7 8 n = 3 n = 2 S = 3. 30 S = 2.78 T = 3. 66 T = 2.0 C = 2. 66 C = 2.0 U = 3. 664 U = 3.33 High Change Rate 10 n S T. C U 1 3.95 4.5 3.5 3.633 11 n = S = T = C = U = 11 3.78 2.22 2.89 3.3358 12 n = S = T = C = U = 13 14 3 3.33 3.66 2.93 3.4106 15 16 n = 10 n = 5 S = 2.64 S = 2.305 T = 3.25 T = 3.0 C = 3.86 C = 4.2 U = 2\3598 U = 1.8518 n = number of cases i n the c e l l ; S = Structure. A high score indicates mechanistic s t r u c t u r e ; T = Time Perspective Taken i n Planning. A high score i n d i c a t e s long-range planning perspective; C = Frequency o f Changes to Plans. A high score i n d i c a t e s frequent changes; U = Perceived Environmental Uncertainty. A high score i n d i c a t e s high c e r t a i n t y . M ON Table 12: Mean Score for Dependent Variables i n an 8 - c e l l Design Low Pluralism Routineness Non-Routineness High P l u r a l i s m Routineness Non-Routineness Low Change Rate High Change Rate n S T C U 21 4.42 4.26 1.24 4.287 n S T C U 12 3.8 2.41 2.94 3.3605 6 4.05 4.08 1.58 4.1661 3 3.33 3.66 2.93 3.4106 n S T C U 5 3.50 3.5 2.0 3.7852 10 2.64 3.25 3.86 2.3598 n S T C U 2 2.78 2.0 2.0 3.33 n S T C U 5 2.305 3.0 4.2 1.8518 138 As further evidence to corroborate the findings obtained from univariate analysis of covariance, discriminant analysis was performed on the 16- and 8-cell designs respectively. The prupose here was to determine whether one could a l l o c a t e res-pondents or organizational units to c e l l s based on t h e i r scores on uncertainty, departmental structure, time perspective taken i n planning, and frequency of changes to plans. These four variables were hypothesized to be r e l a t e d to environmental c h a r a c t e r i s t i c s . Under a 16-cell design, four discriminant functions were obtained. These were uncertainty (S = .000), structure (S = .000) time perspective taken in planning (S = .180), and frequency of changes to plans (S = .848). The percent of "grouped" cases c o r r e c t l y c l a s s i f i e d was 64.06%. Under the 8 - c e l l design, four discriminant functions were obtained. These were uncertainty (S = .000), structure (S = .001), time perspective taken i n planning (S = .210), and frequency of changes to plans (S = .626). The percent of "grouped" cases c o r r e c t l y c l a s s i f i e d rose to 73.441. Given the relationships between environmental charac-t e r i s t i c s and the dependent variables under i n v e s t i g a t i o n are not perfect, i t would not possible to obtain one hundred percent accuracy i n c l a s s i f i c a t i o n s on the basis of scores on uncertainty, structure, time perspective taken i n planning, and frequency of changes to plans. However, a proportion of c o r r e c t l y c l a s s i f i e d cases of almost 75% shows that there i s a very d e f i n i t e r e l a t i o n -ship between environmental c h a r a c t e r i s t i c s and uncertainty, 139 structure, time perspective taken in planning, and frequency of changes to plans. The f i r s t set of hypotheses which sought to relate environmental c h a r a c t e r i s t i c s to perceived environmental uncer-tainty were strongly supported. The results of analysis of covariance showed that the degree of perceived environmental uncertainty experienced by organizational units located in di f f e r e n t c e l l s varied s i g n i f i c a n t l y from each other (S = .001). An examination of the mean scores on uncertainty for the d i f f e r e n t c e l l s i n Tables 11 and 12 show that the scores on uncertainty varied i n the predicted fashion. Organizational units located in the extreme north-west corner c e l l enjoyed the lowest degree of perceived environmental uncertainty; while organizational units located i n the extreme south-east corner c e l l received the highest mean score on perceived environmental uncertainty. The scores on perceived environmental uncertainty for organi-zational units located i n the other c e l l s varied i n the pre-dicted fashion. Hypotheses 5 through 8 were concerned with the r e l a t i o n -ships between environmental c h a r a c t e r i s t i c s and organizational variables. The results of analysis of covariance showed that departmental structure, time perspective taken i n planning, and frequency of changes to plans varied s i g n i f i c a n t l y from each other ( p i . 031). An examination of the mean scores on the three organizational variables for the d i f f e r e n t c e l l s i n Tables 11 and 12 show that the scores on departmental structure, and frequency of changes to plans varied i n the predicted fashion. 140 The mean scores on Time Perspective taken i n Planning deviated from the predicted fashion i n cer t a i n c e l l s , most noticeably in the extreme north-east corner c e l l in both the 16- and 8 - c e l l typologies and the extreme south-west corner c e l l i n the 16-cell design. These deviations could be at t r i b u t e d to one of several reasons:-(1) small number of cases in each of these two c e l l s . Under the 16-cell typology when there was only one case i n c e l l 9, the time perspective taken in planning was 4.5. When the number of cases was increased to 12 for the extreme south-west corner c e l l i n the 8 - c e l l typology, the mean score on Time Perspective Taken i n Planning dropped to 2.41 (or shorter-range planning perspec-tive) . The l a t t e r was consistent with the hypothesized direc-t i o n . The same is true for the north-west corner c e l l . The Time Perspective increased from 3.5 under a 16-cell typology with an n of 5 to 4.26 under an 8 - c e l l design with an n of 21. (2) although the organizational units studied were autonomous in t h e i r functions and a c t i v i t i e s , departmental plans, more s p e c i f i c a l l y "formalized" departmental plans* were usually coordinated at the corporate l e v e l . (3) those departments which engaged i n a multitude of j o i n t programmes and e f f o r t s with other companies had to coordinate t h e i r planning perspective with those with whom they were c o l l a -borating. Otherwise th e i r e f f o r t s would appear d i s j o i n t e d . * The question designed to tap t h i s dimension (Schedule I I , Part E, Question 1, Appendix 1) s p e c i f i c a l l y asks i f these plans were "formalized i n w r i t i n g and ... reviewed and approved at top management l e v e l . " 141 Hypothesis 9 examined the c o n d i t i o n s under which the o r i g i n a l r e l a t i o n s h i p s between environmental c h a r a c t e r i s t i c s , on the one hand, and departmental s t r u c t u r e , time p e r s p e c t i v e taken i n p l a n n i n g , and frequency o f changes to p l a n s , on the oth e r , would be more pronounced than o r i g i n a l l y observed. S i z e was found to be an important t e s t f a c t o r . When the sample was s p l i t i n t o two approximately equal groups on the b a s i s o f s i z e , the r e l a t i o n s h i p s between environmental c h a r a c t e r i s t i c s and o r g a n i z a t i o n a l v a r i a b l e s became more pronounced as evidenced by the i n c r e a s e d m u l t i p l e R squared v a l u e s . Departmental s i z e , as measured by the number o f people i n the department, changed the i n f l u e n c e of environmental c h a r a c t e r i s t i c s on the three o r g a n i z a t i o n a l v a r i a b l e s examined i n t h i s study. T h i s i s under-standable from a conceptual p o i n t o f view. The l a r g e r the departmental s i z e , the more d i f f i c u l t i t would be f o r the department to adopt an o r g a n i c type o f s t r u c t u r e . Hypothesis 10 was a l s o s u s t a i n e d i n g e n e r a l . When p e r c e i v e d environmental u n c e r t a i n t y was h e l d c o n s t a n t by s p l i t -t i n g the sample i n t o two approximately equal groups on the b a s i s of t h e i r scores on p e r c e i v e d environmental u n c e r t a i n t y , the p a r t i a l r e l a t i o n s h i p s between environmental c h a r a c t e r i s t i c s and o r g a n i z a t i o n a l v a r i a b l e s decreased. I t was onl y when u n c e r t a i n t y was p e r c e i v e d and r e c o g n i z e d by the d e c i s i o n maker that t h e r e would be subsequent changes i n the departmental s t r u c t u r e , time p e r s p e c t i v e taken i n p l a n n i n g , and frequency o f changes to plans to respond to such environmental u n c e r t a i n t y . Although the p a r t i a l r e l a t i o n s h i p s decreased when p e r c e i v e d environmental uncertainty was held constant, they did not drop to zero. This would occur only i f perceived environmental uncertainty were able to interpret i n f u l l the rel a t i o n s h i p s between environ-mental c h a r a c t e r i s t i c s and organizational v a r i a b l e s . However, there are other exogenous variables -- to c i t e only two: technology (which was examined i n d e t a i l by Woodward, 1965; and Perrow, 1970), history (which was looked into by the Aston group, 1968) -- which could influence the organizational variables that were investigated i n t h i s study. In fa c t , the studies by Woodward and the Aston group showed that these variables did have an impact upon the way the organization was structured. 5.4 SUMMARY The environmental dimensions obtained after inter-item analysis and computations of correlations were subjected to factor analysis. The factor pattern obtained when 6 factors were s p e c i f i e d was clear-cut and these 6 factors were used as the independent variables in a l l subsequent ana l y s i s . The r e s u l t s of regression analyses showed that based on the data c o l l e c t e d i n this study, a 64-cell matrix may be unduly r i c h or over-expanded, and that an 8- or 16-cell typology was quite capable of explaining the va r i a t i o n s i n perceived environmental uncertainty, departmental structure, time per-spective taken i n planning, and frequency of changes to plans without too much loss of explanatory power. 143 Hypotheses 1 through 4 were strongly supported. The scores on perceived environmental uncertainty for organizational units located in d i f f e r e n t c e l l s varied s i g n i f i c a n t l y and i n the predicted fashion. Hypotheses 5 through 8 were also sus-tained. The scores on departmental structure, time perspective taken in planning and frequency of changes to plans varied s i g n i f i c a n t l y across c e l l s ; and i n the predicted fashion for departmental structure and frequency of changes to plans. Hypotheses 9 and 10 also were sustained. When size was held constant, the relationships between environmental c h a r a c t e r i s t i c s and organizational variables became more pronounced than o r i g i n a l l y observed. When perceived environ-mental uncertainty was held constant, the p a r t i a l r e l a t i o n s h i p s between environmental c h a r a c t e r i s t i c s and organizational variables decreased. 144 CHAPTER S I X SUMMARY AND I M P L I C A T I O N S 6.1 SUMMARY OF FINDINGS The p r i m a r y o b j e c t i v e s o f t h i s s t u d y were t w o - f o l d : -(1) t o v e r i f y , on an e m p i r i c a l b a s i s , J u r k o v i c h ' s c o r e t y p o l o g y f o r a n a l y z i n g o r g a n i z a t i o n a l e n v i r o n m e n t s ; and (2) t o examine the r e l a t i o n s h i p s between e n v i r o n m e n t a l c h a r a c t e r i s t i c s , p e r c e i v e d e n v i r o n m e n t a l u n c e r t a i n t y , d e p a r t -m e n t a l s t r u c t u r e , t i m e p e r s p e c t i v e t a k e n i n p l a n n i n g , and f r e q u e n c y o f changes t o p l a n s . I n the f i r s t i n s t a n c e , an attempt was made t o t e s t the v i a b i l i t y o f J u r k o v i c h ' s c o r e t y p o l o g y f o r a n a l y z i n g and i n t e r -p r e t i n g o r g a n i z a t i o n a l e n v i r o n m e n t s . J u r k o v i c h i d e n t i f i e d s i x e n v i r o n m e n t a l c h a r a c t e r i s t i c s w h i c h formed a 6 4 - c e l l m a t r i x . An i n s t r u m e n t was d e v e l o p e d t o i d e n t i f y and measure t h e s e e n v i r o n m e n t a l c h a r a c t e r i s t i c s . Data on t h e s e e n v i r o n -m e n t a l c h a r a c t e r i s t i c s were c o l l e c t e d from 64 o r g a n i z a t i o n a l u n i t s l o c a t e d i n 21 d i f f e r e n t i n d u s t r i a l o r g a n i z a t i o n s engaged i n v a r i e d types o f b u s i n e s s a c t i v i t i e s . By means o f i n t e r -i t e m a n a l y s i s , i t was demonstrated t h a t the items m e a s u r i n g a s i n g l e v a r i a b l e were i n d e e d homogeneous. C o r r e l a t i o n c o e f f i -c i e n t s were th e n computed f o r v a r i a b l e s c o n s t i t u t i n g a sub-d i m e n s i o n . These sub-dimensions were t h e n s u b j e c t e d to f a c t o r a n a l y s i s . S i x d i s c r e t e d i m e n s i o n s were o b t a i n e d . However, t h e s e were n o t i d e n t i c a l t o the s i x t h e o r e t i c a l d i m e n s i o n s 145 i d e n t i f i e d by Jurkovich. The six dimensions that were derived on an empirical basis were Pluralism, Degree of Interdependency, Routineness of Problem/Opportunity States, Organized Sectors, D i r e c t l y Related Sectors, and Change Rate. Once these dimensions were derived and measured, i t was possible to examine the relationships between environmental c h a r a c t e r i s t i c s and organizational v a r i a b l e s . By means of regression analyses (both multiple stepwise and m u l t i v a r i a t e ) , i t was found that some of the environmental c h a r a c t e r i