Environmental uncertainty has become an important topic in management because it has many influences on managers and organizations.This essay will firstly describe the definition of environmental uncertainty and then gives examples of the impact that the environment uncertainty has on managers and organizations such as rising failure rates,.Finally,it will talk about the measures that managers or organizations used to minimize the influence of environmental uncertainty via example.
Before discussing the influence of environmental uncertainty,it is necessary to defined the term.Environmental uncertainty has many definitions.Thompson (1967) identifiesenvironmental uncertainty as the fundamental problem with which top-level organizational administrators must cope because there is a link between the budget to include rolling forecasting and the uncertainty of the environment(Ekholm and Wallin ,2000). It has also been seen as a central problem of organizations(March & Simon, 1958; Thompson, 1967).Milliken (1987), in a review of the literature and research on environmental uncertainty, noted that the construction has often been inadequately understood.He also found a fact that many authors use “environmental uncertainty” to describe both an environmental and an individual state.For example,environmental uncertainty is examined as a perceptual phenomenon, a property of organization administrators (Starbuck, 1976).According to his research,Milliken(1987) explained environmental uncertainty as an individual's perceived inability to predict an organization's environment and suggested that it should have three types,effect uncertainty(unable to predict the characteristics of the effect of a future statement of an organization),response uncertainty(unable to forecast the possible consequence of a response choice) and state uncertainty(also explained as perceived environmental uncertainty).Furthermore,Daft (2004) claimed that environmental uncertainty can be explained as a lack of criticalenvironmental information when managers make decisions according to some researchers’ research(Cheng, 1983; Galbraith, 1973).Under this situation,the environmental uncertainty will have an influence on the design of firm’s operation.Because of this, environmental uncertainty can be defined as a situation in which a design firm has little information about its external environment to use in achieving its organizational goals.
After explaining the definition of environmental uncertainty and three types of it,this essay will discuss impacts of environmental uncertainty on managers and organizations.The environmental uncertainty will raise the failure rate.Because of the environmental uncertainty,it is hard for an organization to predict the future of their products.It is likely to develop a product under unclear and shifting conditions.The market,policy and technology factors can have a bad influence on project performance and change the process execution.When these factors changed,the manager and organization also need to change their product or strategies quickly in order to be suitable for the market.As a result,when the managers make decisions,they must take conditions as much as possible into consideration and make different strategies.But no one can take all condition into consideration. The rest of conditions that not be considered will raise the risk and may lead to failure.However,Montoya-Weiss and Calantone (1994) noted that the change of environment may not make a critical impact on the success.But they also caution that the environmental uncertainty may have a strong influence in the future.In contrast,Brown and Eisenhardt (1995) argued that the direct effect of the market context on business success has been generally neglected,the environmental uncertainty does influence the development of organizations to a different degree.
Environmental uncertainty reduces firms' ability to control the flow of resources and