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

Abstract

In the September 1974 issue of the Administrative Science Quarterly, Ray Jurkovich presented a core typology for analyzing and interpreting organizational environments. His 64-cell typology, which was developed on a theoretical basis, sought to identify organizational environments along five major dimensions: complexity, routineness of problem/ opportunity states, directly related sectors, organized sectors and movement, which included change rate and the stability of change. Most previous theorists and researchers in the field of organization-environment interaction have focused on the complexity and movement dimensions. Jurkovich argued that this was not sufficient and that the four-cell typologies of Thompson (1967), Laivrence and Lorsch (1967) were "essentially over-simplified". In his article, Jurkovich merely presented the dimensions. He did not operationalize the dimensions nor did he demonstrate empirically the viability of his typology. Consequently, the first undertaking in the present study was to develop operational definitions for these dimensions. Data on environmental characteristics and organizational variables (departmental structure, time perspective taken in planning and frequency of changes to plans) were collected from 64 organizational units which came from 21 different business and industrial firms located in British Columbia. The data on environmental characteristics were subjected to principal components analysis to assist in detecting the underlying structure. Six discrete dimensions were obtained. However, these were different from the ones hypothesized by Jurkovich on a theoretical basis. The six dimensions that were obtained on an empirical basis were pluralism, degree of interdependency, routineness of problem/opportunity states, organized sectors, directly related sectors and change rate. Based on the results of regression analyses which sought to relate environmental characteristics to organizational variables, two dimensions (the organized sectors and directly related sectors dimensions) were found to be least significant in explaining the variations in departmental structure, time perspective taken in planning and frequency of changes to plans. The "degree of interdependency" dimension was found to be significant in two of the regression functions where "time perspective taken in planning" was used as the dependent variable. Based on these findings, it was believed that a 16- or 8-cell typology was quite capable of explaining the variations in the three organizational variables, without too much loss of explanatory power. To test the hypotheses that were investigated in this study, the data were systematically subjected to a carefully planned series of data analyses, including multivariate regression, canonical correlation, discriminant analysis and analysis of covariance, to cite only a few. The first set of hypotheses which sought to relate environmental characteristics to perceived environmental uncertainty was strongly supported. The second set of hypotheses sought to examine the relationships between environmental characteristics and organizational variables. The departmental structure, time perspective taken in planning and frequency of changes to plans of organizational units located in different cells varied significantly from each other. Two variables: size and perceived environmental uncertainty were introduced as test factors to elaborate the relationships between the dependent and independent variables. When size was held constant, the relationships between environmental characteristics and organizational variables became more pronounced. Perceived environmental uncertainty interpreted the relationships between environmental properties and organizational characteristics, because it was only when uncertainty was perceived and recognized by decision makers that there would be subsequent changes in departmental structure and frequency of changes to plans. This study showed that it was indeed possible to measure environmental characteristics on more than two dimensions, and that environmental characteristics did have an impact on organizational variables.

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