Perceived Environmental Uncertainty: The Extension of Miller’s Scale to the Natural Environment

Abstract

Large businesses are professionalizing their approach to environmental management, in pursuit of quality management, cost effective eco‐efficiency and regulatory compliance. However, recent evidence suggests that business corporations are not integrating the natural environment into their strategic thinking. One of the major reasons for this is the contingent relationship between perceived uncertainty in the business environment and strategic decision making. This paper describes the development and testing of a Perceived Environmental Uncertainty (PEU) measurement scale for the natural environment. The new PEU scale is based on Miller’s (1993) PEU scale for the commercial environment and grounded in the environmental management theory. It is also shown to possess very good reliability and dimensionality. The new PEU scale was applied in the form of self‐report questionnaire. Respondents were senior executives (n = 198) from the UK textile industry. We specifically looked for variations in levels of executives’ PEU along the industry supply chain. As a result of applying the new scale, our findings show that the natural environment presents significantly higher levels of PEU for executives in the textile making‐up/retail sector. The major cause of uncertainty for the textile making‐up/retail sector is that firms in this sector are at the end of the supply chain and therefore exposed to up‐stream risk, which is often very difficult to manage.