Abstract The external circumstances that organizations confront are an important influence upon their prospects of success. The resources available within
the environment, the multiplicity of stakeholder demands to be addressed and
the rates of change in these, each have serious implications for organizational
functioning. Nevertheless, it remains conceivable that the effects of different
dimensions of the environment are not straightforwardly positive or negative,
but may follow nonlinear patterns posing very different challenges at different
levels. To draw lessons for public organizations seeking to understand how
best to respond the circumstances that they face, this paper examines linear
and nonlinear effects of different dimensions of the organizational environment
on the performance of over 500 organizations using both objective and subjective measures of the environment. Strong support is found for the presence
of linear relationships between each environmental dimension and type of
measure and performance, but no evidence of statistically significant nonlinear
environmental effects. The theoretical and practical implications of the findings
are discussed.