s t i c s were not able to account, i n a s t a t i s t i c a l l y s i g n i f i c a n t sense, for much of the variatio n s i n departmental structure, time perspective taken i n planning,and frequency of changes to plans. These were the Organized Sectors, D i r e c t l y Related Sectors, and Degree of Interdependency dimen-sions. However the l a t t e r was able to account for ce r t a i n variations i n the "time perspective taken i n planning". Based on the data c o l l e c t e d in t h i s study, i t was decided that a 64-cell typology may be unduly r i c h or over-expanded. The Organized Sectors, D i r e c t l y Related Sectors, and Degree of Interdependency dimensions could be deleted from the typology without much loss of explanatory power. However i t was noted that t h i s deletion should not be construed as f i n a l and conclusive. The adequacy of an 8- or 16 - c e l l typology could very well be a feature of the limi t e d sample s i z e . This speculation was based on the ov e r a l l high multiple R squared values obtained when environmental c h a r a c t e r i s t i c s were regressed against perceived environmental uncertainty and 146 the three organizational variables investigated i n this study. Given that only 64 organizational units were studied, i t would be impossible to f i l l a l l 64 c e l l s with a s u f f i c i e n t number of units in each c e l l to permit meaningful comparison on a s t a t i s t i c a l basis. With a larger sample s i z e , however, i t might be possible to f i l l a l l of the 64 c e l l s i n Jurkovich's matrix with a large enough number of cases i n each c e l l to test i f there were indeed s t a t i s t i c a l l y s i g n i f i c a n t differences across a l l 64 c e l l s . Future studies that are based on larger samples which consist of organizational units engaged i n more diverse a c t i v i t i e s (not merely business and i n d u s t r i a l ) , should c o l l e c t information on a l l six dimensions. The r e s u l t s obtained from such future studies w i l l help to confirm or refute this speculation. The f i r s t set of hypotheses sought to investigate the relationships between environmental c h a r a c t e r i s t i c s and per-ceived environmental uncertainty. S p e c i f i c a l l y , i t was hypo-thesized that organizational units which were confronted with low environmental complexity, low degree of interdependency with environmental sectors, high degree of routineness in problem-solving a c t i v i t i e s , low change rate and whose .transac-tions were primarily with organized sectors on a d i r e c t l y r e l a t e d basis, would experience a low degree of perceived environmental uncertainty i n decision making. Conversely, organizational units that operated in an environment characterized by high complexity, high degree of interdependency, low degree of routineness i n problem-solving a c t i v i t i e s , high change rate 147 and whose transactions were primarily with unorganized sectors on an i n d i r e c t l y related basis, would be confronted with a high degree of uncertainty in decision making. The four hypotheses that were s p e c i f i c a l l y designed to investigate these r e l a t i o n -ships were strongly supported in the an a l y s i s . It was found that the degree of perceived environmental uncertainty experienced by organizational units located i n d i f f e r e n t c e l l s varied s i g n i -f i c a n t l y from each other and i n the predicted fashion. The Change Rate dimension was the single greatest contributor to the v a r i a t i o n in Perceived Environmental Uncertainty. A l l environmental dimensions, with the exception of the Degree of Interdependency, were s t a t i s t i c a l l y s i g n i f i c a n t at the .05 l e v e l or l e s s . The second set of hypotheses was concerned with the rel a t i o n s h i p s between environmental properties and departmental structure, time perspective taken i n planning, and frequency of changes to plans. S p e c i f i c a l l y , i t was hypothesized that organizational units which were confronted with low environ-mental complexity, low degree of interdependency with environ-mental sectors, high degree of routineness i n problem-solving a c t i v i t i e s , low change rate and whose transactions were pr i m a r i l y with organized sectors on a d i r e c t l y r e l a t e d basis, would be most l i k e l y to adopt a mechanistic structure, and engage i n long-range planning with few modifications to such plans. Conversely, organizational units that operated in an environ-ment characterized by high complexity, high degree of in t e r -dependency, low degree of routineness i n problem-solving 1 4 8 a c t i v i t i e s , h i g h change r a t e and whose t r a n s a c t i o n s were p r i m a r i l y with unorganized s e c t o r s on an i n d i r e c t l y r e l a t e d b a s i s , would be most l i k e l y to adopt an o r g a n i c s t r u c t u r e , and engage i n s h o r t e r range p l a n n i n g with frequent and major modi-f i c a t i o n s and adjustments to such plans along the way. I t was found that departmental s t r u c t u r e , time p e r s p e c t i v e taken i n p l a n n i n g , and frequency o f changes to p l a n s v a r i e d s i g n i -f i c a n t l y between o r g a n i z a t i o n a l u n i t s l o c a t e d i n d i f f e r e n t c e l l s . S t r u c t u r e and frequency of changes to plans v a r i e d a c r o s s c e l l s i n the p r e d i c t e d f a s h i o n , i . e . o r g a n i z a t i o n a l u n i t s l o c a t e d i n the extreme north-west c o r n e r c e l l possessed the most mechanis-t i c s t r u c t u r e and had the lowest frequency o f changes to p l a n s over the l i f e - t i m e of such plans and p o l i c i e s . O r g a n i z a t i o n a l u n i t s l o c a t e d i n the extreme south-east c o r n e r c e l l , on the other hand, possessed the most f l e x i b l e s t r u c t u r e and exp e r i e n c e d the h i g h e s t i n c i d e n c e o f changes to plans and p o l i c i e s . S i z e was found to be an important t e s t f a c t o r . When i t was h e l d c o n s t a n t , the r e l a t i o n s h i p s between environmental c h a r a c t e r i s t i c s and o r g a n i z a t i o n a l v a r i a b l e s became more pro-nounced . U n c e r t a i n t y was a l s o found to be an important i n t e r v e n i n g v a r i a b l e . When p e r c e i v e d environmental u n c e r t a i n t y was h e l d c o n s t a n t , the p a r t i a l r e l a t i o n s h i p s between environmental charac-t e r i s t i c s and o r g a n i z a t i o n a l v a r i a b l e s decreased. 149 6.2 IMPLICATIONS OF RESEARCH FINDINGS (1) The most important finding of the present study i s that i t i s possible to both conceptualize and operationalize organizational environments in terms of more than two dimen-sions. Previous researchers i n the f i e l d of organization-environment i n t e r a c t i o n have not moved beyond f o u r - c e l l typo-l o g i e s . In this study, i t has been shown that i t i s indeed possible to define and analyze the environment i n terms of six dimensions. Five of these six dimensions were able to account for variations i n the amount of perceived environ-mental uncertainty experienced by an organizational unit i n i t s decision making a c t i v i t i e s . (p$.05). Three of the six environ-mental dimensions were shown to be s i g n i f i c a n t predictors of variations i n departmental structure, time perspective taken in planning, and frequency of changes to plans. Based on these findings, i t i s believed that a 16- or 8 - c e l l typology i s quite capable of explaining the variations in departmental structure, time perspective taken i n planning, and frequency of changes to plans without too much loss of explanatory power. However, as was stressed e a r l i e r , i t may be necessary to adopt a more expanded typology a f t e r analysis of a much larger sample. It i s believed that the r e s u l t s of t h i s research provide a s i g n i f i c a n t improvement over the f o u r - c e l l typologies heretofore a v a i l a b l e . A more elaborate typology of organizational environments can a s s i s t organizational t h e o r i s t s , researchers and p r a c t i t i o n e r s to more c l e a r l y d i s t i n g u i s h and 150 i d e n t i f y the problems confronting organizational units operat-ing i n d i f f e r e n t environments. Once a c l e a r e r diagnosis can be made, prognosis would be f a c i l i t a t e d . Under a more refined and expanded typology, prognosis would be. more d e t a i l e d and more accurate than that possible i f the diagnosis were based only on more broad and general guidelines. As was pointed out e a r l i e r , a more refined and elaborate typology could a s s i s t i n the generation of more s p e c i f i c and sophisticated hypotheses concerning the relationships between environmental and organi-zational variables, which could subsequently be tested i n the f i e l d . This study has examined merely the impact of environ-mental c h a r a c t e r i s t i c s on uncertainty, departmental structure, time perspective taken i n planning, and frequency of changes to plans. Although these are undoubtedly very important va r i a b l e s , they are by no means the only ones that should be investigated i n subsequent studies. In f a c t , the research reported here i s just a step toward a series of more d e t a i l e d investigations and analyses of styles and patterns of people i n t e r a c t i o n , organization-people i n t e r a c t i o n , and organization-organization i n t e r a c t i o n . Results of such analyses could revolutionize the whole area of thinking i n organizational theory and behavioural research. (2) Further, a more refined basis for d i f f e r e n t i a t i n g between organizational environments can lead to the development of a better core typology of organizations. Two important questions immediately come to mind:-151 (a) i s a typology of organizations necessary or are such e f f o r t s merely an academic exercise? (b) how could a better and more thorough conceptualization of environmental c h a r a c t e r i s t i c s contribute to the development of a better core typology of organizations? With respect to the f i r s t question, Richard Hall (1972) pointed to the need for developing typologies or frameworks to a s s i s t us i n understanding and giving order to phenomena and s t i m u l i that surround us. Discussion of typologies can seem e n t i r e l y academic. As a matter of fact they are not. Man must c l a s s i f y phenomena in order to be able to think about them. He must have some framework by which to view the world around him, or else he is surrounded by an unordered kaleidoscope of s t i m u l i , rendering him unable to function at a l l . ( H a l l , 1972, pp. 39-40) Man i s l i m i t e d i n his cognitive a b i l i t i e s . There are l i m i t s to man's a b i l i t i e s to grasp and comprehend complex phenomena in t h e i r natural and unordered states. A s a t i s f a c t o r y typology would provide a framework whereby he could give order to such complex phenomena and draw cognitive maps of the r e l a t i o n s between groups or classes. This i s the reason \\rhy in any major f i e l d of inquiry, either i n the physical or s o c i a l sciences, man has sought to c l a s s i f y or rank-order the phenomena under in v e s t i g a t i o n . And organizational analysis should be no excep-t i o n . The ramifications of any improvement or development of a better core typology of organizations would be far-reaching. After a l l , developed s o c i e t i e s are made up of organizations of one sort or another. An improved typology of organizations 152 would provide a better basis to i d e n t i f y or d i f f e r e n t i a t e the points of s i m i l a r i t y or d i s s i m i l a r i t y between categories. Any c l a r i f i c a t i o n s in this respect would f a c i l i t a t e the free flow and interchange of formulae and ideas developed i n one or two organizations within a given category to the other members of the group. A s a t i s f a c t o r y answer to the second question requires at least a cursory survey of the work that has been done in the area of c l a s s i f i c a t o r y schemes for d i f f e r e n t i a t i n g organi-zations. Most previous typologies of organizations have sought to c l a s s i f y organizations on the basis of one key v a r i a b l e . T a l c o t t Parsons (1960) , for instance, attempted to c l a s s i f y organizations on the basis of type of function or goal served by the organization. E t z i o n i (1961, pp. 23-67) used "compliance" as the major source of d i f f e r e n t i a t i o n between organizations. Blau and Scott (1962, pp. 40-58), on the other hand, used the "prime beneficiary of the organization's actions" as the key variable for distinguishing organizations. These formulations based on a single p r i n c i p l e have been c r i t i c i z e d by other theorists and researchers in the f i e l d . Burns (1967), for instance, argued that the E t z i o n i typology was over-simplified and "leaves too many things unexplained and u t i l i z e s some unwarranted assumptions." Based on a study of 75 organizations, H a l l , Haas and Johnson (1967) found that the E t z i o n i and the Blau and Scott formulations did not hold up empirically. 