The Effects of Experience on Managerial Decision-Making Uncertainty

Abstract

An important contribution to the literature on perceived environmental uncertainty (PEU) is Milliken's (1987, 1990) distinction between state uncertainty, effect uncertainty and response uncertainty. Although much is known about their conceptual underpinnings and measurement, there has been no empirical investigation of their antecedents. The purpose of this study is to begin to understand their antecedents by exploring the role of decision-maker experience in influencing state, effect and response uncertainty. There is also investigation as to how two personality variables – locus of control and tolerance for ambiguity – moderate the relationships between experience and decision-maker uncertainty. Data were obtained from a sample of senior marketing executives in New Zealand. Results suggest that decision-maker experience has a differential impact on the types of uncertainty experienced by managers as they scan, interpret and respond to change in the external environment. This study advances theoretical knowledge about uncertainty by revealing that locus of control and tolerance for ambiguity moderate the relationship between decision-maker experience and response uncertainty. The research findings are interpreted and future research opportunities discussed.