25 ppmr / September 2008 Perceived Environmental
Uncertainty in
Public Organizations
An Empirical Exploration
Rhys Andrews
Cardiff University
ABSTRACT: Contingency theories suggest that managerial perceptions of
environmental uncertainty are associated with organizational outcomes. Higher
perceptions of uncertainty lead managers to pay increased attention to the
strategies, structures, and processes that are likely to improve organizational
performance. However, to date, there is very little evidence on the level of perceived
environmental uncertainty (PEU) among managers within public organizations.
This paper explores the relation among management, organizational, and
strategic factors, and PEU in 48 U.K. local government service departments,
before analyzing the impact of PEU on organizational effectiveness. The results
show that consultation with citizens, organizational inertia, and strategic stance
are all associated with PEU and that uncertainty about the external political
environment is linked with better service performance. Theoretical and practical
implications are discussed.
KEYWORDS: empirical analysis, perceived environmental uncertainty,
performance, public organizations, United Kingdom
R
esearch on managerial perceptions of organizational environments has been a
prominent feature of management and organizational studies for many years (Boyd,
Dess, & Rasheed, 1993; Dess & Beard, 1984; Doty, Bhattacharya, Wheatley, &
Sutcliffe, 2006; Lawrence & Lorsch, 1969). However, to date, there has been scant
systematic investigation of the perceived environment in public organizations,
despite mounting evidence that organizational environments are a statistically
significant determinant of public service performance (see, e.g., Andrews, Boyne,
Law, & Walker, 2005; Meier & Bohte, 2003). In particular, perceived environmental uncertainty (PEU) among managers in the public sector has received no
Public Performance & Management Review, Vol. 32, No. 1, September 2008, pp. 25–50.
© 2008 M.E. Sharpe, Inc. All rights reserved.
1530–9576/2008 $9.50 + 0.00.
DOI 10.2753/PMR1530-9576320102
25
26 ppmr / September 2008 attention, even though it is recognized to be a critical issue in management theory
(Buchko, 1994; Duncan, 1972; Milliken, 1987). This article seeks to address this
gap in the literature on public organizations by exploring PEU in local government service departments.
PEU is a product of managers’ perceptions of the combined complexity, instability, and unpredictability in the organizational environment. An environment that
is perceived to be complex, changing rapidly, and difficult to predict creates high
levels of uncertainty about the appropriate organizational responses to external
circumstances. As a result, managers are forced to consider carefully the impact
of their actions and decisions. PEU is thus a concept chiefly associated with contingency theories (Donaldson, 2001; Miles & Snow, 1978).
Scholars such as Chandler (1962) and Child (1972) have claimed that managers
make strategic choices based on the assessment of the environmental conditions
that they face. Miles and Snow (1978) later refined this argument to suggest that
organizational performance is dependent on the adoption of a consistent strategy
for aligning an organization with its environment. The successful adoption of the
correct strategy in these circumstances was intimately related to perceptions of
environmental uncertainty among managers. High levels of managerial PEU would
reflect a heightened sensitivity to the external constraints surrounding an organization and thereby be associated with strategies and structures that were likely to
maximize performance. By contrast, low levels of PEU reflect an underestimation
of organizational contingencies that would be revealed in a mismatch between
strategy, structure, and environment, ultimately resulting in poor performance.
The significance of the strategy–environment link for organizational effectiveness
thus makes the extent of perceived environmental uncertainty a critical concern
for public management scholars. Indeed, evidence from private organizations
suggests that higher levels of PEU are associated with increased environmental
scanning and innovation, which, in turn, lead to better organizational outcomes
(Daft, Sormunen, & Parks, 1988; Ozsomer, Calantone, & Di Benedetto, 1997;
Russell & Russell, 1992).
Environmental Uncertainty in Public Organizations
Concepts and measures of environmental uncertainty have conventionally focused
on how key organizational stakeholders perceive certain features of their organizational environments. Although such subjective measures of the environment
can be criticized for their lack of correspondence with more objective archival
measures (Tosi, Aldag, & Storey, 1973), it is only by using such perceptual measures that researchers can accurately tap the linkages between uncertainty and
managerial choices proposed by contingency theorists. These unique aspects of
Andrews / Perceived Environmental Uncertainty 27
organizational behavior lie beyond the reach of aggregated secondary data drawn
from archival sources. Indeed, managers’ perceptions of the environment are in
many respects more important than the actual environment, as it is perceptions
of external circumstances rather than objective indicators of those conditions that
organizational decision makers act on (Weick, 1969).
Classic work on organizational environments (Duncan, 1972; Jurkovich, 1974;
Terreberry, 1968) suggests that managerial perceptions of the simple–complex
and static–dynamic dimensions of the environment are the most significant determinants of the perceived uncertainty of external circumstances, which makes
it especially important to investigate the combined effects of perceived complexity and dynamism when considering PEU. The combination of these dimensions
also has special relevance for the conceptualization and measurement of PEU in
public organizations, where the complexity, instability, and unpredictability of the
environment they confront are arguably defining characteristics of their publicness (see Boyne, 2002). A conceptual model of PEU in public organizations can
thus be developed by drawing on the literature on environmental complexity and
dynamism.
Environmental Complexity and Dynamism
Environmental complexity is a product of the relative heterogeneity and dispersion
of an organization’s domain (Dess & Beard, 1984). Heterogeneity is present when
organizations grapple with a wide range of markets and services, which increases
the need for information-processing skills and systems, thereby placing greater
strain on the resource capacity of an organization (Dutton, Fahey, & Narayanan,
1983). Organizations providing services across a broad domain face a dispersed
environment. In these circumstances, the costs associated with strategic management and strong partnerships with suppliers, customers, and other stakeholders
are high (Aldrich, 1979). By contrast, the benefits from interdependence (such as
multioutput production) accrue more quickly when services are concentrated in
a narrow domain (Starbuck, 1976). The environment faced by public organizations is especially complex because they are required to meet the demands of a
diverse range of (often widely dispersed) client groups and external stakeholders.
Perceived complexity in the public sector is, therefore, likely to reflect managers’ assessments of the relative homogeneity and dispersion of the service users,
citizens, and external agencies with whom they interact.
Environmental dynamism is a product of the rate of change in external circumstances (instability), and the unpredictability (or turbulence) of that change
(Terreberry, 1968). Organizations typically seek to cope with environmental
turbulence and instability through better strategic management (Dess & Beard,
28 ppmr / September 2008 1984). In the public sector, policymakers have claimed that the impact of environmental dynamism can be reduced through improved planning and corporate
coordination (Office of Public Services Reform, 2002). Although major shifts in
the socioeconomic and external political environments of public organizations are
often known in advance (e.g., demographic change and new policy initiatives),
perceived deviations from expected environmental changes are still likely to have
an important influence on public organizations. For example, environmental jolts,
such as natural disasters or political crises, may place additional burdens on an
organization’s capacity to perceive and manage uncertainty (Meyer, 1982).