153 The typology advanced by Katz and Kahn (1966) was more elaborate. These investigators sought to c l a s s i f y organizations on the basis of f i r s t and second order c h a r a c t e r i s t i c s . "Although the organizational c h a r a c t e r i s t i c s that Katz and Kahn discuss are quite relevant dimensions along which organizations vary, the goals-and-function approach does not seem to be a s u f f i c i e n t l y discriminating c l a s s i f i c a t o r y b asis." ( H a l l , 1972, p. 45). Based on a c r i t i c a l review of e x i s t i n g typologies and the r e s u l t s of his own empirical research (Haas, Hall and Johnson, 1966), H a l l arrived at the conclusion that: The essence of the typological e f f o r t r e a l l y l i e s i n the determination of the c r i t i c a l variables for d i f f e r e n t i a t i n g the phenomena under in v e s t i g a t i o n . Since organizations are highly complex e n t i t i e s , c l a s s i f i c a t o r y schemes must represent this complexity. An adequate o v e r a l l c l a s s i f i c a t i o n would have to take into account the array of external conditions (emphasis mine), the t o t a l spectrum of actions and interactions within an organization, and the outcome of organi-zational behaviors. (1972, p. 41). In short, i n v e s t i g a t i o n of one single variable or dimension would not provide an adequate scheme for analyzing organi-zations. Since organizations do not operate i n a vacuum, any comprehensive scheme for c l a s s i f y i n g organizations would have to take into consideration the "array of external conditions" under which the organization operates. Although H a l l did not develop a typology that would provide a s a t i s f a c t o r y basis for c l a s s i f y i n g organizations, he did i d e n t i f y some of the major and c r i t i c a l elements that were necessary for organizational 154 analysis. A comprehensive c l a s s i f i c a t o r y scheme ... should treat the organization as both a dependent and independent variable. It i s a dependent variable when we consider factors such as technology, the general environment, and the nature of the personnel coming into the organization.... The organization becomes the independent variable in r e l a t i o n to the impact of i t s outputs, the compliance structure, employee morale and s a t i s f a c t i o n , or patterns of internal c o n f l i c t . The adequate typology should be empirically based. Relationships that have been demonstrated should serve as the basis for c l a s s i f i -cation and the demonstration of further r e l a t i o n s h i p s . Although a typology of organizations i s not availa b l e , many empirical relationships have been demonstrated and others have been hypothesized and proposed. As these are tested, the typological e f f o r t w i l l advance, and i t may be possible at some future time to state than an organization with an x environmental configuration w i l l have a y st r u c t u r a l and processual system with a z set of output r e l a t i o n s h i p s . (Hall, 1972, pp. 77-78) As stated previously, this study did not attempt to examine a l l possible relationships between environmental charac-t e r i s t i c s and " s t r u c t u r a l and processual systems", nor did i t look into the "z set of output r e l a t i o n s h i p s " discussed by H a l l . Nevertheless, the study did investigate one of the key sets of variables which should be encompassed i n any comprehen-sive scheme for c l a s s i f y i n g organizations. Given a better understanding of organizations based on environmental differences and the development of an instrument for measuring such differences, theorists and researchers would be better equipped to rethink and refine e x i s t i n g typologies of organizations. 155 (3) In addition, a more comprehensive typology of organiza-t i o n a l environments could lead to the development of a more sa t i s f a c t o r y framework for analyzing or assessing organi-zational effectiveness. In Chapter One, i t was pointed out that theorists and researchers are becoming increasingly aware of the necessity of incorporating organizational environments into any framework for analyzing organizational effectiveness. In a recent and comprehensive study of organizational effectiveness, Steers (1976) pointed to the f u t i l i t y of any approach which t r i e d to view "the concept (of organizational effectiveness) within a unidimensional framework, focusing on only one evaluation c r i t e r i o n (e.g. p r o d u c t i v i t y ) . " (Steers, 1976, Chapter 3, p. 2) He argued instead for the use of "multivariate effectiveness measures" to analyze and assess a concept as complex as organizational effectiveness. These models (multivariate ones) have a d i s t i n c t advantage over univariate techniques i n that they generally represent attempts to study in a more comprehensive fashion the major sets of variables involved i n the effectiveness construct and to demonstrate or at least suggest how such variables f i t together. (Steers, 1976, Chapter 3, p. 7). He s p e c i f i e d environmental c h a r a c t e r i s t i c s as one of the major sets of variables i n his framework for analyzing organizational effectiveness. Hence, any improvement i n i d e n t i f y i n g and measuring environmental c h a r a c t e r i s t i c s would make d e f i n i t e and p o s i t i v e contributions towards the assessment of the organi-zational effectiveness construct. 156 In a world of munificence and plenty, effectiveness was one of the most important c r i t e r i a for j u s t i f y i n g the existence of an organization. It has become increasingly apparent that the t r a d i t i o n a l basis of organizational theory must be questioned i n view of the fact that resources are indeed f i n i t e . (Scott, 1974). In a world of diminishing resources where " s c a r c i t y " i s r a p i d l y becoming a frequently-encountered terminology and topic of discussion, the whole question of effectiveness presents i t s e l f with greater urgency. The Club of Rome studies of world resources are well-known. They conclude that world resources w i l l not sustain present l e v e l s of population, growth and consumption. These studies project resource c r i s e s by 1990. Similar projections are also made by the English study, Blueprint  for S urvival. Recently, the U.S. Geological Survey added the weight of i t s authority to the impending c r i s e s by i d e n t i f y i n g American d e f i c i e n c i e s i n i t s natural resources base. (Scott, 1974, p. 247) Unless some revolutionary discoveries are made soon, " s c a r c i t y " or at l e a s t a concern for conservation and e f f e c t i v e u t i l i z a t i o n of diminishing resources w i l l influence organizations increasingly during the years to come. In the area of organi-zational theory, t h e o r i s t s have already begun to study the implications that " s c a r c i t y " would have upon p r i n c i p l e s of organization and management that were based on assumptions of growth and plenty. (Scott, 1974; Moudgill, 1975). Thus the need for more comprehensive models for analyzing and assessing effectiveness that incorporate increased understanding of the organizational environment i s l i k e l y to grow in the years ahead. 157 (4) It w i l l be r e c a l l e d that i n the present i n v e s t i g a t i o n , departments were used as the units of analysis rather than the t o t a l organization. It was found that environmental c h a r a c t e r i s t i c s confronting d i f f e r e n t departments i n an organization do vary. In l i g h t of these findings, we should re-examine the findings of much e a r l i e r research that was based on t o t a l organizations. We should ask whether c e r t a i n p r i n c i p l e s or prescriptions are indeed applicable across the organization or whether they can be applied with any degree of accuracy only to p a r t i c u l a r departments or organizational u n i t s . In t h i s same vein, I would l i k e to question the common practice of applying c e r t a i n p r i n c i p l e s and prescriptions across groups of organizations that perform s i m i l a r functional a c t i v i t i e s . This practice i s r e a l l y a function of e x i s t i n g c l a s s i f i c a t o r y schemes for d i f f e r e n t i a t i n g organizations. As pointed out previously, several of these u t i l i z e "goals or functions" as the major c r i t e r i o n for d i f f e r e n t i a t i n g organi-zations. As Charles Perrow pointed out:-... types of organizations -- i n terms of th e i r functions i n society -- w i l l vary as much within each type as between types. Thus, some schools, hosp i t a l s , banks and steel companies may have more in common, because of their routine character, than routine and nonroutine schools, routine and nonroutine hospitals, and so for t h . (1967, p. 203) There can be, and possibly i s , as much i f not more organizational v a r i a t i o n within categories based on functional 158 a c t i v i t i e s , as between them.* Again, the need i s shown for organizational typological schemes that incorporate environ-mental c h a r a c t e r i s t i c s as one of the major areas to be i n v e s t i -gated, as well as the need to recognize that the environment confronting d i f f e r e n t departments i n a given organization (and for that matter, organizations performing the same functional a c t i v i t i e s ) do vary. Hence, any p r i n c i p l e s or p r e s c r i p t i o n s that are applied across organizations p r i m a r i l y because the l a t t e r perform the same broad functions, should be suspect and re-examined i n that l i g h t . (5) Findings reported i n the l i t e r a t u r e about the influence of size on organizational c h a r a c t e r i s t i c s are diverse and far from conclusive. One possible reason for such diverse findings could be attributed to the fact that size was often used as a predictor variable i n previous research. For example, Pugh et a l (1969a) used size as a predictor of the manner i n which a c t i v i t i e s were structured, authority concentrated, and work flow con-t r o l l e d . After a c r i t i c a l review of the l i t e r a t u r e pertaining to s i z e , H a l l (1972) was of the opinion that: . . . size has a variable impact on the organization and that i t cannot be taken as a simple p r e d i c t o r , as i t often i s . . . The size factor i s greatly modi-f i e d by the technology or technologies employed by Analysis of covariance of the data in the present research was conducted using structure, time perspective taken in planning, and frequency of changes to plans as the dependent variables; functional a c t i v i t y as the major factor, and environmental characteristics as the covariates. The significance levels associated with the dependent variables were structure (.621), time perspective taken in planning (.358), and frequency of changes to plans (.786). These significance levels i n d i -cate that there were no significant differences based on type of a c t i v i t y (continued on bottom of next page). 159 the organization... Further modifications of the impact of size are caused by environmental factors and the presence of p a r t i c u l a r kinds of personnel, such as professionals. As an explanatory t o o l , s i z e must be u t i l i z e d in conjunction with these other c h a r a c t e r i s t i c s . . . When s i z e . . . is taken i n conjunc-ti o n with technological and environmental fa c t o r s , p r e d i c t i o n regarding organizational structures and processes can be made. (1972, pp. 137-139) In th i s study, size was u t i l i z e d as a test factor to elaborate the relationships between environmental c h a r a c t e r i s t i c s and organizational variables. When size was held constant by s p l i t t i n g the sample into two approximately equal groups on the basis of departmental s i z e , the relationships between environmental c h a r a c t e r i s t i c s and organizational variables became more pronounced than those o r i g i n a l l y observed. Thus th i s study lends support to the contention that s i z e , when taken i n conjunction with other variables such as environmental c h a r a c t e r i s t i c s , does have an impact upon organizational structure and processes. The case i s strengthened for the argument that prescriptions for the "best way" to organize given c e r t a i n environmental properties, cannot be made without due recognition of the "departmental s i z e " f a c t o r . (6) The l a s t but by no means least important finding of t h i s study has to do with the relationships between environmental and organizational c h a r a c t e r i s t i c s . The present findings are in l i n e with those obtained by other researchers of organi-zation-environment i n t e r a c t i o n (Lawrence and Lorsch,' 1967; (continued from footnote on previous page) performed by the company. In other words, Perrow fs a s s e r t i o n i s supported that v a r i a t i o n s within categories based on f u n c t i o n a l a c t i v i t y could be as marked as v a r i a t i o n s between categories. Duncan, 1970) . It was shown that Change Rate has the single greatest e f f e c t upon the v a r i a t i o n i n Perceived Environmental Uncertainty; and that the departmental structure, time perspec ti v e taken in planning, and frequency of changes to plans of organizational units located i n d i f f e r e n t environments do vary Thus, this study points to the importance of achieving " f i t s " between environmental and organizational variables to ensure the long-run survival of the organizational unit under study. It points to the need for organizations, or more s p e c i f i c a l l y organizational units, to c o r r e c t l y i d e n t i f y the environment they are operating i n , and the importance of gathering i n t e l l i gence on any changes that may take place i n the environment, i n order to develop strategies and techniques to e f f e c t i v e l y cope and deal with such environmental demands and constraints. 