Stone & Fiorito expanded this line of reasoning. According t them, the decision to adopt HRP (and by extension, largely influ by in a firm's environment. The 'environment is derstood to include annual fluctuations in the firm's product (e.g level of earnings and workforce employment) For example, in moderately volatile environments are likely to use both HRP and SHRM, primarily because some level of volatility in the env ronment makes such techniques necessary, and also because a stable environ ment makes the use of these techniques feasible. In contrast, according t Stone & Fiorito, the ble, or use of HRP or SHRM is much ess likely in highly sta highly volatile environments. In the former, HRP and SHRM won't ecessary, while in the latter these procedures will probably not be fective. The construct of tolatility, and potential effects on the adoption of HRP and SHRM, is explored in more detail below. The Construct of Environmental volatility Environmental volatility is typically defined in terms of the factors be- yond the boundaries of the organization that infl i outcomes. Orga nizational theorists have long held that environmental volatility has an important influence on firm performance (Burns & Stalker, 1961; Child 1972; Pfeffer & Salancik, 1978; Thom 1967), Strategic management pson, scholars have pointed to the importance of environmental volatility as we For example, Chandler Cl962), Miles, Snow, & Pfeffer Cl974), and Camillus (1982) all argue that changes in a firm's level of environmental volatility in crease the need to develop new (or at least altere organizational strate- gies. And environmental volatility has been found to affect the outcomes of the strategic business planning process as well (Fredrickson, 1984 Fredrickson and Mitchell, 1984; Hofer & Schendel, 1978; Koberg, 1987) Thus, the assertion that environmental volatility shoul also effect the use of HRP and SHRM should be uncontroversial As noted above, two facets of environmental volatility should be espe cially relevant to th decision to adopt HRP and SHRM. The most common form of environmental volatility reflects instability in the firm's earnin (Wholey & Brittain, 1989) and is typically called product market volatility (PMV; Dess & Beard, 1984). Since firms attempt to maximize earnings, variation in a firm's profitability should signal instability in its productmar ket. The second form of environmental volatility is related to the firm' workforce. Workforce, volatility (WFV) reflects in the firm's level of total employment from year to year. High levels of WFV or should the HRP or SHRM difficult, as dramatic shifts in employmen render workforce projections highly inaccurate. Conversely, as noted above, stable or placid may not require sophisticated plan ning procedures. Based on this line of reasoning, firms with moderate le els of WFV or PMV would be likely to use HRP and sHRM most intensively." These relationships are stated formally in the second hypothe sis, and depicted graphically in Exhibit 1 Hypothesis 2: The impact of WFV and PMV on the adoption of HRP and SHRM will be curvilinear. All else equal, firms with moderate lev els of WFV and PMV will use the highest levels of HRP and SHRM