Daft (2001) argued that PEU is the product of managers’ perceptions of environmental complexity and dynamism in combination. Perceptions of complexity
increase uncertainty by placing greater demands on the ability of managers to
interpret how to meet potentially conflicting demands within the environment. An
unpredictable and rapidly changing environment intensifies the need for managers
to manage the circumstances they confront proactively. Taken together, the highest
level of PEU possible is, therefore, found when managers perceive high levels of
complexity, instability, and unpredictability. According to contingency theorists,
managers who are able to recognize high levels of complexity and dynamism in
the environment are more likely to manage uncertainty better than those who do
not. For instance, Downey and Slocum (1975) argued that cognitive biases associated with low tolerance of ambiguity lead to the underestimation of environmental
complexity, instability, and unpredictability, which, in turn, is likely to result in
poor decision making. In the public sector, the increasing interconnectedness of
demographic diversity and change, as well as the growth of multiorganizational
and multigovernmental networks, places ever greater burdens on public managers to perceive and manage uncertainty. This complexity makes it particularly
important for researchers to systematically theorize, measure, and investigate
PEU in public organizations.
Harris (2004) claimed that a successful conceptualization of the organizational environment should meet four key criteria: empirical testability, temporal
validity, international generalizability, and predictive validity. The framework
for exploring PEU that I present here is empirically testable, because suitable
measures of managerial perceptions of environmental complexity, instability, and
unpredictability are available or can be developed and applied. It exhibits temporal
validity because PEU in the public sector is an issue of perennial importance,
which also means that the framework is generalizable to public organizations
in other nations where managers are also likely to experience high levels of environmental uncertainty. Furthermore, it is capable of demonstrating predictive
validity in that PEU can be modeled on a host of relevant organizational inputs,
outputs, and outcomes.
Andrews / Perceived Environmental Uncertainty 29
Exploring PEU in Public Organizations
Internal Factors
Management
Buffering their organizations from environmental shocks is an important task for
public managers (O’Toole & Meier, 1999). However, excessive buffering may
lead managers to run the risk of becoming too insulated from external circumstances, potentially causing environmental misperception. This buffering effect
makes managerial efforts to learn about and exploit opportunities within the
environment a critical task. One important way in which public managers can
accomplish this task is through the cultivation of collaborative governance with
a range of relevant external actors and agencies (see, e.g., Agranoff, 2005; Meier
& O’Toole, 2003). Collaborative governance arrangements are characterized by
multiple, overlapping partnerships between various combinations of public, private, and voluntary organizations. Proactive management of these arrangements is
likely to reflect a greater sensitivity to the external context spurred by a deliberate
strategy of “high uncertainty avoidance” (Goerdel, 2006, p. 353), which leads to
my first hypothesis:
H1: Collaborative governance is positively related to PEU.
Public organizations require the support of external stakeholders other than their
partners in collaborative governance arrangements. In particular, local citizens may
dictate agenda setting or constrain the range of alternatives available to policymakers (Elkins & Simeon, 1979). Better communication with citizens can help generate
trust and confidence in public organizations and increase responsiveness to local
needs by improving the quality of information on customer preferences (Berman,
1997; Swindell & Kelly, 2000). By managing outward in this manner, managers
may be able to gain a broader sense of the variety of external contingencies faced
by their organizations. Hence:
H2: Consultation with local citizens is positively related to PEU.
Organization
Organizations that are unable to manage their external environment are arguably
plagued by internal inertia, that is, a general inability to break free from outdated
or inadequate routines. Such a lack of responsiveness is often associated with
hierarchical organizational structures. Centralized decision making, in particular,
has been linked with reliance on complicated information systems and an overall
preference for internal rather than external communication, thereby preventing
swift or effective adjustments to environmental change (Katz, 1982). By contrast,
30 ppmr / September 2008 less hierarchical organizations may be able to draw on a wider range of informal
channels of internal and external information to both respond to and shape environmental change. For example, in the public sector, street-level bureaucrats (e.g.,
teachers, police officers, and social workers) have more regular contact with clients
and are, therefore, able to exercise considerable discretion in their dealings with
them (Lipsky, 1980). As a result, managers in decentralized organizations may be
more likely to perceive high levels of environmental complexity and dynamism.
Thus, the third hypothesis is:
H3. Decentralized decision making is positively related to PEU.
A further aspect of organizational inertia that may affect managerial perceptions of the environment is the relative level of autonomy of their organization
from bureaucratic control. Autonomy can give organizations greater leeway in
how they choose to respond to external challenges, enabling them to buffer threats
and exploit opportunities as they see fit. However, high levels of autonomy may
make it less urgent for managers to perceive accurately and respond appropriately
to environmental variations, as they are likely to be subjected to fewer regulatory
pressures from political principals. Indeed, high levels of organizational autonomy
in some public organizations have been associated with insular decision making
and managerial complacency (Rainey & Steinbauer, 1999). Therefore:
H4: Organizational autonomy is negatively related to PEU.
The recent performance of organizations may be linked with relative inertia due
to its impact on the efforts of decision makers to effect strategic change (Ketchen
& Palmer, 1999). Managers’ perceptions of organizational performance are,
therefore, likely to be related to the levels of PEU that they experience. If managers perceive their organizations to be underperforming, they may have a keener
sense of the need to develop and implement innovative strategies in response to
external contingencies. By contrast, perceptions of high performance may prevent
managers from recognizing serious environmental threats (Staw, Sandelands, &
Dutton, 1981). As a result:
H5: Perceived performance is negatively related to PEU.
Strategy
Miles and Snow’s (1978) classic strategy typology associates different strategic
stances with varying managerial assumptions regarding the environment. Prospecting organizations “almost continually search for market opportunities, and . . .
regularly experiment with potential responses to emerging environmental trends”
and so perceive the environment to be constantly changing (p. 29). By contrast,
defending organizations “devote primary attention to improving the efficiency of
their existing operations” and, therefore, concentrate on optimizing performance
Andrews / Perceived Environmental Uncertainty 31
on core tasks (p. 29). Consequently, they tend to view the environment as simple
and stable because their focus is on refining internal operations. Reacting organizations, however, rarely alter their managerial processes “until forced to do so
by environmental pressures” and thus regard the organizational environment as
unpredictable (Miles & Snow, 1978, p. 29). The varying approaches to assessing
and managing the environment associated with these different strategies lead to:
H6: Strategies of prospecting and reacting are positively related to PEU,
but a strategy of defending is negatively related to PEU.
Organizational Effectiveness
Managers’ perceptions of environmental uncertainty are likely to reflect the
extent to which they understand how the external degree of difficulty constrains
their ability to deliver services. In such circumstances, managers may be more
committed to enhancing the ability of their organization to cope with exogenous
pressures, leading them to avert the potential pitfall of threat-rigidity. High levels
of PEU may reflect a thorough knowledge of clients’ widely differing needs, the
competing values held by external stakeholders (Quinn & Rohrbaugh, 1981), and
the problems associated with the goal ambiguity of both these causes (Chun &
Rainey, 2005). Realistic assessments of these wicked issues in the socioeconomic
and external political context facing a public organization, therefore, suggest the
following hypothesis:
H7: Organizational effectiveness is positively related to PEU.
