Mapping Perceived Environmental Uncertainty

Organizations are in continuous interaction with their environment - an environment that is a primary source of opportunities and threats. Detailed information about that environment is required for making sound decisions, but that information is never complete. There is always uncertainty. Perceived Environmental Uncertainty (PEU) quantifies the lack of information about the world around a firm as perceived by its decision-makers.

The lack of information can be because the decision-related items, i, are difficult to understand (complexity, Ci) and because their nature is changing (dynamism, Di). This suggests a conceptual plot PEU. Any point on the plot gives the PEU experienced by a decision-maker based on the perceived complexity and dynamism of that environmental item.

The core idea is to measure environmental complexity and dynamism by means of latent variables (empirically defined by operational items) without introducing any external weights as was done in previous research (e.g., Daft et al., 1988). Accordingly, we obtained a sample of 338 surveys answered by business managers in the Canary Islands (Spain). We asked them about their perceptions (on a 5-point scale) of complexity and dynamism for 25 items relevant to the local economy.

Cross-plotting the Rasch item calibrations for the complexity and dynamism constructs yields an instructive map of PEU, shown above. There is a strong correlation (R² = 0.85) between the two constructs. This confirms the findings of previous research (Daft et al., 1988). According to the scatterplot, dynamism and complexity contribute roughly equally to PEU. This finding differs from Duncan (1972). He found that dynamism contributes more to uncertainty.

The "Insularity" item is an outlier (top left). It is perceived to be more complex than dynamic. This could be because of a special meaning of the term "insularity" for people living on islands. In one sense it is a constant factor in managing their businesses.

One way in which this work advances this field of research is that the relationship between complexity and dynamism derives from the decision-makers themselves and is not forced into the data by some arbitrary weighting system.

Another way is that it assists organizations faced by the problem of allocating resources for the improvement of decision-making. This methodology identifies which environmental items are perceived to be more uncertain and whether that uncertainty is more due to complexity or dynamism. This information can then be used to optimize decision support systems.

From Yanes-Estévez V., Oreja-Rodríguez J.R. & Alvarez P. (2004) Computing the perceived environmental uncertainty function by Rasch model, WSEAS Transactions on Business and Economics, 4, 1, 281-285

Daft R.L., Sormunen, J., Parks, D. (1988) Chief executive scanning, environmental characteristics, and company performance: an empirical study. Strategic Management Journal, 9, 123-139.

Duncan, R. (1972) Characteristics of organizational environment and perceived environment uncertainty, Administrative Science Quarterly, 17, 313 - 327.

Yanes-Estévez V., Oreja-Rodríguez J.R. & Alvarez P. (2006) Mapping Perceived Environmental Uncertainty, … Rasch Measurement Transactions, 2006, 19:3 p. 1033-4

Rasch Publications
Rasch Measurement Transactions (free, online) Rasch Measurement research papers (free, online) Probabilistic Models for Some Intelligence and Attainment Tests, Georg Rasch Applying the Rasch Model 3rd. Ed., Bond & Fox Best Test Design, Wright & Stone
Rating Scale Analysis, Wright & Masters Introduction to Rasch Measurement, E. Smith & R. Smith Introduction to Many-Facet Rasch Measurement, Thomas Eckes Invariant Measurement: Using Rasch Models in the Social, Behavioral, and Health Sciences, George Engelhard, Jr. Statistical Analyses for Language Testers, Rita Green
Rasch Models: Foundations, Recent Developments, and Applications, Fischer & Molenaar Journal of Applied Measurement Rasch models for measurement, David Andrich Constructing Measures, Mark Wilson Rasch Analysis in the Human Sciences, Boone, Stave, Yale
in Spanish: Análisis de Rasch para todos, Agustín Tristán Mediciones, Posicionamientos y Diagnósticos Competitivos, Juan Ramón Oreja Rodríguez

To be emailed about new material on
please enter your email address here:

I want to Subscribe: & click below
I want to Unsubscribe: & click below

Please set your SPAM filter to accept emails from welcomes your comments:

Your email address (if you want us to reply):


ForumRasch Measurement Forum to discuss any Rasch-related topic

Go to Top of Page
Go to index of all Rasch Measurement Transactions
AERA members: Join the Rasch Measurement SIG and receive the printed version of RMT
Some back issues of RMT are available as bound volumes
Subscribe to Journal of Applied Measurement

Go to Institute for Objective Measurement Home Page. The Rasch Measurement SIG (AERA) thanks the Institute for Objective Measurement for inviting the publication of Rasch Measurement Transactions on the Institute's website,

Coming Rasch-related Events
Sept. 27-29, 2017, Wed.-Fri. In-person workshop: Introductory Rasch Analysis using RUMM2030, Leeds, UK (M. Horton), Announcement
Oct. 13 - Nov. 10, 2017, Fri.-Fri. On-line workshop: Practical Rasch Measurement - Core Topics (E. Smith, Winsteps),
Oct. 25-27, 2017, Wed.-Fri. In-person workshop: Applying the Rasch Model hands-on introductory workshop, Melbourne, Australia (T. Bond, B&FSteps), Announcement
Dec. 6-8, 2017, Wed.-Fri. In-person workshop: Introductory Rasch Analysis using RUMM2030, Leeds, UK (M. Horton), Announcement
Jan. 5 - Feb. 2, 2018, Fri.-Fri. On-line workshop: Practical Rasch Measurement - Core Topics (E. Smith, Winsteps),
Jan. 10-16, 2018, Wed.-Tues. In-person workshop: Advanced Course in Rasch Measurement Theory and the application of RUMM2030, Perth, Australia (D. Andrich), Announcement
Jan. 17-19, 2018, Wed.-Fri. Rasch Conference: Seventh International Conference on Probabilistic Models for Measurement, Matilda Bay Club, Perth, Australia, Website
April 13-17, 2018, Fri.-Tues. AERA, New York, NY,
May 25 - June 22, 2018, Fri.-Fri. On-line workshop: Practical Rasch Measurement - Core Topics (E. Smith, Winsteps),
June 29 - July 27, 2018, Fri.-Fri. On-line workshop: Practical Rasch Measurement - Further Topics (E. Smith, Winsteps),
Aug. 10 - Sept. 7, 2018, Fri.-Fri. On-line workshop: Many-Facet Rasch Measurement (E. Smith, Facets),
Oct. 12 - Nov. 9, 2018, Fri.-Fri. On-line workshop: Practical Rasch Measurement - Core Topics (E. Smith, Winsteps),


The URL of this page is