6,3 LIMITATIONS OF THE RESEARCH Despite the important implications of the present study for organizational theory and research, the study suffers from several l i m i t a t i o n s . These are related to time constraints, lack of a v a i l a b i l i t y of subjects and the present state of our knowledge about the relationships between c e r t a i n variables i n our f i e l d . Readers should take these l i m i t a t i o n s into consi-deration when they are i n t e r p r e t i n g the r e s u l t s of this study. The l i m i t a t i o n s of t h i s research are:-(1) Limited sample s i z e . The sample consisted of 64 organi-161 zational units from 21 d i f f e r e n t companies engaged i n 7 d i f f e r e n t business/industrial a c t i v i t i e s . As pointed out previously, the locus of the research limited the number of business and indus-t r i a l firms that met the c r i t e r i a for in c l u s i o n i n the study. Fortunately, the sample size obtained was not so small as to preclude the app l i c a t i o n of a variety of sophisticated s t a t i s t i -c a l procedures. In addition, the author adjusted for the sample size by c a l c u l a t i n g the "unbiased estimate of population multiple c o r r e l a t i o n " (R ) to estimate the shrinkage i n going from a sample of a given size to an i n f i n i t e l y large sample. (2) One of the problems that researchers must contend with i n research design i s the problem of inter n a l versus external v a l i d i t i e s . Campbell and Stanley (1973) have shown that these two kinds of v a l i d i t i e s are not always compatible i n a given research design since the researcher often has to make a trade-o f f of one against the other. Both types of c r i t e r i a are obviously important, even though they are frequently at odds i n that features increasing one may jeopardize the other. (Campbell and Stanley, 1973, p. 5) Unless the researcher has unlimited time, f a c i l i t i e s and funds at his disposal, i t i s not always possible to maximize both types of v a l i d i t i e s i n a given research study. Since this study was of an exploratory nature and the researcher was more interested i n developing and v a l i d a t i n g an instrument for measuring dimensions of a rather expanded typo-logy, more attention was devoted to features of design that would maximize i n t e r n a l v a l i d i t y . The sample was confined to 162 business and i n d u s t r i a l firms located i n the Lower Mainland area of B r i t i s h Columbia. The c u l t u r a l environment was assumed to be homogeneous and the firms were profit-seeking business organizations. Hence, i t i s not clear whether the typology and instrument developed for measuring dimensions of this typology could be applied to i n d u s t r i a l organizations located i n other geographic areas, and whether they could be applied to non-profit organizations. If the typology and instrument are not applicable to such s i t u a t i o n s , the modifi-cations that would be required remain as an empirical question. (3) As pointed out i n Chapter One, i t was beyond the scope of t h i s research to examine what impact the " f i t " between organization environmental c h a r a c t e r i s t i c s and organization s t r u c t u r a l variables would have upon the effectiveness of the organization. It has been noted that effectiveness i s a very important area of i n v e s t i g a t i o n . Hence, t h i s study could make statements only about the p r o b a b i l i t y of finding a given type of structure within a department confronted with a given type of environment, but the effectiveness of t h i s structure in f a c i l i t a t i n g the department's adaptation to environmental constraints could not be assessed. Although effectiveness was not e x p l i c i t l y investigated, i t was i m p l i c i t in s e l e c t i o n of the sample. A l l the organi-zations selected for study were high performers i n terms of return on investment. In fact, a number of the firms covered in t h i s study were among the ten largest firms i n B r i t i s h Columbia. 163 (4) A fourth and f i n a l weakness of this study i s the f a i l u r e to investigate the exact relationship between environmental c h a r a c t e r i s t i c s and organization s t r u c t u r a l v a r i a b l e s . Given the present state of our understanding about the r e l a t i o n s h i p s between environmental c h a r a c t e r i s t i c s , uncertainty and organi-zational structure, and the fact that t h i s study was only c o r r e l a t i o n a l in nature, i t was d i f f i c u l t , i f not impossible, to make clear and d e f i n i t i v e statements about the d i r e c t i o n of c a u s a l i t y . 6,4 TOPICS FOR FUTURE RESEARCH Throughout the study, both implications and s p e c i f i c needs for future research have been alluded to or noted. At this point, i t seems appropriate to b r i e f l y summarize these. (1) Examine what impact the " f i t " between environmental c h a r a c t e r i s t i c s and organizational variables has upon the effectiveness and long-run survival of the company. (2) This study only examined three organizational v a r i a b l e s . There are a whole multitude of variables r e l a t i n g to i n t e r -personal behaviour, which could be investigated as a function of environmental c h a r a c t e r i s t i c s . (3) This study treated the organization or department as a passive e n t i t y which seeks to respond or adapt to environmental demands and constraints. As Child (1972, p.4) noted: "Organi-zations also determine the environment to a c e r t a i n extent, p a r t i c u l a r l y larger ones." This is c l e a r l y i n l i n e with Miles, 164 P f e f f e r and Snow's (1974, p. 251) assertion that "while organi-zations are c l e a r l y influenced by forces i n t h e i r domain, they also have a wealth of available means for a l t e r i n g t h e i r environ-ments to make them conform more c l o s e l y to what the organization can change." Thus, future studies should also study the strategies adopted by organizations to modify the environment. (4) Longitudinal studies pertaining to organizational adapta-t i o n to the environment. As Miles et a l (1974, p. 259) pointed out: "cross-sectional studies u t i l i z i n g s t a t i c models cannot possibly capture the richness of the responses which organi-zations make to ensure th e i r s u rvival and foster growth." (5) In this study, perceived environmental uncertainty was used as an intervening variable to interpret the relationships between environmental c h a r a c t e r i s t i c s and organizational variables. A l l the possible sources of v a r i a b i l i t y i n per-ceptions were not examined. Downey and Slocum (1975) suggested four sources of v a r i a b i l i t y : perceived environmental charac-t e r i s t i c s , i n d i v i d u a l cognitive processes, behavioral response repertoire and s o c i a l expectations. Those sources of v a r i -a b i l i t y that were not looked into in the present study should be investigated i n future research. 165 6.5 SOME CONCLUDING REMARKS Future research on organization-environment i n t e r a c t i o n should c a p i t a l i z e on the strengths and seek to minimize the weaknesses of the present research. S p e c i f i c a l l y , the instrument for measuring environmental c h a r a c t e r i s t i c s should be applied to much broader samples consist-ing of organizational units located i n d i f f e r e n t geographic areas and engaged in very diverse a c t i v i t i e s . Results of such research would a s s i s t in further r e f i n i n g and v a l i d a t i n g the instrument. In addition, future research designs should examine what implications the " f i t " between environmental and organi-zational c h a r a c t e r i s t i c s would have on organizational e f f e c t i v e -ness. 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APPENDIX ONE INSTRUMENT FOR MEASURING ORGANIZATIONAL VARIABLES 178 SCHEDULE 1: INTERVIEW SCHEDULE FOR MEASURING DEPARTMENTAL AUTONOMY Below i s a l i s t of the things on which departmental heads may or may not have to make decisions. Let us c a l l these decision issues or decision items. Some of these things may not apply to your department. For each of those decision items that do apply, please indicate whether or not the "authority to decide" on that p a r t i c u l a r issue rests within  your department (but not necessarily with you as an in d i v i d u a l ) by c i r c l i n g "yes" or "no". For those decision items that do not apply, please make a c i r c l e i n the column "Not Relevant". (Note: "Authority to Decide" on a decision issue means that i n most instances, action can be taken on the decision without wait-ing for confirmation from above, even i f the decision i s l a t e r r a t i f i e d at a higher level.) DECISION ISSUES Changing the i n t e r n a l patterns of s i ^ p f ^ i f i ^ L . Appointment of Supervisory s t a f f from outside the organization (external recruitment) Promotion of Supervisory S t a f f Dismissing a Supervisor Setting Salaries of Supervisory s t a f f within broad company guidelines Determining a New Product or Service or Major l i n e of e f f o r t IS AUTHORITY INSIDE YOUR DEPARTMENT? Yes Determining Marketing t e r r i t o r i e s covered (where new or e x i s t i n g outputs are to be marketed) The Extent and Type of Market to be aimed for Pr i c i n g of the Output or Service ^ Training Methods to be used (how tra i n i n g should be done) Yes Yes Yes Yes No No Not Relevant Not Relevant No No No Yes No Yes Yes No No Yes Yes No No Not Relevant Not Relevant Not Relevant Not Relevant Not Relevant Not Relevant Not Relevant Not Relevant 179 DECISION ISSUES IS A U THORITE DEPAR1 ' I N S I D E Y O U R : M E N T ? Spending unbudgeted or unallocated money on c a p i t a l items (using money not previously ear-marked for a p a r t i c u l a r purpose for what would be classed as c a p i t a l expenditure Yes No Not Relevant A l t e r i n g Responsibilities/areas of work Yes No Not Relevant Creating a new job (functional, s p e c i a l i s t or l i n e , of any status, probably s i g n i f i e d by a new job t i t l e ) Yes No Not Relevant Number of f u l l - t i m e employees i n your department -Number of part-time employees i n your department = 180 SCHEDULE I I : INTERVIEW SCHEDULE FOR DEPARTMENTAL STRUCTURAL VARIABLES  Part A Instructions: This part of the questionnaire seeks to i d e n t i f y the d i v i s i o n of labour within your department. The following i s a l i s t of a c t i v i t i e s which may or may not be performed by your department. Where the a c t i v i t y i s relevant, please indicate whether or not the function i s performed by at least one person on a f u l l - t i m e basis. ACTIVITIES YES NO NOT RELEVANT A c t i v i t i e s to obtain and control Non-human inputs: materials, equip-ment, stocks A c t i v i t i e s to record and control f i n a n c i a l resources A c t i v i t i e s to maintain and develop non-human resources: buildings, equipment, etc. A c t i v i t i e s to carry outputs and resources from place to place A c t i v i t i e s to maintain and i d e n t i f y human resources: medical, welfare, safety A c t i v i t i e s to control and regulate the q u a l i t y of non-human inputs and outputs A c t i v i t i e s to regulate and coordinate the workflow A c t i v i t i e s to dispose of, d i s t r i b u t e and service the output —, A c t i v i t i e s to devise new outputs and processes A c t i v i t i e s to acquire human resources A c t i v i t i e s to regulate and record administrative procedures A c t i v i t i e s to develop and transform human resources, e.g. t r a i n i n g A c t i v i t i e s to meet l e g a l requirements a f f e c t i n g your department Part B Instructions: This part of the questionnaire seeks to i d e n t i f y the amount of  standardization within your department, i . e . the extent to which a c t i v i t i e s and people are subject to procedural r u l e s . Please answer the following set of questions by f i l l i n g i n the number representing the response category i n the blank spaces provided in the right-hand column. 1 means D e f i n i t e l y True 2 means More True than False 3 means More False than True 4 means D e f i n i t e l y False 1. Employees enjoy considerable latitude i n performing t h e i r duties within broad guidelines l a i d down by t h e i r superiors. 2. A person can make his own decisions without checking with any-body else as long as he gets the job done to the s a t i s f a c t i o n of his superiors. 3. How things are done i n t h i s department i s l e f t up to the person doing the work. 4. People here are allowed to do almost as they please i n most instances. 5. Most people here make t h e i r own rules on the job provided they get the work done. 6. The employees are constantly checked upon for r u l e v i o l a t i o n s . 7. People here f e e l as though they are constantly being watched to see that they obey a l l the rules. 