Data and Methods
The organizational context of the analysis is local government service departments
in Wales. Welsh local governments provide education, social care, housing, welfare
benefits, environmental, and leisure and cultural services and are governed by
elected bodies with a Westminster-style cabinet system of political management. In
such a system, the cabinet represents the de facto executive branch of government
and usually comprises senior members of the ruling political party, all of whom
collectively decide policy. By restricting the analysis to service departments, other
potential influences on PEU such as the policies of higher tiers of government and
legal constraints are held constant. Some cases could not be matched when the
explanatory variables were mapped on to the dependent variables, due to missing
data within the respective datasets. As a result, the statistical analysis is conducted
on 48 cases, consisting of 9 education departments, 6 social services departments,
6 housing departments, 8 highways departments, 9 public protection departments,
and 10 benefits and revenues departments.
Data on perceptions of the environment, management, organizational, and
32 ppmr / September 2008 strategic factors are derived from an electronic survey of managers in Welsh local government conducted in autumn 2002. E-mail addresses for up to 10 senior
and middle managers in every service department were provided by the corporate
policy unit in each government. Questionnaires were then distributed via e-mail.
Survey respondents were asked a series of questions about their organizations. For
each question, informants placed their service department on a seven-point Likert
scale ranging from 1 (disagree with the statement) to 7 (agree with the statement).
Data were collected from different tiers of management to circumvent sample
bias problems associated with surveying informants from only one organizational
level. Heads of service and middle managers were selected for the survey because
attitudes often differ between hierarchical levels within organizations (Walker &
Enticott, 2004).
The sampling frame for the survey consisted of 198 service departments and
830 informants. Responses were received from 46 percent of services (n = 90) and
29 percent of individual informants (n = 237). The sample of 48 service departments analyzed represents 36 percent of a possible 132 education, social services,
housing, highways, public protection, and benefits departments—a rate similar to
studies of strategic management in the private sector (e.g., Gomez-Mejia, 1992).
The departments analyzed are representative of the diverse operating environments faced by Welsh local governments, including urban, rural, socioeconomically deprived, and predominantly English- or Welsh-speaking areas. Time trend
extrapolation tests uncovered no statistically significant differences between early
and late respondents, indicating that nonrespondent bias is not a problem. This
estimation technique is commonly used in survey research because late respondents
demonstrate a reluctance to respond, which is akin to nonresponse (see Armstrong
& Overton, 1977, for an explanation and application).
To generate service level data suitable for analysis, informants’ responses
within each service department were aggregated. The average score was taken
as representative of that service. Thus, for instance, if there were two informants
from a highways department, one from road repair services, and another from
traffic planning services, the mean of their responses was used.
Dependent Variables
Perceived Environmental Uncertainty
Six items from the survey gauged perceptions of environmental complexity and
dynamism (see Table 1). To measure perceived complexity, respondents were asked
to score the relative complexity of both the socioeconomic and external political
contexts they faced on a seven-point scale ranging from 1 (disagree with the proposed statement) to 7 (agree with the proposed statement). Similarly, perceived
dynamism was measured by asking them to evaluate the extent to which these two
Andrews / Perceived Environmental Uncertainty 33
contexts were (a) unpredictable and (b) changing rapidly. Because it is possible for
an organization to face a changing but predictable environment, the perceptions
of instability and unpredictability were multiplied to construct variables reflecting
more accurately their interactive effects on perceived environmental dynamism.
To generate measures of overall socioeconomic and external political PEU,
the respective measures of perceived complexity and dynamism were multiplied
together. Again, the rationale for multiplying rather than summing complexity and
dynamism is simply that an organization’s environment reflects the interaction of
both dimensions. Organizational environments can be complex but comparatively
static. In such circumstances, PEU may be relatively low as managers are able to
predict the level of complexity that they face (Jurkovich, 1974). Therefore, it is
important to account for the combined effects of perceived complexity and dynamism when exploring the relation between PEU and organizational characteristics
and outcomes. Skewness and kurtosis tests reveal that the interacted measures
are normally distributed. Very high PEU scores are, therefore, unlikely to have
distorted the statistical results.
Organizational Effectiveness
The performance of Welsh local government services is evaluated every year
through statutory performance indicators set by the National Assembly for Wales
(i.e., their most powerful stakeholder). The National Assembly for Wales Performance Indicators (NAWPIs) are based on common definitions and data, which are
obtained by councils for the same time period with uniform collection procedures
before being independently verified. For this analysis, 29 of the 100 NAWPIs
available for 2003 that focus most closely on effectiveness were used. Examples
include the average General Certificate in Secondary Education (GCSE) score,
the number of pedestrians killed or seriously injured in road accidents, and the
percentage of welfare benefit renewal claims processed on time (see the Appendix for the full list). To standardize the NAWPIs for comparative analysis across
different service areas, z-scores are taken of each performance indicator for all
Welsh governments. Different indicators within each service area are then added
together to produce an average score, before being combined with other service
scores to create an aggregate measure of organizational effectiveness.
Independent Variables
Internal Factors
Management. The relative level of collaborative governance in Welsh local government service departments is measured by creating a single factor using principal
components analysis of three survey items asking respondents to indicate whether
they worked with (a) other local and public authorities, (b) the private sector, or
Dependent variables
Perceived socioeconomic uncertainty:
The socioeconomic context the service operates in
is very complex.
is unpredictable.
is changing rapidly.
Perceived external political uncertainty:
The external political context the service operates in:
is very complex.
is unpredictable.
is changing rapidly.
Organizational effectiveness 2003
Independent variables
Management factors:
The service works in partnership with other local or public authorities.
The service works in partnership with the voluntary sector.
The service works in partnership with the private sector.
Strategy develops through consultation with local citizens.
Table 1. Descriptive Statistics
4.00
2.00
1.00
1.00
4.00
2.00
1.00
2.00
–1.56
3.00
1.00
1.00
2.00
4.92
3.40
3.71
110.55
5.08
4.12
4.61
.04
5.40
4.97
4.37
4.41
Min
69.85
Mean
7.00
7.00
7.00
7.00
7.00
6.00
7.00
1.34
7.00
6.00
6.00
252.00
216.00
Max
.96
1.44
1.29
1.16
1.24
1.26
1.33
.57
1.19
1.19
1.29
67.25
48.82
Std. dev.
34 ppmr / September 2008 7.00
7.00
7.00
7.00
7.00
2.12
1.54
2.40
40.02
1326.01
223,301
726.32
1.00
1.00
2.00
2.00
2.00
4.00
–1.51
–1.43
12.31
353.27
66,829
24.25
.68
.98
7.13
205.17
38,244.66
242.82
.86
1.20
1.06
1.48
1.26
.88
Note: The diversity measure consists of 16 ethnic groups: White British, Irish, Other White, White and Black Caribbean, White and Black African, White and
Asian, Other Mixed, Indian, Pakistani, Bangladeshi, Other Asian, Caribbean, African, Other Black, Chinese, Other Ethnic Group.
Sources: Data for organizational effectiveness and service expenditure (2001–2003), deprivation, ethnic diversity, population, and population density come
from National Assembly for Wales (2003, 2004), Department of Environment, Transport, and Regions (2000), and Office for National Statistics (2003).
Organizational factors
All staff are involved in the strategy-making process to some degree.
4.67
Our service has more autonomy than other services in the authority.
4.15
Perceived overall performance 2002
5.36
Strategy factors
Searching for new opportunities for service delivery is a major part of our
overall strategy.
4.87
The service emphasizes efficiency of provision.
