Are you sure about what you mean by ‘uncertainty’? The actor’s perspective vs. the institutional perspective

Abstract

This paper explicates theoretical and methodological differences between Archival Environmental Uncertainty (AEU) and Perceived Environmental Uncertainty (PEU). Conceptually, we discuss the controversial development of the concepts in a literature review. We propose a reconciling framework which emphasizes that AEU and PEU differ due to the specificity of the decision unit, the predictability of change, and the use of leading indicators. We conclude that future conceptual work could further refine AEU- and PEU-measures; especially a better distinction between AEU and ‘risk’ is warranted.Empirically, we are the first ones to investigate the statistical association between prevailing measures of AEU (Tosi et al., 1973; Dess and Beard, 1984) and PEU (Miller, 1993). Our analysis combines archival data on AEU (annual reports) with survey data on PEU from top executives of the 110 largest listed German companies (55% response rate) by using time series-, factor- and correlation-analyses. Our findings show—as predicted—that AEU and PEU correlate moderately on a significant level. Yet, adjustment of the AEU-measure for predictable changes does not increase the strength of this correlation. This implies that future empirical work should focus more on the specificity of the decision unit and the use of leading indicators than on adjusting the predictability of change