8. In t h i s department, most people recognize that t h e i r work/ decisions are only checked on major issues/problems, i . e . the end products or outcomes are subject to s c r u t i n y rather than the means to the ends. 9. You don't f i n d many people here who complain o f excessive supervision. 10. People here f e e l that they are v i r t u a l l y never checked upon f o r adherence to "procedural rules" as long as they get the work done. 182 Part C Instructions: This part of the questionnaire i s designed to i d e n t i f y the degree of formalization i n your department, i . e . the extent to which communi-cations and procedures are written down and adhered to. Please indicate by means of a check mark on the "yes" or "no" columns whether your department possesses documents on the following. A document i s defined as at least a single piece of paper with printed, typed or otherwise reproduced content - not handwritten. DOCUMENTS YES NO Written contracts of employment Information booklets on employment, conditions, safety, pensions, etc. Organization Chart Written operating instructions available to the rank and f i l e employees (including instructions attached to equipment) Written terms of reference or job descriptions for rank and f i l e employees Written terms of reference or job descriptions for supervisors Manual of procedures (or standing orders) Written statement of p o l i c i e s (excluding minutes of committees) Written production schedules or sales programmes Written research programme ( l i s t i n g intended research work) and/or research reports (reporting work done) 183 For the next set of questions, please indicate whether your department has written records that are f i l e d away somewhere on the following a c t i v i t i e s . ACTIVITIES j YES NO NOT RELEVANT N o t i f i c a t i o n of employment of rank and f i l e employees Minutes for senior executive meetings Conference reports Agendas for senior executive meetings Agendas for meetings such as production planning, manpower planning or sales promotions Minutes for meetings such as production planning, manpower planning or sales promotions Dismissal forms or reports recording or communicating the dismissal of rank and f i l e employees House journals or newspapers Records of inspections performed (e.g. reports, c e r t i f i c a t e s , q u a l i t y cards, etc. recording both p o s i t i v e and negative r e s u l t s , not merely a r e j e c t i o n s l i p ) Performance appraisal reports of rank and f i l e employees Records of rank and f i l e employees' time, i. e . number of hours, days or weeks worked Petty cash vouchers, authorizing and recording petty expenditure Requisitions for employment of rank and f i l e employees Application or employment forms for rank and f i l e employees Grievance forms Appeal forms against Dismissal 184 ACTIVITIES YES NO NOT RELEVANT Documents i d e n t i f y i n g units of output (e.g. work orders, work t i c k e t s , sales checks or ti c k e t s i n a r e t a i l store, insurance p o l i c i e s i n an insurance of f i c e ) Shipping t i c k e t s communicating dispatch of unit of output Written trade union contracts Written h i s t o r y of the organization 185 Part D Instructions: This part of the questionnaire i s designed to i d e n t i f y the extent of p a r t i c i p a t i o n i n decision making that i s a c t u a l l y allowed in your department. For each of the following questions, please c i r c l e the appropriate response category. T = True i n most instances F = False in most instances 1. How are objectives set i n your department? (a) Objectives are announced with no opportunity to ask questions or make comments. (b) Objectives are announced and explained, and an opportunity i s then given to ask questions. (c) Objectives are drawn up, but are discussed with subordinates and sometimes modified before being used. (d) S p e c i f i c a l t e r n a t i v e objectives are drawn up by supervisors, and subordinates are asked to discuss them and indicate the one which they think i s best. (e) Problems are presented to those persons who are involved, and the objectives f e l t to be best are then set by the subordinates and the supervisor j o i n t l y , by group p a r t i c i p a t i o n and discussion. T F T F T F T F T F Instructions: Please answer the following set of questions by f i l l i n g i n the number representing the response category in the blank spaces provided in the right-hand column. 1 means To a Very L i t t l e Extent 2 means To a L i t t l e Extent 3 means To Some Extent 4 means To a Great Extent 5 means To a Very Great Extent 2. In t h i s department, to what extent are decisions made at le v e l s above those levels where the most adequate and accurate i n f o r -mation i s available, i . e . to what extent are decisions made at a higher l e v e l than i s appropriate? 3. When decisions are being made, to what extent are the persons affected asked for t h e i r ideas? 4. People at a l l l e v e l s i n a department may have information about how to do things better. To what extent do you f e e l such information from a l l lev e l s i s used? 5. To what extent are the persons who make decisions unaware of relevant problems at lower levels in the department? 1 8 7 Part E Instructions: This part of the questionnaire i s concerned with the time perspective adopted by your department i n planning future a c t i v i t i e s and p o l i c i e s to be pursued by your department. Please answer the following questions by f i l l i n g i n the number representing the response category i n the blank spaces provided i n the right-hand column. 1 . In general, how would you characterise the time perspective adopted by your department i n planning future p o l i c i e s and goals to be pursued by your department? 1 means Short-range Planning: less than 1 year 2 means Medium-range Planning: between 1 to 3 years  3 means Long-range Planning: over 3 years I f you checked response category ( 3 ), are these long-range plans formalized i n wr i t i n g and are they reviewed and approved at top management level? 2 . Over the l i f e - t i m e of a plan or programme of action, changes may occur i n both the i n t e r n a l and external environments which necessitate changes to e x i s t i n g plans and programmes of action. Now think about the plans and programmes that your department has been engaged i n over the course of the past 3 or 4 years. How often were changes (both formal and informal, major and  minor) made to e x i s t i n g departmental plans and programmes? Please choose one of the following response categories and f i l l out the number representing the category i n the blank space provided to the r i g h t . 1 means Very Seldom (changes to less than 207o of the o r i g i n a l plans) 2 means Seldom (changes to 20 - 40%, of the o r i g i n a l plans) 3 means Sometimes (changes to 40 - 607 o of the o r i g i n a l plans) 4 means Frequently (changes to 60 - 80% of the o r i g i n a l plans) 5 means Very Often (changes to more than 80% of the o r i g i n a l plans) APPENDIX TWO -TEST INSTRUMENT FOR MEASURING ENVIRONMENTAL CHARACTERISTICS WORKSHEET #1 INTRA-DEPARTMENTAL ENVIRONMENT = WITHIN THE DEPARTMENT ITSELF (1) Take i n t o Consideration (2) Level of Certainty (3) Range 1. Intra-departmental personnel component, i . e . concerning people i n your department: (a) Educational background of your employees, inc l u d i n g t e c h n i c a l expertise, etc. (b) Previous work experience of your employees c u r r e n t l y employed i n your department (c) Individual member's involvement and commitment to a t t a i n i n g depart-mental goals (d) Interpersonal behaviour s t y l e s (e) A v a i l a b i l i t y of manpower f o r u t i l i z a t i o n within the department INTER-DEPARTMENTAL ENVIRONMENT = WITHIN THE COMPANY ITSELF 2. Inter-departmental personnel component, i . e . concerning people i n your company: (a) Educational background of employees, in c l u d i n g t e c h n i c a l expertise, etc. (b) Previous work experience of people c u r r e n t l y employed i n your organi-zation as a whole (c) I ndividual member's (across depart-ments) involvement and commitment to a t t a i n i n g company's goals (d) Interpersonal behaviour s t y l e s of i n d i v i d u a l s employed across departments -(e) A v a i l a b i l i t y of manpower f o r u t i l i -zation within the organization 3. Functional and S t a f f Units i n other Depart-ments: (a) Technological c h a r a c t e r i s t i c s of other departments (b) Dependence on other departments i n meet-ing my objectives xyu INTER-DEPARTMENTAL ENVIRONMENT (cont'd) (1) Take i n t o Consideration (2) Level of Cert a i n t y (3) Range 4. Organizational Level Component: (a) Broad company objectives and goals (b) Mechanisms and processes adopted by your organization to communicate ideas and get employees to work towards company's goals • (c) Nature of the organization's products and/or services EXTERNAL ENVIRONMENT = OUTSIDE THE COMPANY 5. Customers: (a) D i s t r i b u t o r s of product or service (b) Actual users of product or service - - -- - -6. Suppliers: (a) Materials Supplier (b) Labour Supply 7. Competitors: (a) Competitors for Suppliers (b) Competitors f o r Customers 8. Governments: (a) Government Regulatory Control over the industry I (b) Public p o l i t i c a l a t t i t u d e toward industry and i t s p a r t i c u l a r product 9. Trade Unions: Relationship with trade unions with j u r i s d i c t i o n i n the company 10. Technology: (a) Meeting new tech n o l o g i c a l require-ments of own industry and r e l a t e d i n d u s t r i e s i n production of product or service (b) Improving and developing new Products by implementing new technological advances i n the industry 191 SCHEDULE I I I : INTERVIEW SCHEDULE FOR ENVIRONMENTAL CHARACTERISTICS Part A: Responses to this section ( i . e . Questions 1 through 15) are to be made with reference to Worksheet #1. Instructions: We are trying i n this study to gain a better understanding about jobs l i k e yours and the a c t i v i t i e s you go through i n making decisions on your job. As you know, i n making decisions people have to take into consideration certain factors within the depart-ment (intra-departmental environment), others within the organi-zation as a whole (inter-departmental environment), or s t i l l others outside the organization (external environment). For example, i n making decisions about how he does his job, a production manager may have to take into consideration whether the i n d i v i d u a l s within his own department possess the s k i l l to per-form the job (intra-departmental environment); and such factors within the organization as whether the Parts Department w i l l have the necessary supplies ready and available when they are needed (inter-departmental environment). He might also have to take into consideration such factors outside the organization as market demand for the product i n question (external environment). 1. Let us look at Worksheet #1. In Column (1) of the Worksheet, please i d e n t i f y by means of a check mark those factors, components, groups or i n d i v i d u a l s that you have to take d i r e c t l y into consideration i n making decisions (of a l l kinds and magnitudes) i n your p o s i t i o n . The term " d i r e c t l y " i s used here i n a very immediate sense, i . e . the factors that have a d i r e c t bearing on or are affected by your decision. B r i e f l y explain why you have to take each of these i n t o consideration i n decision making. 2. Instructions: As I go through the items on Worksheet #1 that you have i d e n t i f i e d as being taken into consideration i n decision making, please t e l l me the approximate frequency with which each of these items d i r e c t l y r e s t r i c t your department s a c t i v i t i e s , i . e . how often does your department have to take that p a r t i c u l a r factor into consideration i n decision making, goal s e t t i n g , goal a t t a i n -ment, etc. For example, a production department that requires a p a r t i c u l a r material for a l l i t s production processes i s said to be "very often r e s t r i c t e d " by the supplier(s) of that material. (Note: " r e s t r i c t " i s used here i n a very immediate sense, i . e . to re f e r to short-term effects as opposed to medium-, long-term and/or i n d i r e c t e f f e c t s ) . Please phrase your response i n terms of:-1 = Very Seldom 2 = Seldom 3 = Occasionally 4 = F a i r l y Often 5 = Very Often 192 3. Instructions; As I go through each of the items you have i d e n t i f i e d on the Worksheet, please t e l l me how serious i s the r e s t r a i n t imposed by each of these items upon your department's operations. Please select one of the points on the following scale: 1 2 3 4 • 5 L, I U I 1 Not Serious Very At A l l Serious 1 = Not Serious at a l l = may be annoying but does not incur any f i n a n c i a l loss whatsoever. 5 = Very Serious = disrupting organizational goals and plans completely; has the e f f e c t of h a l t i n g operations altogether, even on a temporary basis. Instructions: The next two questions (4 and 5) are concerned with the extent to which you f e e l that you can exert some influence over each of these various items you have i d e n t i f i e d as a f f e c t i n g decisio making i n your department. 