5.15
The service explores new opportunities only when under pressure from external
agencies.
1.00
Controls
Organizational effectiveness 2002
.03
Service expenditure 2002
.01
Deprivation 2001
23.85
Ethnic diversity 2001
582.41
Population 2001
131,465
Population density 2001
355.51
Andrews / Perceived Environmental Uncertainty 35
36 ppmr / September 2008 (c) the voluntary sector. The factor explains over 60 percent of the variance in the
items, and the factor loadings for each aspect of collaborative governance were all
above 0.7, indicating that they are important determinants of the variance explained
by the factor. It also has a good Cronbach’s alpha internal reliability score of 0.7
(Nunnally, 1978). The role of citizen consultation within service departments is
measured using an item that gauges the extent to which strategy develops through
consultation with local citizens.
Organization. Most studies of organizational structure in the private sector
measure the extent of centralization by assessing the degree of participation in
decision making (Hage & Aiken, 1967, p. 77). The measure of organizational decentralization used in this study is, therefore, based on a variable that evaluates the
extent of involvement in strategic decision making within the sample organizations.
Organizational inertia is also measured as both a function of the relative autonomy
and the perceived performance of service departments. Autonomy is gauged by
asking respondents to indicate the extent to which their service department had
more autonomy than other services in the authority. High levels of occupational
closure within multipurpose public organizations may buffer service departments
from unpredictable external shocks and intrusive bureaucratic control (Kitchener,
2000). Managerial perceptions of performance were assessed by posing a question
based on Dess and Robinson’s (1984) study of manufacturing firms: “Overall, to
what extent would you agree that your service is performing well?” Perceptions
of high performance are likely to lead organizational decision makers to rely on
automatic interpretations of environmental circumstances based on past diagnoses
(Dutton, 1993).
Strategic stance. The measures of organizational strategy are derived from
Snow and Hrebiniak (1980) and Stevens and McGowan (1983). A prospector
strategy is operationalized through a survey item asking respondents to indicate
if their service is at the forefront of innovative approaches. To explore the extent
to which Welsh local governments displayed defender characteristics, informants
were asked whether their service emphasizes efficiency of provision. Reactors
are expected to lack a consistent strategy and to await guidance on how to manage and deliver services. Informants were, therefore, asked about the extent to
which they explored new opportunities only when under pressure from external
agencies.
Controls
Past performance. The performance of public organizations changes only incrementally over time (O’Toole & Meier, 1999), which indicates that performance
in one period is strongly influenced by performance in the past. Consequently,
effectiveness in the previous year is entered in the analysis of organizational effectiveness in 2002–3. By including the autoregressive term, the coefficients for
Andrews / Perceived Environmental Uncertainty 37
socioeconomic and external political PEU show what these variables have added
to (or subtracted from) the performance baseline.
Service expenditure. Performance may vary because of the financial resources
expended on services (Boyne, 2003). Spending variations across services may
arise for a number of reasons (e.g., the level of central government support, the
size of the local tax base, and departmental shares of a government’s total budget). Potential expenditure effects are controlled by using figures drawn from the
2001–2 NAWPIs (see the Appendix).
External constraints. Previous research has shown that the achievements of local governments are affected by the environment in which they operate (Andrews
et al., 2005). As a result, four objective measures of the external environment
faced by service departments are included in the statistical model of performance.
The average Ward score on the Index of Multiple Deprivation (Department of
Environment, Transport, and Regions, 2000) is used as a measure of the quantity
of service need. This score, which is the standard population-weighted measure
of deprivation used by U.K. central government, is derived from 33 indicators
across six domains (e.g., levels of income, education, and health). Residents in
disadvantaged areas scoring highly in the index of deprivation typically have fewer
social and economic resources with which to boost service provision through
coproduction (Williams, 2003).
To measure diversity of service need, the proportion of each ethnic group within
a local government area is squared and the sum of the squares of these proportions
subtracted from 10,000. The resulting measures are the equivalent of the Herfindahl
indices used by economists to measure market concentration, with a high level
of diversity reflected in a high score. Public organizations operating in ethnically
diverse areas may require a wider range of costly specialist social services, such as
multilingual community workers, and also need to assign considerable resources to
building good community relations (Office of the Deputy Prime Minister, 2003).
Indeed, controlling for this aspect of social heterogeneity, rather than economic or
educational diversity, is especially important, because of the substantial scholarly
and governmental attention devoted to addressing its consequences (e.g., Jencks
& Phillips, 1998; Office of the Deputy Prime Minister, 2003). Log transformation
of the measure counter the effects of positive skew (test result of 2.2).
Large organizations can accrue scale economies by distributing fixed costs over
more units of output (Stigler, 1958), which can, in turn, enable them to reinvest
the savings in new or innovative ways of working that may improve performance.
The relative size of local government service departments is fixed by the territorial
boundaries of the population they serve. Organizational size is, therefore, measured using population figures for each local government. These figures are then
divided by the area in square kilometers to give a measure of population density.
Providing services within densely populated areas can generate scope economies,
38 ppmr / September 2008 as static facilities in urban locations can offer multiple services from the same site
(Grosskopf & Yaisawamg, 1990). The descriptive statistics and data sources for
all the measures are listed in Table 1.
Statistical Results
The results of the statistical models of PEU are shown in Table 2. The average
variance inflation factor for the independent variables is around 1.6. It is, therefore,
highly unlikely that the results are distorted by multicollinearity (Bowerman &
O’Connell, 1990). Robust estimation of the regression standard errors was used
to correct for nonconstant error variance (Long & Ervin, 2000).
Management, organizational, and strategic variables collectively explain over
37 percent of the variation in socioeconomic and external political PEU in Welsh
local government service departments. The evidence suggests that strategic factors
have a fairly consistent association with both dimensions of PEU. However, the
evidence on management and organizational factors is more mixed.
Hypothesis 1 is not confirmed by the results: The coefficient for the collaborative governance factor is statistically insignificant for both measures of PEU. This
finding corroborates evidence that the benefits of collaborative governance, in
terms of knowledge and information sharing, may not be as great as anticipated
(Zhang & Dawes, 2006). However, it is possible that the effects of the different
dimensions of collaborative governance are canceling each other out. That is,
that partnership with one sector is more likely to heighten PEU in organizations,
whereas partnership with another is likely to reduce levels of PEU. For example,
Parker and Hartley stressed that collaboration with private organizations can generate substantial transaction costs “arising from incomplete information” (2003,
p. 107). We might then expect partnership with the private sector to be positively
associated with PEU. However, disaggregating the separate aspects of the collaborative governance factor did not lead to changes in the explanatory power of
the model or uncover new statistically significant relations.
Hypothesis 2 receives extremely mixed support: The sign of the coefficient
for citizen consultation is positive and statistically significant for socioeconomic
PEU but is negative and significant for external political PEU. On the one hand,
organizations that consult with citizens may develop a keener sense of the diverse
social needs that they confront, intensifying their uncertainty about meeting the
competing demands that these make. For example, to consult different citizen
groups, particular efforts are required to reach those experiencing poverty or social exclusion (Barnes, Newman, Knops, & Sullivan, 2003). On the other hand,
by directly consulting citizens, public organizations may be displaying a greater
propensity to trust them and, correspondingly, perceive local political demands
to be more certain (Yang & Callahan, 2005). In either case, it is clear from the
Andrews / Perceived Environmental Uncertainty 39
Table 2. Internal Factors Associated with Perceived
Environmental Uncertainty (PEU)
Socioeconomic PEU
External political PEU
Independent variables
Slope
Slope
s.e.
