Conceptualizing and Measuring the Organizational Environment: A Multidimensional Approach

Abstract

Neither a single set of constructs nor a single set of measures of the organizational environment is widely accepted, making it difficult to build a comprehensive literature on the impact of the environment on thefirm. In this article we review three constructs-complexity, instability, and resource availability common to most environmental research. We identify theoretical omissions in Dess and Beard's (1984) measurement of these constructs, and present a revised set of constructs designed to build on their research. The new measures' construct validity is assessed using perceptual data from senior managers. We investigate the predictive validity of both our measures and Dess and Beard's by using them to predict industry performance. We also use our measures to predict two firm-level structural variables. We argue that the revised measures more accurately reflect our theoretical un-derstanding of environmental dimensions.