Despite a growing evidence base supporting linear patterns in the environment-performance relationship in both the public (e.g. Andrews 2009; Meier and Bohte 2003) and private sectors (e.g. Keats and Hitt 1988; Sheppard 1995), it remains conceivable that the effects of different dimensions of the environment are not straightforwardly positive or negative. The benefits of environmental munificence may turn negative as organizations become complacent or overconfident in their capacity to keep on doing what they did well in the past. Likewise, at low-medium levels, complexity and dynamism may actually sharpen managerial awareness of the challenges to be confronted, at least until the environment becomes too complicated or unpredictable to manage effectively. However, to date, there has been little systematic research examining nonlinearity in the organizational environment-performance relationship using either objective or subjective measures of the environment. Does the impact of external environmental circumstances on organizational performance follow a linear or nonlinear pattern? Do managerial perceptions of organizational environments affect the achievements of organizations in consistent or different ways depending on the strength of those perceptions? To answer these questions, this paper explores linearity and nonlinearity in the relationship between “objective” recorded and “subjective” perceived environments on the performance of a set of over 500 public organizations.
Despite a growing evidence base supporting linear patterns in the environment-performance relationship in both the public (e.g. Andrews 2009; Meier and Bohte 2003) and private sectors (e.g. Keats and Hitt 1988; Sheppard 1995), it remains conceivable that the effects of different dimensions of the environment are not straightforwardly positive or negative. The benefits of environmental munificence may turn negative as organizations become complacent or overconfident in their capacity to keep on doing what they did well in the past. Likewise, at low-medium levels, complexity and dynamism may actually sharpen managerial awareness of the challenges to be confronted, at least until the environment becomes too complicated or unpredictable to manage effectively. However, to date, there has been little systematic research examining nonlinearity in the organizational environment-performance relationship using either objective or subjective measures of the environment. Does the impact of external environmental circumstances on organizational performance follow a linear or nonlinear pattern? Do managerial perceptions of organizational environments affect the achievements of organizations in consistent or different ways depending on the strength of those perceptions? To answer these questions, this paper explores linearity and nonlinearity in the relationship between “objective” recorded and “subjective” perceived environments on the performance of a set of over 500 public organizations.
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