Constant
Management
Collaborative
governance
Citizen consultation
Organization
Decentralization
Autonomy
Perceived
performance
Strategic stance
Prospector
Defender
Reactor
F statistic
R2
–48.662
147.021
96.318
s.e.
56.642
3.034
8.135*
5.520
4.484
–2.743
–16.120**
8.885
7.085
7.653**
–2.642
3.453
3.815
2.677
–13.322**
5.207
6.454
6.280
2.021
9.896
5.542
5.174
7.665
29.052***
–25.034***
23.427**
2.857**
.370
8.332
8.031
11.765
–10.588*
11.098**
.578
23.039***
3.067***
.386
Note: N = 48.
***p ≤ 0.01. **p ≤ 0.05. *p ≤ 0.10 (two-tailed tests).
results that engaging with citizens is strongly associated with the environmental
perceptions of local government service departments.
Hypothesis 3 receives partial support. Decentralized decision making appears
to increase levels of socioeconomic PEU. However, the results suggest it has no
statistically significant effect on external political PEU. One potential explanation
for this finding is that by involving staff from lower levels, it is possible for an
organization to tap into particular aspects of their local knowledge, but that there
maybe limits to that knowledge. Organizational members that are closer to the
front line of operations are likely to have a sure grasp of the heterogeneity and
unpredictability of client needs in the public sector, but their distance from political principals may lead them to be less aware of the demands of other important
external stakeholders. For example, street-level bureaucrats who are “savvy about
what works as a result of daily interactions with clients” are rarely involved in
the external political relations of their parent organizations (Maynard-Moody,
Musheno, & Palumbo, 1990, p. 845).
The results provide mixed support for Hypothesis 4. The sign for the organizational autonomy coefficient is negative in both cases but is only statistically
significant for external political PEU. By contrast, Hypothesis 5 is confirmed for
40 ppmr / September 2008 socioeconomic PEU but not for external political PEU. The evidence on these
organizational factors suggests that service departments that are buffered from
external interference through having greater freedom to maneuver than their less
autonomous counterparts are likely to perceive their external political circumstances to be more certain. In contradistinction, those organizations perceiving
themselves to be high performers appear to feel that they have a surer grasp of the
social and economic circumstances with which they contend. Both findings imply
that organizations may become more complacent about environmental challenges
if they perceive themselves to be insulated from important socioeconomic and
external political pressures. For example, the precipitous decline of the prestigious
and successful U.K. retailer Marks and Spencer during the 1990s coincided with
a failure to respond to concerns about service quality voiced in customer surveys
(Mellahi, Jackson, & Sparks, 2002).
The hypothesis on strategic factors (Hypothesis 6) receives strong support from
the statistical results. In line with the propositions, the coefficient for a strategy
of prospecting is consistently positive and statistically significant. Similarly, the
sign for the reacting coefficient is positive and statistically significant for both
measures of PEU. In addition, the proposition on defending receives some confirmation from the results: Its coefficient is negative and statistically significant
for external political PEU. Prospecting is generally associated with a high level of
PEU by contingency theorists. Innovative organizations that seek to identify new
opportunities typically perceive their external circumstances to be both complex
and dynamic (Russell & Russell, 1992). A reacting strategy may lead managers to
become highly sensitive to rapid environmental changes as their decision making
would need to be attuned to cues from external forces, especially those given by
their political principals (Rainey, 1997). By contrast, defenders are inward looking
and may be more inclined to perceive their environment as stable, simple, and
predictable even if evidence is available to suggest that this is not the case.
The results of the statistical model of PEU and organizational effectiveness using
robust estimation of the regression standard errors are shown in Table 3. The results
are unlikely to be distorted by multicollinearity as the average variance inflation
factor for the independent variables is about 1.4 (Bowerman & O’Connell, 1990).
The model provides an excellent level of statistical explanation of variations in
the performance of Welsh local government service departments. The R2 is above
80 percent and is significant at 0.01. Furthermore, the control variables have the
expected signs, and most are statistically significant. Performance is autoregressive, quantity and diversity of service need, as expected, have a significant negative
association with performance, and population density has a significant positive
association. Taken together, the R2 and the effects of the performance baseline,
service expenditure, and external constraints suggest that the model provides a
sound foundation for assessing the consequences of PEU.
Andrews / Perceived Environmental Uncertainty 41
Table 3. Perceived Environmental Uncertainty (PEU)
and Organizational Effectiveness
Effectiveness
Independent variables
Constant
Perceived socioeconomic uncertainty
Perceived external political uncertainty
Past performance
Service expenditure
Ethnic diversity (log)
Deprivation
Population
Population density
F statistic
R2
Slope
3.678***
–.0008
.001**
.792***
.060
–1.152***
–.035***
.000001
.0004**
20.612***
.809
s.e.
1.185
.0008
.0006
.065
.041
.400
.008
.000001
.0002
Note: N = 48.
***p ≤ 0.01. **p ≤ 0.05 (two-tailed tests).
Hypothesis 7 is given partial support by the findings presented in Table 3. The
coefficient for external political PEU is positive and statistically significant, and
the coefficient for socioeconomic PEU is statistically insignificant. Local government service departments that perceive high levels of uncertainty in their external
political environment perform better than those that perceive that environment to
be certain. However, perceptions of the relative level of uncertainty in the social
and economic circumstances are unrelated to their service achievements.
Even when controlling for past performance, service expenditure, and external
constraints, perceptions of external political uncertainty appear to stimulate better
performance. There are a number of potential explanations for this finding. It is
conceivable that managers in high-performing public organizations are acutely
aware of uncertainty in the external political environment and are, as a result, far
less complacent about the need to secure institutional legitimacy. For instance,
they may be more willing to devote greater resources to meeting the demands
made of them by important political principals or to improving community relations within the local population. By contrast, underestimation of the external
political context may lead to insular decision making or an inability to respond
effectively to political exigencies. Institutional theory suggests that organizations
that are confident of their legitimacy may erroneously associate that with better
performance (Frumkin & Galaskiewicz, 2004). It is also possible that simply having a heightened sensitivity to the wide range of external stakeholders within the
environment of public organizations may make public managers approach their
42 ppmr / September 2008 Table 4. Summary of Findings
Findings
Variable
Management
Collaborative governance
Citizen consultation
Organization
Decentralization
Autonomy
Perceived performance
Strategic stance
Prospector
Defender
Reactor
Effectiveness
Service performance
Hypothesized
direction
Socioeconomic
PEU
External political
PEU
+
+
ns
+
ns
–
+
–
–
+
ns
–
ns
–
ns
+
–
+
+
ns
+
+
–
+
+
ns
+
Note: PEU = perceived environmental uncertainty.
task in a manner that is conducive to better service performance. For example,
they may increase the intensity of their networking with relevant external agencies
to reduce the impact of uncertainty (Meier & O’Toole, 2001).
