International Risk and Perceived Environmental Uncertainty: The Dimensionality and Internal Consistency of Miller's Measure

Abstract

Increasingly, scholars have suggested that there is a need to approach the problem of international risk from a multidimensional perspective [Brouthers 1995; Miller 1993; Shan 1991]. Miller [1992, 1993] developed and tested the most comprehensive framework to date. Miller [1993] showed high inter-rater reliability in his measure of Perceived Environmental Uncertainty (PEU). In this paper we test the dimensionality of the scales from a statistical viewpoint and find that the statistical determination is reasonably consistent with Miller's conceptual determination. We also investigate Miller's measure by comparing scales, conceptualized by Miller, with ones determined by factor analysis. We test the reliability of these scales and find that the conceptualized scales have generally high internal consistency in samples of both manufacturing and service firms. However, the findings also suggest that several changes in the PEU measure are warranted, resulting in a refinement of Miller's measure, which we have labeled PEU 2.