Social Theory: Environmental Uncertainty

In empirical research on social theories, there is a term called environmental uncertainty. It is one of the important aspects of a business environment and should be carefully considered by the company or organization. It derives from two words, environment and uncertainty. 

Environment in social research usually refers to the organizational environment. The environment is an external force, which behavior impacts the organization. It is anything that surrounds a system and is the accumulation of all conditions, events, and circumstances happening in the place where the organization operates.  As one of the founding fathers of the organizational environment theory, Duncan (1972) described the environment as the entire physical and social factors taken into account by the organization's individuals during their decision-making activities

Uncertainty on the other hand derives from the absence of information. According to Pfeffer and Salancik (2003), uncertainty refers to 'the degree to which future states could not be anticipated and accurately predicted'. As uncertainty appears, hesitancy, indecisiveness, and confusion may arise which may make the prediction of the future be inaccurate.

Environmental uncertainty, therefore, is about ambiguity and uncertain information about the environment surrounding a certain organization. Ambiguous and uncertain information will likely be problematic if it influences the organization's performance. As we know, the environment has a dynamic nature (always changing), and the continuity of an organization or business depends on how well they manage to adapt and evolve according to their environment. If there is no information available, or there's a lack of information about the environment, the organization will surely have a hard time adapting.  

Environmental uncertainty has an important role in a business or organization. Environmental uncertainty will influence individuals or group's decision-making process, which will then determine their performances. Therefore, it is wise for an organization to become acquainted and familiar with environmental uncertainty, its definition, its types, its components. Knowing these theories will help them recognize the environmental uncertainty that they experienced and how to respond to it.