The findings on perceived socioeconomic PEU suggest that managers’ perceptions of complexity, instability, and unpredictability in the social and economic
circumstances they face are unrelated to public service performance. However, this
result does not necessarily mean that this dimension of PEU simply does not affect
the achievements of public organizations. It is possible that managers’ perceptions
of social and economic uncertainty are associated with strategies, structures, or
processes that may, in turn, lead to better performance. The combined effect of
PEU and internal organizational characteristics on performance is a topic meriting further research.
The overall results of the hypothesis testing are summarized in Table 4. For the
most part, the empirical findings support the hypotheses. The results show that over
one-half of the results (10 out of 18) are statistically significant in the predicted
direction. However, nearly one-third of the findings are statistically insignificant,
suggesting that there is a need to explore certain aspects of PEU in more depth,
especially its hypothesized relation with collaborative governance. Furthermore,
one hypothesis is contradicted: Citizen consultation is negatively associated with
external political PEU. Nonetheless, the results confirm the value of the concept
of PEU for the empirical analysis of public organization behavior. By analyzing
Andrews / Perceived Environmental Uncertainty 43
the relations between PEU and the organizational choices and outcomes proposed
by contingency theorists, researchers can gain a valuable perspective on the ways
in which “environmental forces mold organizations through the mediation of human minds” (Simon, 1976, p. 334).
Conclusion
This paper examines PEU in public organizations by exploring its relation with
internal factors and organizational outcomes in Welsh local government service
departments. Levels of PEU are strongly associated with strategic stance: A prospecting or reacting strategy is positively related to socioeconomic and external
political uncertainty, whereas a strategy of defending is negatively related to
external political uncertainty. Citizen consultation and organizational inertia are
also associated with PEU. In turn, the performance of local government service
departments is positively influenced by perceived external political uncertainty,
even when controlling for past performance and a range of external constraints.
This analysis expands on work on organizational environments in the public
sector in several ways. First, it formalizes and tests a model of the organizational
characteristics and outcomes associated with PEU. Previous studies have so far
only theorized the concept of PEU in public organizations (Begun & Kaissi,
2004). Second, the paper presents systematic empirical evidence on managerial
perceptions of the environment in the public sector. Existing work concentrates
solely on the impact of archival objective measures of the organizational environment drawn from secondary data sources (Andrews et al., 2005). Third, the unit
of analysis is different service departments in multipurpose local governments,
making the results particularly generalizable as they apply to a wide variety of
public services.
To explore fully how public organizations can perceive and manage high levels of uncertainty, it is essential for researchers and policymakers to consider the
extent to which the linkages between PEU and internal characteristics proposed
by contingency theorists are susceptible to central and local discretion. In particular, how organizations should seek to align their strategy with the environmental
circumstances that they face is a critical question for public managers. Further
investigation of the relation between organizational fit and performance would
also provide important information on the policy levers that should be pulled to
maximize the impact of public sector reform. For example, the evidence presented
here supports the argument that the strategic management capability of public
organizations should be directed toward strengthening the fit between organizations and their external stakeholders (Poister & Streib, 1999).
There are, of course, some limitations of this analysis. The statistical results
may be a product of where and when the research was conducted. Therefore, it is
44 ppmr / September 2008 important to identify whether PEU differs in other organizational settings, both
within the United Kingdom and elsewhere and over other time periods. Welsh local governments operate within a highly regulated environment, which constrains
many aspects of their behavior (see Andrews et al., 2003). Public organizations
elsewhere across the globe may experience higher levels of PEU than those studied here. In addition, the ability to measure adequately perceived environmental
instability and unpredictability is limited by the use of a cross-sectional data set.
Because it was not possible to track changes in managers’ perceptions of the
environment, the analysis may be biased by the potential impact of recency on
managerial perceptions (Wholey & Brittain, 1989). Furthermore, debate abounds
about the direction of causality in the relation between PEU and organizational
characteristics (see, especially, Leifer & Huber, 1977). Longitudinal panel data
would enable the issue of causality between internal factors, such as strategy and
structure, and perceptions of environmental uncertainty to be traced with greater
precision.
Finally, the combined effect of management, organizational, and strategic factors
leaves a substantial part of the variation in PEU found here unexplained. This gap
may be partly attributable to limitations in the measures but may also be attributable to a host of additional individual and organizational level variables (such as
managerial experience, top team diversity, environmental scanning procedures,
and research and development capacity) that are beyond the scope of this study.
Similarly, the contribution of PEU to organizational outcomes could be explored
in greater depth, both by controlling for the management, organizational, and
strategic factors with which it is associated, and investigating its effect in combination with those factors. Nonetheless, the findings presented here have important
practical implications.
Decentralization of decision making by encouraging the participation of service managers in important strategic decisions can enable public organizations to
engage with the organizational environment in a manner conducive to the efficient
creation and transfer of client knowledge. For this decentralization to influence
service outcomes positively, other sources of organizational inertia must also
be overcome. Cross-departmental working within multipurpose organizations,
for instance, may corral vital information about the task environment (Willem
& Buelens, 2007). Another important way in which such knowledge about the
external environment can be communicated is through the use of citizen consultation techniques, such as neighborhood panels and public forums (Office of the
Deputy Prime Minister, 2006). However, managers should not be complacent
about the information that they gather from such exercises. For example, because
they often focus on specific issues and initiatives, consultation processes may
sometimes neglect broader issues of political responsiveness and social equity
(Yang & Holzer, 2006).
Andrews / Perceived Environmental Uncertainty 45
At a strategic level, PEU may be associated with two contradictory strategies:
prospecting and reacting. Prospecting implies a proactive attitude toward managing environmental change, and reacting signifies passive dependence on external
forces. Public organizations should, therefore, adopt a prospector strategy to
maximize the positive impact of managerial sensitivity to external circumstances.
Indeed, research suggests that prospecting organizations outperform their reacting
counterparts (Andrews, Boyne, & Walker, 2006). In addition, the positive relation between external political PEU and performance implies that more resources
should be devoted to ensuring that public managers understand their external
political environment. By learning more about the intricacies of the complex,
networked environments in which they increasingly operate, public managers
become better equipped to access vital exogenous sources of resources and support from other public, private, and nonprofit organizations, which, in turn, leads
to service improvement.
This study provides evidence on PEU in the public sector. Despite its limitations, the findings provide a strong platform for the application of the insights of
contingency theory to public organizations. Future research could furnish further
guidance for the theory and practice of public management by analyzing the linkages between PEU and the strategy, structure, and processes of organizations and
their separate and combined effects on public service performance.
References
Agranoff, R. (2005). Managing collaborative performance: Changing the boundaries of
the state? Public Performance & Management Review, 29(1), 18–45.
Aldrich, H.E. (1979). Organizations and environment. Englewood Cliffs, NJ: PrenticeHall.
Andrews, R., Boyne, G.A., & Walker, R.M. (2006). Strategy content and organizational
performance: An empirical analysis. Public Administration Review, 66(1), 52–63.
Andrews, R., Boyne, G.A., Law, J., & Walker, R.M. (2003). Myths, measures and modernisation: A comparative analysis of local authority performance in England and Wales.
Local Government Studies, 29(4), 54–78.
