Environmental dynamism is a product of the rate of change in external circumstances (instability), and the unpredictability (or turbulence) of that change (Emery and Trist1965). Organizations typically require greater human and financial resources to cope effectively with turbulence and instability in the environment (Dess and Beard 1984). Organizational decision-makers require a certain degree of environmental stability to direct and plan the use of resources effectively (Dutton et al. 1983). Large or unexpected shifts in the organizational environment may lead managers to be hesitant about developing new services, and to become unwilling or unable to adapt to environmental shifts, resulting in the perils of “threat-rigidity” (Staw et al. 1981).Pressure to deliver customer-led services in what are perceived to be unstable or unpredictable social and economic circumstances can lead to reactive decision making or an absence of strategic behaviour altogether (Inkpen and Choudhury 1995). This, in turn, is highly likely to result in worse performance. Turnover in the environmental circumstances that managers confront is likely to heighten uncertainty about the services that should be provided to clients. As the rate of environmental change increases, the need to gather new information about clients’ expectations places ever greater burdens on organizations, leading additional resources to be devoted to environmental scanning and operational planning(Boyd and Fulk 1996). Although a dynamic environment implies an increased performance management burden, it is nevertheless possible that the need to exhibit a heightened sensitivity to the external constraints surrounding an organization may ineluctably lead towards strategic behaviour that will enhance performance. Like environmental complexity, this curvilinear relationship may be particularly evident within the subjective environment. Low-moderate levels of perceived dynamism may sharpen managerial reflexes, prompting increased innovation and thereby potentially lead to better organizational outcomes (see Daft et al. 1988; Ozsomer et al. 1997; Russell and Russell 1992)—at least until environmental instability and unpredictability become so great as to preclude any kind of effective managerial response. It is therefore anticipated that environmental dynamism will exhibit either a linear negative relationship with performance or an inverted u-shaped one.