4. Please indicate to what extent do you always have to deal with this p a r t i c u l a r factor because you have no alternatives? Please phrase your response i n terms of:-1 = To a Very L i t t l e Extent 2 = To a L i t t l e Extent 3 = To Some Extent 4 = To a Considerable Extent 5 = To a Very Great Extent 5. Please indicate to what extent you f e e l that you have control over how thi s factor a f f e c t s your department? Please phrase your response i n terms of:-1 = To a Very L i t t l e Extent 2 = To a L i t t l e Extent 3 = To Some Extent 4 = To a Considerable Extent 5 = To a Very Great Extent Instructions: The next set of questions (6 through 8) concerns j o i n t programmes that your department may have engaged i n . Over the course of the past 3 or 4 years, your depart-ment may have engaged i n j o i n t programmes with another department or d i v i s i o n within your company or another company. A j o i n t  programme i s defined as (1) any e f f o r t or undertaking between your department and another department(s) or company(ies); (2) that was set up for a s p e c i f i c purpose to accomplish a s p e c i f i c goal; and (3) which involved mutual pooling of f i n a n c i a l , technical and/or personnel resources. Remember, a j o i n t programme, i s not one which involves j u s t your department. Where relevant, please specify the number of j o i n t programmes that your department has been engaged i n over the course of the past 3 or 4 years. For each of these j o i n t programmes, please t e l l me whether they were with a department or d i v i s i o n within your company, or whether i t was with another company. For each of these j o i n t programmes, b r i e f l y specify the goal of such undertakings. For each of these j o i n t programmes, b r i e f l y indicate the approximate number of s t a f f shared ( i n terms of number of people or man-hours) and the approximate proportion of funds contributed by your department, on the one hand, and the other partner(s). Instructions: For each of the items that your department has to take into consideration i n decision making and functioning, please in d i c a t e whether i t i s predominantly organized or predominantly unorganized. 1 = Predominantly Organized Sector = sector that i s capable of imposing r e a l and d i r e c t threats and  r e s t r a i n t s on your department's a c t i v i t i e s , i . e . the sector possesses s u f f i c i e n t "bargaining c l o u t " i n i t s dealings with your department that i t can ensure that i t s views and well-being w i l l be taken into consideration. An example of a predominantly organized sector would be a labour union. 2 = Predominantly Unorganized Sector = opposite of organized sector, i . e . any relevant sector that i s not organized w i l l be c l a s s i f i e d as unorganized. Examples of unorganized sectors would be non-unionized employees, consumers, customers and t r a v e l l i n g public. 194 We have been t a l k i n g about organized sectors such as other companies or government agencies, on the one hand, and unorganized sectors, such as customers or non-unionized employees, on the other. Now we never r e a l l y know what impact things and events and groups i n the environment are going to have on us, or i n your case, your department. We speak of these as uncertainty  about the future. Now what I r e a l l y want here i s your opinion as to which category, organized or unorganized, presents you with more uncertainty. 10. Instructions This next question seeks to i d e n t i f y whether the items you have checked on the Worksheet are d i r e c t l y or i n d i r e c t l y r e l a t e d to your department. 1 = I n d i r e c t l y Related means that your exchanges with this sector are performed through an intermediary. An intermediary i s a middle-man -- a t h i r d party or person who i s not a d i r e c t partner i n the exchange r e l a t i o n -ship. For example, a trading agency that markets the goods of smaller manufacturers (who do not s e l l d i r e c t to the consumers) i s an intermediary. 2 = D i r e c t l y Related means that exchanges with t h i s sector are performed without an intermediary. For example, i f a department purchases i t s raw materials supply d i r e c t l y from the producer of that raw material, and not a trading agency, then the exchange r e l a t i o n -ship i s d i r e c t . As I read out each of the items checked on the Worksheet, please t e l l me whether i t i s d i r e c t or i n d i r e c t . I f your deal-ings with a p a r t i c u l a r sector are i n d i r e c t , do you have any idea whether there i s one or more than one intermediary involved? Instructions: This next set of questions (11 and 12) deals with change i n the items you have checked on Worksheet #1. 11. How often does each of those items that you have checked on the Worksheet change i n the course of a year? "Changes" r e f e r to goal, p o l i c y and programme changes (where they are known) plus any kinds of "ongoing changes" i n each of these sectors which you see as a f f e c t i n g your department's opeartions and a c t i v i t i e s . "Ongoing changes" would include such things as consumers' preferences or the general r i s e i n standard of l i v i n g . Please phrase your response i n terms of:-1 = Very Seldom 2 = Seldom 3 = Sometimes 4 = Frequently 5 = Very Often • 195 12. Please estimate the magnitude of each change i n terms of the seriousness of the impact i t has upon your department's operations. Please select one of the points on the following scale: 1 2 3 4 5 J i _— ,. i i 1 Not Serious Very At A l l Serious 1 = Not Serious at A l l = may be annoying but does not require any reorientation or modification to e x i s t i n g departmental goals, p o l i c i e s or courses of action pursued by your depart-ment . 5 = Very Serious = disrupting existing departmental goals and plans very seriously. Major r e o r i e n t a t i o n or modifications to e x i s t i n g goals and plans are required as a r e s u l t of the change. Instructions: Not only may the things indicated above change but also new and d i f f e r e n t ones may appear both wi t h i n the organization and outside i t . You may have to take these new or d i f f e r e n t things into consideration i n decision making, while those that you previously considered w i l l no longer be relevant. In other words, the make-up of your environment may change. For example, members i n a marketing department at one time may have to take into consideration i n decision making a c e r t a i n group of customers i n introducing a new product or service and whether the materials department can d e l i v e r the new parts when required. In a d i f f e r e n t instance, t h i s same marketing department may i n developing a new product have to focus on whether suppliers outside the organization can provide cheap raw materials for the product. So the things that the marketing department considers i n decision making change somewhat, i . e . the make-up of i t s environment changes. On the other hand, a d i f f e r e n t type of department, say a production department, might over time c o n t i n u a l l y consider i n i t s decision making behaviour only whether i t has the necessary parts with which to produce i t s given product. We say that the make-up of the department's environment remains the same. 13. Now thinking again about yo'ur decision making a c t i v i t i e s and the decisions that are made i n your department ... how often do new  and d i f f e r e n t things have to be considered by you i n decision making and the decisions that are made i n your department? In other words, how often does the make-up of your environment change over the course of a year? Please phrase your response i n terms of: 1 = Very Often 2 = Frequently 3 = Sometimes 4 = Seldom 5 = Very Seldom 196 14. Given that the make-up of your environment changes, please t e l l me to what extent your department knows what to expect from each of the items on the ch e c k l i s t after the change takes place? For example, to what extent would a Purchasing Department know that a newly selected supplier w i l l be l i k e l y to deliver as contracted. The emphasis here i s on knowledge about events. Please phrase your response i n terms of one of the following: 1 = Very L i t t l e Knowledge 2 = L i t t l e Knowledge 3 = Some Knowledge 4 = High Knowledge 5 = Very High Knowledge 15. Instructions: A l l organizations face changing environments to a c e r t a i n extent. Whether an organization can succe s s f u l l y adapt to a change depends to a large extent on adequate warning or lead time so that your department can plan for the adaptation. For changes i n each of the relevent sectors i n the Work-sheet, would you say that the length of the warning period pre-ceding the onset of the change was adequate or inadequate? Please sel e c t one of the points on the following scale:-1 2 3 4 5 Inadequate Adequate 1 = Inadequate = there was some advance notice about the change. However, the warning period was so short that your department was not able to gather s u f f i c i e n t information to deal with the change. 5 = Adequate = s u f f i c i e n t for gathering adequate information to deal with the change. WORKSHEET # 2 197 TECHNOLOGICAL KNOW-HOW (SPECIFY) MARKET INFORMATION (SPECIFY) \ 198 Part B: Responses to this section ( i . e . Questions 1 through 11) are to be made with reference to Worksheet #2. Instructions: In the past, situations o r i g i n a t i n g i n the environment may have arisen which presented themselves as opportunities which your department can take advantage of. At the same time, other situations may have arisen which posed threats or problems to your department's functioning. The intent here i s to examine the extent to which you could treat either the problem or opportunity situations as routine or non-routine. 1. Please try to r e c a l l the problem and/or opportunity s i t u a t i o n s that have arisen for your department i n the course of the past year or so. Then describe b r i e f l y the major kinds of d i f f i c u l t i e s i n each of the following areas that your department experienced i n the blank spaces under each of the headings on Worksheet #2. 2. For each of the problem/opportunity si t u a t i o n s indicated i n the Worksheet, please indicate the extent to which you believe your department measured up to each of these demands i n terms of know-ledge, c a p i t a l and other physical/material resources, inclu d i n g personnel. Please se l e c t one of the points on the following scale:-1 2 3 4 5 i , ; i v - i :— ' . 1 Completely Unable Completely Able To meet demands To meet demands 3. For each of the problem/opportunity s i t u a t i o n s i d e n t i f i e d on the Worksheet, please indicate the d i f f i c u l t y of achieving e f f e c t i v e  solutions to each of them. Please select one of the points on the following scale:-1 2 3 4 5 i . 1 i 1 i Very Very D i f f i c u l t Easy 4. For each of the problem/opportunity s i t u a t i o n s i d e n t i f i e d on the Worksheet, please indicate the approximate number of times problems of a si m i l a r nature have arisen i n the course of the past year. 5. In your opinion, what i s the p r o b a b i l i t y that problem/opportunity situations of a s i m i l a r nature w i l l a r i s e again i n the future? Please select one of the points on the following scale:-1 2 3 4 5 C_ I 1 1 1 Very Very Unlikely L i k e l y 1 = Very Unlikely = 0.0 to 0.2 p r o b a b i l i t y 5 = Very L i k e l y = 0.8 to 1.0 p r o b a b i l i t y 199 6. Instructions; For each of the problem/opportunity situations i d e n t i f i e d , please indicate which of the following decision procedures you used to a r r i v e at the decision or recommendation. If you used more than one procedures, please s p l i t up the percentages accordingly. As I go through each of the items, please t e l l me which procedure you used and the percentage of time you used that proce-dure. The four decision procedures are:-A means Relied on routine/standardized procedures which had been used su c c e s s f u l l y i n the past. B means Made step-by-step modifications to e x i s t i n g  procedures e a s i l y (with minimal amount of  search effort^"! C means Made step-by-step modifications to e x i s t i n g  procedures with d i f f i c u l t y ! D means No cut-and-dried method for dealing with the  problem. Considerable search for a l t e r n a t i v e  ( i . e . new) ways of approaching/solving the ' problem"! r 7. For each of the problem/opportunity situations i d e n t i f i e d , please estimate how much time was invested by your department ( i n terms of man-hours, weeks or months) i n an attempt to obtain c r i t i c a l  information to c l a r i f y the problem. Please indicate your response i n quantified terms. 8. Was there any task force set up for the purpose? Please say "yes" or "no" as I read out each of the problem areas you have i d e n t i f i e d . 9. I f the answer to the previous question i s "yes", b r i e f l y describe the nature of each task force. 10. Was outside help ( i . e . consultants, etc.) brought i n to a s s i s t i n solving each of the problem/opportunity states? Please say "yes" or "no" as I read out each of the problem areas you have i d e n t i f i e d . 