Andrews, R., Boyne, G.A., Law, J., & Walker, R.M. (2005). External constraints and public
sector performance: The case of comprehensive performance assessment in English
local government. Public Administration, 83(3), 639–656.
Armstrong, S.J., & Overton, T.S. (1977). Estimating non-response bias in mail surveys.
Journal of Marketing Research, 14(3), 396–402.
Barnes, M., Newman, J., Knops, A., & Sullivan, H. (2003). Constituting “the public” in
public participation. Public Administration, 81(2), 379–399.
Begun, J.W., & Kaissi, A.A. (2004). Uncertainty in health care environments: Myth or
reality? Health Care Management Review, 29(1), 31–39.
Berman, E.M. (1997). Dealing with cynical citizens. Public Administration Review, 57(2),
105–112.
Bowerman, B.L., & O’Connell, R.T. (1990). Linear statistical models: An applied approach. 2d ed. Belmont, CA: Duxbury.
46 ppmr / September 2008 Boyd, B., Dess, G., & Rasheed, A. (1993). Divergence between archival and perceptual
measures of the environment: Causes and consequences. Academy of Management
Review, 18(2), 204–226.
Boyne, G.A. (2002). Public and private management: What’s the difference? Journal of
Management Studies, 39(1), 97–122.
Boyne, G.A. (2003). Sources of public service improvement: A critical review and research
agenda. Journal of Public Administration Research and Theory, 13(2), 367–394.
Buchko, A. (1994). Conceptualisation and measurement of environmental uncertainty: An
assessment of the Miles and Snow perceived environmental uncertainty scale. Academy
of Management Journal, 37(2), 410–425.
Chandler, A. (1962). Strategy and structure: Chapters in the history of the industrial
enterprise. Cambridge, MA: MIT Press.
Child, J. (1972). Organizational environment, structure and performance: The role of
strategic choice. Sociology, 6(1), 1–22.
Chun, Y.H., & Rainey, H.G. (2005). Goal ambiguity in U.S. federal agencies. Journal of
Public Administration Research and Theory, 15(1), 1–30.
Daft, R.L. (2001). Organizational theory and design. 7th ed. Cincinnati: Thomson
Learning.
Daft, R.L., Sormunen, J., & Parks, D. (1988). Chief executive scanning, environmental
characteristics, and company performance: An empirical study. Strategic Management
Journal, 9(2), 123–139.
Department of Environment, Transport, and Regions. (2000). Indices of multiple deprivation. London.
Dess, G.G., & Beard, D.W. (1984). Dimensions of organizational task environments.
Administrative Science Quarterly, 29(1), 52–73.
Dess, G.G., & Robinson, R.B., Jr. (1984). Measuring organizational performance in the
absence of objective measures: The case of the privately-held form and conglomerate
business unit. Strategic Management Journal, 5(3), 265–273.
Donaldson, L. (2001). The contingency theory of organizations. Thousand Oaks, CA: Sage.
Doty, D.H., Bhattacharya, M., Wheatley, K.K., & Sutcliffe, K.M. (2006). Divergence between informant and archival measures of the environment: Real differences, artefact,
or perceptual error. Journal of Business Research, 59(2), 268–277.
Downey, H.K., & Slocum, J.W. (1975). Uncertainty: Measures, research, and sources of
variation. Academy of Management Journal, 18(3), 562–578.
Duncan, R. (1972). Characteristics of organizational environments and perceived uncertainty. Administrative Science Quarterly, 17(3), 313–327.
Dutton, J.M. (1993). Interpretations on automatic: A different view of strategic issue
diagnosis. Journal of Management Studies, 30(3), 339–357.
Dutton, J.M., Fahey, L., & Narayanan, V.K. (1983). Toward understanding strategic issue
diagnosis. Strategic Management Journal, 4(4), 307–323.
Elkins, D.J., & Simeon, E.B. (1979). A cause in search of its effect, or what does political
culture explain? Comparative Politics, 11(1), 127–145.
Frumkin, P., & Galaskiewicz, J. (2004). Institutional isomorphism and public sector organizations. Journal of Public Administration Research and Theory, 14(3), 283–307.
Goerdel, H.T. (2006). Taking initiative: Proactive management and organizational performance in networked environments. Journal of Public Administration Research and
Theory, 16(3), 351–367.
Gomez-Mejia, L. (1992). Structure and process of diversification, compensation strategy,
and firm performance. Strategic Management Journal, 13(5), 381–397.
Grosskopf, S., & Yaisawamg, S. (1990). Economies of scope in the provision of local
public services. National Tax Journal, 43, 61–74.
Andrews / Perceived Environmental Uncertainty 47
Hage, J., & Aiken, M. (1967). Relationship of centralization to other structural properties.
Administrative Science Quarterly, 12(1), 72–93.
Harris, R.D. (2004). Organizational task environments: An evaluation of convergent and
discriminant validity. Journal of Management Studies, 41(5), 857–882.
Jencks, C., & Phillips, M. (Eds.). (1998). The black–white test score gap. Washington,
DC: Brookings Institution.
Jurkovich, R. (1974). A core typology of organizational environments. Administrative
Science Quarterly, 19(4), 380–394.
Katz, R. (1982). The effects of group longevity on project communication and performance.
Administrative Science Quarterly, 27(1), 81–104.
Ketchen, D.J., Jr., & Palmer, T.B. (1999). Strategic responses to poor organizational performance: A test of competing perspectives. Journal of Management, 25(5), 683–706.
Kitchener, M. (2000). The “bureaucratization” of professional roles: The case of clinical
directors in U.K. hospitals. Organization, 7(1), 129–154.
Lawrence, P., & Lorsch, J. (1969). Organization and environment. Homewood, IL: Irwin.
Leifer, R., & Huber, G.P. (1977). Relations among perceived environmental uncertainty,
organizational structure, and boundary-spanning behaviour. Administrative Science
Quarterly, 22(2), 235–247.
Lipsky, M. (1980). Street-level bureaucracy: Dilemmas of the individual in public services.
New York: Russell Sage Foundation.
Long, J.S., & Ervin, L.H. (2000). Using heteroscedasticity consistent standard errors in
the linear regression model. American Statistician, 54(3), 217–224.
Maynard-Moody, S., Musheno, M., & Palumbo, D. (1990). Street-wise social policy: Resolving the dilemma of street-level influence and successful implementation. Western
Political Quarterly, 43(4), 833–848.
Meier, K.J., & Bohte, J. (2003). Not with a bang but a whimper: Explaining organizational
failures. Administration and Society, 35(1), 1–18.
Meier, K.J., & O’Toole, L.J. (2001). Managerial strategies and behaviour in networks:
A model with evidence from U.S. public education. Journal of Public Administration
Research and Theory, 11(3), 271–293.
Meier, K.J., & O’Toole, L.J. (2003). Public management and educational performance: The
impact of managerial networking. Public Administration Review, 63(6), 689–699.
Mellahi, K., Jackson, P., & Sparks, L. (2002). An exploratory study into failure in successful organizations: The case of Marks and Spencer. British Journal of Management,
13(1), 15–30.
Meyer, A.D. (1982). Adapting to environmental jolts. Administrative Science Quarterly,
27(4), 515–538.
