Environmental uncertainty is a multidimensional construct as well as a perceptual construct. It could be classified into three types, which are state, effect, and response uncertainty. In studies on perceived environmental uncertainty (PEU), these three types of environmental uncertainty are generally used as the measurements.
State uncertainty, defined by Kessler (2013), is the inability to forecast how the environmental components are changing. It also applies to how members of the organization do not feel secure that they recognize the key events or trends currently happening in their environment. The lack of information regarding unexpected changes in the environment caused an organization to experience state uncertainty. It only occurs when a member of the organization faced a shortage of facts and knowledge about their environment.
Effect uncertainty, also defined by Kessler (2013), is the inability to forecast the effect of environmental component changes within the organization. It is the second type of environmental uncertainty and also the continuity from state uncertainty. As effect uncertainty refers to the lack of information on the effect of environmental changes, it will then impact the organization. When members of the organization cannot predict the impact of the environmental changes, it will then affect their decision-making process.
Last, Kessler (2013) defined response uncertainty as a lack of insight into the alternative response to environmental uncertainty. It also refers to the inability to anticipate the potential consequences of the chosen response to the environmental uncertainty that the organization encountered. This type of uncertainty plays a significant role in the decision-making process, as its existence could restrain and slow down the process. When an organization has a high degree of response uncertainty, it indicates that they are not confident and have hesitations about how to respond to environmental turbulence and changes