Introduction
The relationship between organizational environments and performance is a key topic in organizational studies (e.g. Aldrich 1979; Boyd and Gove 2006; Dess and Beard 1984). In particular, contingency theory suggests that the external circum-stances that organizations confront are likely to have important effects on organiza-tional outcomes (see Donaldson 2001; Miles and Snow 1978; Perrow 1970). Theories of the organizational environment advanced by scholars adopting a contingency perspective suggest that the relative munificence, complexity and dynamism of the circumstances faced by organizations are likely to influence their behaviour and outcomes (Dess and Beard 1984). Environmental munificence (or exogenous resource capacity) is thought to be associated with better organizational performance, while complexity (client homogeneity-heterogeneity and concentration-dispersion) and dynamism (environmental instability and turbulence) are assumed to increase the degree of task difficulty and so lead to worse performance. These relationships are arguably likely to hold for both “objective” archival measures of the environment drawn from secondary administrative sources and “subjective” perceptual measures of the environment drawn from surveys of practising managers.