Miles, R., & Snow, C. (1978). Organizational strategy, structure and process. London:
McGraw Hill.
Milliken, F. (1987). Three types of perceived uncertainty about the environment: State,
effect and response uncertainty. Academy of Management Review, 12(1), 133–143.
National Assembly for Wales. (2003). National Assembly for Wales performance indicators 2001–2002. Cardiff.
National Assembly for Wales. (2004). National Assembly for Wales performance indicators 2002–2003. Cardiff.
Nunnally, J.C. (1978). Psychometric theory. 2d ed. New York: McGraw Hill.
Office of the Deputy Prime Minister. (2003). Equality and diversity in local government:
A literature review. London.
Office of the Deputy Prime Minister. (2006). Promoting effective citizenship and community empowerment: A guide for local authorities on enhancing capacity for public
participation. London.
48 ppmr / September 2008 Office for National Statistics. (2003). Census 2001: Key statistics for local authorities.
London: TSO.
Office of Public Services Reform. (2002). Reforming our public services. Principles into
practice. London: Cabinet Office.
O’Toole, L.J., Jr., & Meier, K.J. (1999). Modelling the impact of public management:
Implications of structural context. Journal of Public Administration Research and
Theory, 9(4), 505–526.
Ozsomer, A., Calantone, R., & Di Benedetto, A. (1997). What makes firms more innovative?
A look at organizational and environmental factors. Journal of Business and Industrial
Marketing, 12(6), 400–416.
Parker, D., & Hartley, K. (2003). Transaction costs, relational contracting and public
private partnerships: A case study of U.K. defence. Journal of Purchasing and Supply
Management, 9(3), 97–108.
Poister, G.D., & Streib, G.D. (1999). Strategic management in the public sector: Concepts,
models and processes. Public Productivity & Management Review, 22(3), 308–325.
Quinn, R.E., & Rohrbaugh, J. (1981). A competing values approach to organizational effectiveness. Public Productivity Review, 5(2), 122–140.
Rainey, H.G. (1997). Understanding and managing public organizations. 2d ed. San
Francisco: Jossey-Bass.
Rainey, H.G., & Steinbauer, P. (1999). Galloping elephants: Developing elements of a
theory of effective government organizations. Journal of Public Administration Research
and Theory, 9(1), 1–32.
Russell, R., & Russell, C. (1992). An examination of the effects of organizational norms,
organizational structure, and environmental uncertainty on entrepreneurial strategy.
Journal of Management, 18(1), 639–657.
Simon, H.A. (1976). Administrative behavior: A study of decision-making processes in
administrative organization. 3d ed. London: Macmillan.
Snow, C.C., & Hrebiniak, L.G. (1980). Strategy, distinctive competence, and organizational
performance. Administrative Science Quarterly, 25(2), 317–336.
Starbuck, W.H. (1976). Organizations and their environments. In M.D. Dunnette (Ed.),
Handbook of industrial and organizational psychology (pp. 1069–1123). Chicago:
Rand McNally.
Staw, B., Sandelands, L., & Dutton, J. (1981). Threat-rigidity cycles in organizational
behavior: A multi-level analysis. Administrative Science Quarterly, 26(4), 501–524.
Stevens, J.M., & McGowan, R.P. (1983). Managerial strategies in municipal government
organizations. Academy of Management Journal, 26(3), 527–534.
Stigler, G. (1958). The economics of scale. Journal of Law and Economics, 1, 54–71.
Swindell, D., & Kelly, J.M. (2000). Linking citizen satisfaction data to performance measures:
A preliminary evaluation. Public Performance & Management Review, 24(1), 30–52.
Terreberry, S. (1968). The evolution of organizational environments. Administrative Science Quarterly, 12(3), 377–396.
Tosi, H., Aldag, R., & Storey, R. (1973). On the measurement of the environment: An
assessment of the Lawrence and Lorsch environmental uncertainty subscale. Administrative Science Quarterly, 18(1), 27–36.
Walker, R.M., & Enticott, G. (2004). Using multiple informants in public administration:
Revisiting the managerial values and actions debate. Journal of Public Administration
Research and Theory, 14(3), 417–434.
Weick, K.E. (1969). The social psychology of organizing. Reading, MA: AddisonWesley.
Wholey, D.R., & Brittain, J. (1989). Characterizing environmental variation. Academy of
Management Journal, 32(4), 867–882.
Andrews / Perceived Environmental Uncertainty 49
Willem, A., & Buelens, M. (2007). Knowledge sharing in public sector organizations: The
effect of organizational characteristics on interdepartmental knowledge sharing. Journal
of Public Administration Research and Theory, 17(4), 581–606.
Williams, C. (2003). Developing community involvement: Contrasting local and regional
participatory cultures in Britain and their implications for policy. Regional Studies,
37(5), 531–541.
Yang, K.F., & Callahan, K. (2005). Assessing citizen involvement efforts by local governments. Administration & Society, 29(2), 191–216.
Yang, K.F., & Holzer, M. (2006). The performance-trust link: Implications for performance
measurement. Public Administration Review, 66(1), 114–126.
Zhang, J., & Dawes, S. (2006). Expectations and perceptions of benefits, barriers, and
success in public sector knowledge networks. Public Performance & Management
Review, 29(4), 433–466.
Dr. Rhys Andrews is a research fellow at the Centre for Local and Regional Government Research at Cardiff University. His research interests focus on civic culture,
organizational environments, and public service performance. His publications
include articles in the Journal of Public Administration Research and Theory and
Public Administration Review.
50 ppmr / September 2008 Appendix. National Assembly for Wales Performance Indicators (NAWPI)
Effectiveness and Expenditure Measures 2001–2003
Service area
Education
Social
services
Housing
Effectiveness NAWPI
Expenditure NAWPI
• Net expenditure per nursery and
primary pupil under 5
• Net expenditure per primary pupil
age 5 and over
• Net expenditure per secondary
pupil under 16
• Net expenditure per pupil secondary pupil age 16 & over
• Average General Certificate in
Secondary Education (GCSE) or
General National Vocational
Qualification (GNVQ) points
score of 15/16-year-olds
• % 15/16-year-olds achieving 5 or
more GCSEs at grades A*–C or
the vocational equivalent
• % 15/16-year-olds achieving one
or more GCSEs at grade G or
above or the vocational equivalent
• % 11-year-olds achieving Level 4
in Key Stage 2 Maths
• % 11-year-olds achieving Level 4
in Key Stage 2 English
• % 11-year-olds achieving Level 4
in Key Stage 2 Science
• % 14-year-olds achieving Level 5
in Key Stage 3 Maths
• % 14-year-olds achieving Level 5
in Key Stage 3 English
• % 14-year-olds achieving Level 5
in Key Stage 3 Science
• % 15/16-year-olds achieving at
least grade C in GCSE English or
Welsh, Mathematics, and Science
in combination
• % 15/16-year-olds leaving fulltime education without a recognized qualification (inverted)
• Cost of children’s services per
• Percentage of young people
child looked after
leaving care age 16 or over with
at least 1 GCSE at grades A*–G
or GNVQ
• Proportion of rent collected
• Average weekly management costs
• Rent arrears of current tenants
• Average weekly repair costs
(inverted)
• Rent written off as not collectable
(inverted)