11. Please indicate the degree of trust that you could place i n a s i g n i f i c a n t portion of the information acquired for each problem/ opportunity area. Please select one of the points on the following scale:-Not Confident At A l l Completely Confident APPENDIX THREE REVISED INSTRUMENT FOR MEASURING ENVIRONMENTAL CHARACTERISTICS 201 SCHEDULE I I I : INTERVIEW SCHEDULE FOR ENVIRONMENTAL CHARACTERISTICS Fart A: Responses to this section are to be made with reference to Worksheet #1. Instructions: We are t r y i n g i n t h i s study to gain a better understand-ing about jobs l i k e yours and the a c t i v i t i e s you go through i n making decisions on your job. As you know, i n making decisions people have to take into consideration c e r t a i n factors within the organization as a whole (inter-departmental environment), and/ or others outside the organization (external environment). For example, i n making decisions about how he does his job, a production manager may have to take into consideration whether the Parts Department w i l l have the necessary supplies ready and available when they are needed (inter-departmental  environment). He might also have to take into consideration such factors outside the organization as market demand for the product i n question (external environment). 1. Let us look at Worksheet #1. In Column (1) of the Worksheet, please indicate by means of a check mark those factors, components, groups or i n d i v i d u a l s that you have to take d i r e c t l y into consi-deration i n making decisions (of a l l kinds and magnitudes) i n your p o s i t i o n . The term " d i r e c t l y " i s used here i n a very immediate sense, i . e . the factors that have a d i r e c t bearing on or are affected by your decision. B r i e f l y explain why you have to take each of these into consideration i n decision making. 2. Instructions: As I go through the items on Worksheet #1 that you have i d e n t i f i e d as being taken into consideration i n decision making, please indicate the extent to which you depend on each of them to accomplish your department's objectives. Please phrase your response i n terms of:-1 = To a Very L i t t l e Extent 2 = To a L i t t l e Extent 3 = To Some Extent 4 = To a Great Extent 5 = To a Very Great Extent 202 Instructions: As I go through each of the items you have i d e n t i f i e d on the Worksheet, please estimate how serious i s the r e s t r a i n t imposed by each of them, i . e . please estimate the seriousness of that  variable (upon your department's operations) when i t comes into  play. Please select one of the points on the following scale:-1 2 3 4 5 Not Serious Very At A l l Serious 1 = Not Serious At A l l = may be annoying but does not incur any f i n a n c i a l loss whatsoever 5 = Very Serious = disrupting organizational goals and plans completely; has the e f f e c t of h a l t i n g operations altogether, even on a temporary basis. Instructions: This question i s concerned with the extent to which you f e e l that you can exert some influence over each of these various items you have i d e n t i f i e d as a f f e c t i n g decision making i n your department. Please phrase your response i n terms of:-1 = Very Great Influence 2 = Great Influence 3 = Some Influence 4 = L i t t l e Influence 5 = Very L i t t l e Influence Instructions: The next question concerns j o i n t programmes that your department may have engaged i n . Over the course of the past 3 or 4 years, your depart-ment may have engaged i n j o i n t programmes with another department or d i v i s i o n within your company or another company. A j o i n t  programme i s defined as (1) any e f f o r t or undertaking between your department and another department(s) or company(ies); (2) that was set up for a s p e c i f i c purpose to accomplish a s p e c i f i c goal; and (3) which involved mutual pooling of f i n a n c i a l , technical and/or personnel resources. Remember, a j o i n t programme i s not one which involves j u s t your department. Where relevant, please specify the number of j o i n t programme that your department has been engaged i n over the course of the past 3 or 4 years. For each of these j o i n t programmes, please t e l l me whether they were with a department or d i v i s i o n within your company, or whether i t was with another company. For each of these j o i n t programmes, b r i e f l y specify the goal of such undertakings. For each of these j o i n t programmes, b r i e f l y i n d icate the approximate number of s t a f f shared ( i n terms of number of people 203 or man-hours) and the approximate p r o p o r t i o n o f funds c o n t r i b u t e d by your department, on the one hand, and the other p a r t n e r ( s ) . For each of the f o l l o w i n g groups or s e c t o r s that your department has to take i n t o c o n s i d e r a t i o n i n d e c i s i o n making and f u n c t i o n -i n g , p l e a s e i n d i c a t e whether i t i s predominantly o r g a n i z e d or predominantly unorganized: S u p e r v i s o r y p e r s o n n e l : (a) i n your department (b) i n your company Rank and f i l e employees: (a) i n your department (b) i n your company Customers: (a) D i s t r i b u t o r s of product or s e r v i c e (b) A c t u a l users of product or s e r v i c e M a t e r i a l s S u p p l i e r s Labour S u p p l i e r s 1 = Predominantly Organized S e c t o r = s e c t o r that i s capable o f imposing r e a l and d i r e c t t h r e a t s and r e s t r a i n t s on your department's a c t i v i t i e s , i . e . the s e c t o r possesses s u f f i c i e n t " b a r g a i n i n g c l o u t " i n i t s d e a l i n g s w i t h your department t h a t i t can ensure t h a t i t s views and w e l l - b e i n g w i l l be taken i n t o c o n s i d e r a t i o n . An example o f a predominantly o r g a n i z e d s e c t o r would be a labour union. 2 = Predominantly Unorganized Sector = o p p o s i t e o f o r g a n i z e d s e c t o r , i . e . any r e l e v a n t s e c t o r t h a t i s not o r g a n i z e d w i l l be c l a s s i f i e d as unorganized. Examples of unorganized s e c t o r s would be non-unionized employees, consumers, customers and t r a v e l l i n g p u b l i c . We have been t a l k i n g about o r g a n i z e d s e c t o r s such as o t h e r companies or government agencies, on the one hand, and unorganized s e c t o r s , such as customers or non-unionized employees, on the o t h e r . Now we never r e a l l y know what impact t h i n g s and events and groups i n the environment are going to have on us, or i n your case, your department. We speak of these as u n c e r t a i n t y about the  f u t u r e . Now what I r e a l l y want here i s your o p i n i o n as to which category, o r g a n i z e d or unorganized, p r e s e n t s you w i t h more uncer-t a i n t y . 204 For each of the factors or groups i n the external environment that you i d e n t i f i e d as being taken into consideration i n decision making, could you t e l l me whether your department's transactions with each of them are predominantly on a d i r e c t or i n d i r e c t basis. 1 = I n d i r e c t l y Related means that your exchanges with t h i s sector are performed through an intermediary. An intermediary i s a middle-man -- a t h i r d party or person who i s not a d i r e c t partner i n the exchange r e l a t i o n s h i p . For example, a trading agency that markets the goods of smaller manufacturers (who do not s e l l d i r e c t to the consumers) i s an intermediary. 2 = D i r e c t l y Related means that exchanges with this sector are performed without an intermediary. For example, i f a depart-ment purchases i t s raw materials supply d i r e c t l y from the producer of that raw material, and not a trading agency,then the exchange r e l a t i o n s h i p i s d i r e c t . If your dealings with a p a r t i c u l a r sector are i n d i r e c t , do you have any idea whether there i s only one or more than one intermediary involved? Please indicate. Instructions: The next two questions deal with change i n the items you have checked on Worksheet #1. How often does each of those items that you have checked on the Worksheet change i n the course of a year? "Changes" refer to goal, p o l i c y and programme changes (where they are known) plus any kinds of "ongoing changes" i n each of these sectors which you see as a f f e c t i n g your depart-ment's operations and a c t i v i t i e s . "Ongoing changes" would include such things as consumers' preferences or the general r i s e i n standard of l i v i n g . Please phrase your response i n terms of:-1 = Very Seldom 2 = Seldom 3 = Sometimes 4 = Frequently 5 = Very Often If changes do occur, please estimate the magnitude of each change i n terms of the seriousness of the impact i t has upon your depart-ment's operations. Please select one of the points on the follow-ing scale: 1 2 3 4 5 L I 1 1 1 Not Serious Very At A l l Serious 1 = Not Serious at A l l = may be annoying but does not require any r e o r i e n t a t i o n or modification to e x i s t i n g departmental goals, p o l i c i e s or courses of action pursued by the department. 5 = Very Serious = disrupting ex i s t i n g departmental goals and plans very seriously. Major re o r i e n t a t i o n or modifications to e x i s t -ing goals and plans are required as a r e s u l t of the change. 205 Instructions: Not only may the things indicated above change but also new and.different factors, groups or i n d i v i d u a l s may appear both within the organization and outside i t . You may have to take these new and/or d i f f e r e n t things into consideration i n decision making, while those that you previously considered w i l l no longer be relevant. In other words, the make-up of your environment may change. For example, members i n a marketing department at one time may have to take into consideration i n decision making a ce r t a i n group of customers i n introducing a new product or service and whether the materials department can d e l i v e r the new parts when required. In a d i f f e r e n t instance t h i s same marketing depart-ment may i n developing a new product have to focus on whether suppliers outside the organization can provide cheap raw materials for the product. So the things that the marketing department considers i n decision making change somewhat, i . e . the make-up of its environment changes. On the other hand, a d i f f e r e n t type of department, say a production department, might over time c o n t i n u a l l y consider i n i t s decision making behaviour only whether i t has the necessary parts with which to produce i t s given product. We say that the make-up of the department's environment remains the same. Now thinking again about your de c i s i o n making a c t i v i t i e s and the decisions that are made i n your department '... how often  do new and/or d i f f e r e n t things have to be considered by you i n decision making and the decisions that are made i n your depart-ment? For example, over the course of a year, your department may have to deal with a whole new set of suppliers of materials, a new trade union or customer. In other words, how often does the make-up of your environment change over the course of a year? Please phrase your response i n terms of:-1 = Very Often 2 = Frequently 3 = Sometimes 4 = Seldom 5 = Very Seldom 206 A l l organizations face changing environments to a ce r t a i n extent. Whether an organization can successfully adapt to a change depends to a large extent on adequate warning or lead time so that your department can plan for the adaptation. For changes i n each of the relevant items i n the Worksheet, would you say that the length of the warning period preceding the onset of the change was adequate or inadequate? Please select one of the points on the following scale: 1 2 3 4 5 Inadequate Adequate 1 = Inadequate = there was some advance notice about the change. However, the warning period was so short that your depart-ment was not able to gather s u f f i c i e n t information to deal with the change. 5 = Adequate = s u f f i c i e n t f o r gathering adequate information to deal with the change. If changes do occur, t e l l me to what extent your department knows  what to expect a f t e r the change takes place? For example, to what extent would a Purchasing Department know that a newly selected supplier w i l l be l i k e l y to d e l i v e r as contracted. The emphasis here i s on knowledge about events. Please phrase your response i n terms of: 1 = Very L i t t l e Knowledge 2 = L i t t l e Knowledge 3 = Some Knowledge 4 = High Knowledge 5 = Very High Knowledge 1. 207 Part B:  Instructions: The problems that a r i s e i n a p a r t i c u l a r department may f a l l into one of two broad categories: routine or non-routine. "Routine" problems r e f e r to those s i t u a t i o n s which have arisen before i n the past and for which your department has developed f a i r l y standardized procedures for handling and disposing of them. "Non-routine" problems, on the other hand, r e f e r to those s i t u a t i o n which are unique to a large extent, and f o r which there are no cut-and-dried procedures for dealing with them. Now thinking about the problems that confront your department (not  only those that are a c t u a l l y referred to you for recommendation or decision), could you please indicate which of the following decisioi  procedures your department used to a r r i v e at decisions or recommen-dations , and the approximate frequency with which your department resort to that p a r t i c u l a r decision procedure i n the day-to-day operations. For example, i f your department used Procedure B 75% of the time and Procedure C 25% of the time, you would say B/75 and C/25. The four decision procedures are: A means Relied on routine/standardized procedures which  had been used s u c c e s s f u l l y i n the past B means Made step-by-step modifications to e x i s t i n g procedures e a s i l y (with nrTnimal amount of search  e f f o r t ) C means Made step-by-step modifications to e x i s t i n g  procedures with d i f f i c u l t y D means No cut-and-dried method for dealing with the  problem. Considerable search for a l t e r n a t i v e  ( i . e . new) ways of approaching/solving the problem. For solving problems of a non-routine nature, could you b r i e f l y expand on the ways i n which you seek to resolve the issue, i . e . did you set up a task force for the purpose? Did you seek out-side held ( i . e . consultants, etc.)