Making Sense of Uncertainty: An Examination of Environmental Interpretation

Abstract

Uncertainty in the environment has implications for an organisation's structures, strategies and processes. By extending an existing uncertainty framework and measuring how it is influenced by strategic decision-making, entrepreneurial orientation and organisation structure, this paper explores the process of environmental interpretation. Hypotheses are formulated for testing on the European airport industry. The results show that a fourth type of uncertainty can be meaningfully added to the existing three-part framework; that the four types should be treated as separate constructs; and that rational strategic decision-making, entrepreneurial orientation and organic organisation structures are positively related to environmental uncertainty. Moreover, these variables exert different levels of influence at different stages of the interpretation process. Implications for management are considered along with study limitations and recommendations for future research. [PUBLICATION ABSTRACT]