Independent variables
Debates on the influence of organizational environments on performance center on two contrasting approaches to its measurement. The first approach focuses on “objective” quantifiable measures based on “scientifically rigorous measurement procedures” (Dess and Beard 1984, 53). For example, private sector studies of environmental determinants of performance are often based on “archival” indices of aggregated economic data (e.g. Keats and Hitt 1988). The second approach concentrates on “subjective” measures that gauge how key organizational stakeholders perceive certain features of their organizational environments. For instance, there is a large literature on the impact of perceived environmental uncertainty on firm performance (e.g. Daft et al. 1988; Russell and Russell 1992). “Objective” or “archival” measures arguably provide especially useful data for investigating organizational outcomes (Boyd et al. 1993). Although perceptual measures suffer from potential contamination by respondent biases, such as common method bias (Huber and Power 1985), they more directly reflect the ways in which “environmental forces mold organizations through the mediation of human minds” (Simon 1976, 334). To model linearity and nonlinearity in the organizational environment-performance relationship it is therefore important to test objective and subjective features of the environment in the same study (Randolph and Dess 1984).