? Roughly how much time was invested by your department ( i n terms of man-hours, weeks or months) i n an attempt to obtain c r i t i c a l information to c l a r i f y the problem? Please indicate the degree of trust that you could place i n a s i g n i f i c a n t portion of the information acquired for such non-routine problem s i t u a t i o n s . Please phrase your response i n terms of a p r o b a b i l i t y figure - 1.0 means that you are "completely confident", and 0.0 means that you are "not confident at a l l . " 208 4. In general, how well would you say that your department measures up to the demands made by routine problems, i n terms of knowledge, c a p i t a l and other physical/material resources, including personnel. Please select one of the points on the following scale:-1 2 3 4 5 ! I . 1 1 J Completely Unable Completely Able to meet Demands to meet Demands 1 = Completely Unable to meet Demands, i . e . your department i s t o t a l l y unable to meet the demands posed by these routine problems. 5 = Completely Able to meet Demands, i . e . your department possesses the knowledge, c a p i t a l and other physical/material resources, including personnel to meet the demands posed by routine problems. 5. In general, how well would you say that your department measures up to the demands made by non-routine problems, i n terms of know-ledge, c a p i t a l and other physical/material resources, including personnel. Please select one of the points on the following scale:-1 2 3 4 5 i i i 1 —i 1 = 5 = Completely Unable Completely Able to meet Demands to meet Demands Completely Unable to Meet Demands, i . e . your department i s t o t a l l y unable to meet the demands posed by these non-routine problems. Completely Able to Meet Demands, i . e . your department possesses the knowledge, c a p i t a l and other physical/material resources, including personnel to meet the demands posed by non-routine problems. For non-routine problem si t u a t i o n s , please indicate the d i f f i c u l t y  of achieving e f f e c t i v e solutions. Please select one of the points on the following scale:-1 2 3 4 5 i i i • • Very Very D i f f i c u l t Easy APPENDIX FOUR INSTRUMENT FOR MEASURING PERCEIVED ENVIRONMENTAL UNCERTAINTY 210 SCHEDULE IV: INTERVIEW SCHEDULE FOR MEASURING PERCEIVED ENVIRON-MENTAL UNCERTAINTY Ins tructions: The next set of questions deals with the facto r s which you have described as being taken into consideration i n making decisions i n this department (refer to Worksheet # 1). Could you think a moment about the information you have or need with respect to each of these factors when you make decisions. The emphasis here i s on the way you see the s i t u a t i o n ( s ) . For the next two questions, please phrase your response i n terms of:-1 = Very Seldom 2 = Seldom 3 = Sometimes 4 = Frequently 5 = Very Often Please indicate how often you f e e l that you are able to predict how each of those items i d e n t i f i e d on Worksheet #1 i s going to react to decisions made i n your department. Please indicate how often you fe e l that the information you have about each of these factors i s adequate f o r dec i s i o n making. Please indicate how d i f f i c u l t i t i s for you to c o l l e c t information about each of these factors which you f e e l i s adequate f o r decision making? Please select one of the points on the following scale:-1 2 3 4 5 i l i 1 1 Very Very D i f f i c u l t Easy Instructions: We have talked about the various factors that you have indicated you consider i n making decisions and the information or lack of information about them and how t h i s a f f e c t s your decision making. In summarizing your b e l i e f s about each of these factors, please t e l l me two things as I repeat each of the f a c t o r s you have i d e n t i f i e d . Please f i l l your responses i n columns (2) and (3) of Worksheet # 1 respectively. F i r s t , how sure are you of how each of these factors i s going to a f f e c t the success or f a i l u r e of your department i n performing i t s function? Please put one of the numbers from 0.0 to 1.0 af t e r e a c h factor to indicate y o u r l e v e l of c e r t a i n t y . 0 .0=completely unsure 1.0= completely sure L J. I (III) 5. Second, a f t e r you indicate how sure you are about a factor, pleas describe also the range of numbers between 0.0 and 1.0 which you were considering before i n d i c a t i n g a s p e c i f i c l e v e l of certainty? For example, i f a person answered by i n d i c a t i n g he was .3 sure, what was the range he was considering i n giving the answer - was i t between .2 and .4, or .1 and .7, or 0.0 and 1.0? Please write down the range i n column (3) of Worksheet #1. Instructions: In the next four questions ( 6 through 9 ) , we are asking about your decision making over time. For the next three questions ( 6 through 8 ) , please phrase your response i n terms of:-1 = Very Seldom 2 = Seldom 3 = Sometimes 4 = Frequently 5 = Very Often (II) 6 . How often do you f e e l that you can e f f e c t i v e l y consider and then  evaluate the e x i s t i n g alternative courses of action before you choose among them, i7e. before you select a s p e c i f i c course of action? (II) 7. How often do you f e e l that you can accurately a n t i c i p a t e the  resu l t s of a decision, i . e . how good i s your be t t i n g average? (II) 8 . At the time you make decisions, how often do you f e e l able to  predict with any degree of confidence whether these decisions w i l l have a p o s i t i v e or negative e f f e c t on the company's o v e r a l l performance ? (I) 9. Please c i r c l e the al t e r n a t i v e below which most nearly describes the t y p i c a l length of time involved before you obtain feedback --information concerning the success of your department i n doing i t s job. For example, a sales department may be able to t e l l at the end of each day how successful their s e l l i n g e f f o r t was by examin-ing the t o t a l sales reported for that day. In contrast, a product-ion department may not know whether the i r production meets required s p e c i f i c a t i o n s u n t i l the res u l t s of several performance tests are available which often may take a period of several days from the time the department completes the product. 1 = Two years or more 2 = One Year 3 = Six Months 4 = One Month 5 = One Week 6 = Three Days 7 = One Day APPENDIX FIVE SCORING PROCEDURES FOR PERCEIVED ENVIRONMENTAL UNCERTAINTY 213 Duncan (1970) defined uncertainty i n terms of three components:-(1) lack of information regarding the environmental factors associated with a given decision making s i t u a t i o n . (2) not knowing the outcome of a s p e c i f i c decision i n terms of how much the organization would lose i f the decision was in c o r r e c t . (3) not being able to assign p r o b a b i l i t i e s with regard to how environmental factors are going to a f f e c t the success or f a i l u r e of the decision unit i n performing i t s function. (1970, p. 64) The questions i n Schedule IV, Appendix 4 are adapted from Duncan's Organizational Decision Unit Questionnaire (ODUQ). Each question i s denoted by either a ( I ) , ( I I ) or (III) beside i t to indicate which of the above components of uncertainty i t i s designed to measure. Questions 1 through 3 were scored by means of the follow-ing formula: Total score on a given question (1-3)  iNumber of Factors taken into consideration Questions 4 and 5 were designed to measure the t h i r d component. For each factor the i n d i v i d u a l has indicated he takes into consideration in decision making, he received a score measuring his degree of a b i l i t y to assign pro-b a b i l i t i e s as to the e f f e c t of that factor on the decision unit's performance. This score was derived by weighting his "sureness" about the effects of a given factor (question 4) by the range between 0 and 1.0 he considered i n making his assessment (question 5). The s p e c i f i c formula i s as follows with larger scores i n d i c a t i n g greater a b i l i t y to assign p r o b a b i l i t i e s . Degree of A b i l i t y to•_ (sureness of (1 - range of sure-Assign P r o b a b i l i t i e s e f f e c t s factor) ness estimate) For example, i f a person responded by i n d i c a t i n g he was .3 sure about the e f f e c t s of Factor A on the performance of his work group and the range he was considering i n 214 giving this answer was between 0 and .5, his Degree of A b i l i t y to Assign P r o b a b i l i t i e s Score for th i s factor would be .3 x (1 - .5) = .15. The respondents t o t a l score for (questions 4 and .5) was then normed for the number of factors taken into consideration i n decision making . ... Sum of Degree of A b i l i t y to Assign P r o b a b i l i t i e s Scores for A l l Factors Identified  Number of Factors I d e n t i f i e d (Duncan, 1970, pp. 67-68) Questions 6 through 9 required only one single answer each. The scores on questions comprising a component were subjected to inter-item analysis. Where the r e l i a b i l i t y c o e f f i -cient was high, the scores were combined. The correlations between the three components of uncertainty were also computed. Given the high c o r r e l a t i o n s , the scores on a l l three components were summed and then averaged to arrive at an o v e r a l l uncertainty score for the focal u n i t . The score ranged from 1 to 5. 5 indicated high certainty or low uncertainty. APPENDIX SIX CANONICAL CORRELATION BETWEEN ENVIRONMENTAL CHARACTERISTICS AND ORGANIZATIONAL VARIABLES 2 1 6 To corroborate the findings of the relationships between environmental c h a r a c t e r i s t i c s and organizational variables obtained from multivariate regression, multiple stepwise regres-sion and discriminant analysis, canoncial c o r r e l a t i o n was per-formed. The re s u l t s obtained from running the f u l l sample appear below:-Number Eigenvalue 0.66452 0.21980 Canonical Correlation 0.81518 0.46882 Wilks 1 Lambda Chi-Square D.F. Significance 0.23844 84.58439 18 0.000 0.71075 20.14465 10 0.028 Coefficients for Canonical Variables of the First Set Canvar 1 Canvar 2 Pluralism Interdep. Organized Directly Change Rate Routineness 0.32595 0.17615 -0.06139 -0.06103 0.74197 -0.33117 -0.73087 -0.31536 -0.16953 0.14735 0.79668 0.44463 Coefficients for Canonical Variables of the Second Set Canvar 1 Canvar 2 Structure -0.12552 Time Perspective 0.01222 Frequency of Change 0.75279 1.69337 -0.40827 0.78198 APPENDIX SEVEN RESULTS OF ANALYSIS OF COVARIANCE & DISCRIMINANT ANALYSIS OBTAINED UNDER A 64-CELL DESIGN 218 As pointed out i n the footnote on page 133, under a 64-c e l l design, c e r t a i n of the c e l l s remained empty and a s i z e -able portion of them did not have enough units i n each c e l l to render comparison meaningful and v a l i d on a s t a t i s t i c a l basis. However, i n l i g h t of the reasons for speculating that the adequacy of a 16- or 8 - c e l l typology could very well be a feature of the l i m i t e d sample size (p. 133), analyses was per-formed on a 64-cell matrix and the r e s u l t s are presented below so that they may be compared against future r e s u l t s obtained from much larger and more varied samples. The analyses pre-sented here, however, should be read and interpreted with these l i m i t a t i o n s i n mind. The mean scores for perceived environmental uncertainty, departmental structure, time perspective taken i n planning, and frequency of changes to plans in the four extreme corner c e l l s under a 64-cell design are:-C e l l # 1 Uncertainty = 4.9 Structure = 4.9375 Time Pers. = 3.25 Frequency =1.0 C e l l #31* Uncertainty = 3.5 Structure = 2.925 Time Pers. =2.0 Frequency =2.0 C e l l # 33 Uncertainty = 3.633 Structure =4.9 Time Pers. =4.5 Frequency = 3.5 C e l l # 63* Uncertainty = 1.89 Structure = 2.475 Time Pers. =3.25 Frequency = 4.25 * C e l l s 32 and 64 were empty. Consequently, the mean scores f o r c e l l s 31 and 63 are presented instead. A score of 5 on "uncertainty" i n d i c a t e s high c e r t a i n t y . 219 Analysis of Covariance: When analysis of covariance was performed on a 64-cell design ( i . e . a typology consisting of the following s i x dimen-sions: Pluralism, Degree of Interdependency, Routineness, Organized Sectors, D i r e c t l y Related Sectors and Change Rate), using structure, time perspective taken i n planning and frequency of changes to plans as the dependent variables, and the environmental c h a r a c t e r i s t i c s as covariates, the si g n i f i c a n c e l e v e l s associated with the dependent variables were as follows: structure (S = .007), time perspective taken in planning (S = .130), and frequency of changes to plans (S = .010). Discriminant Analysis: Under the 64-cell design, three discriminant functions were obtained. These were uncertainty (S = .000), structure (S = .013), and time perspective taken in planning (S = .305). The percent of "grouped" cases c o r r e c t l y c l a s s i f i e d was 53.151 

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