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© Academy of Management Journal

2000, Vol. 43, No. 3, 403-427.

ENVIRONMENTAL SCANNING BEHAVIOR IN A


TRANSITIONAL ECONOMY:
EVIDENCE FROM RUSSIA
RUTH C. MAY
University of Dallas

WAYNE H. STEWART, JR.


Clemson University

ROBERT SWEO
University of Maryland University College

We examined the effects of perceived strategic uncertainty in seven environmental


sectors on the scanning behavior of Russian executives. Strategic uncertainty was
highest in sectors influenced by transition and was moderated by perceptions of
accessibility in determining scanning frequency, a relationship that held in predicting
sources of information scanned. The perceived importance of environmental condi-
tions was central to the relationships, suggesting that decomposition of the strategic
uncertainty construct facilitates more insightful analysis of scanning behavior.

A common theme in organization science & Hegarty, 1984; Hambrick, 1982), is tJie first step
schools of thought, ranging from strategic choice to in this problem-solving sequence (Daft & Weick,
environmental determinism, is that environmental 1984; Hambrick, 1982). Because scanning influ-
complexity and volatility significantly influence ences the subsequent perceptions and actions that
organization maintenance, structure, and decision enable organizational adaptation and is necessary
making (Child, 1972; DiMaggio & Powell, 1983; in establishing goals and primary strategies (Dess,
Hannan & Freeman, 1989; Lawrence & Lorsch, 1987), it is an indispensable activity in tbe strategic
1967; Miles & Snow, 1978; Pfeffer & Salancik, management process (Fabey & Narayanan, 1986;
1978]. Major environmental change can create or- Hambrick, 1981a; Schneider & De Meyer, 1991).
ganizational maladjustment, a tension that pushes With a few exceptions (e.g., Auster & Choo, 1993;
an organization to reestablish congruence with new Elenkov, 1997; Cbosbal, 1988; Hoffman & Hegarty,
environmental conditions (cf. Bluedorn, Johnson, 1985; Sawyerr, 1993), empirical studies of execu-
Cartwright, & Barringer, 1994). The basis for correc- tives' scanning behavior have been limited to tbe
tive strategic action is managerial problem sensing United States, despite evidence tbat Western theo-
(Kiesler & SprouU, 1982), consisting of activities ries focusing on organizations and tbeir environ-
associated with noticing, interpreting, and incorpo- ments are more likely to suffer from a weak fit in
rating environmental stimuli. This process enables developing economies than are Western theories
an organization to adapt to its environment (Daft & related to organization tasks and technology (Kig-
Weick, 1984; Hambrick, 1981b; Milliken, 1990), gundu, Jorgensen, & Hafsi, 1983). Because cultures
thereby reestablishing an equilibrium that en-
differ concerning perceptions of environmental fac-
hances organizational performance (Venkatraman,
tors (Bluedorn et al., 1994; Miller, 1993; Sallivan &
1989; Venkatraman & Prescott, 1990).
Nonaka, 1988; Schneider & De Myer, 1991), and
Environmental scanning, the search mechanism cultural assumptions influence strategy formula-
by which managers discover important events and tion (O'Sbaugbnessy, 1985; Schneider, 1989),
trends outside their organizations (Farh, Hofftnan, Western tbeories need reassessment in other con-
texts, especially wbere political ideologies and so-
cial demands exert acute institutional influences
The authors were equal contributors to the article and
are listed in alphabetical order. We thank William Luker on managerial activities (DiMaggio & Powell, 1983).
and Caron St. John for their valuable suggestions. The Sucb is tbe case witb developing countries, partic-
article also benefited from the helpful comments of Mike ularly tbose of the former Soviet bloc, where an
Wright, special research forum guest editor, and three array of conditions differentiates these environ-
anonymous reviewers. ments from tbose of the West (Dadak, 1995;
403
404 Academy of Management Journal June

EJenkov, 1994; Handelman, 1995; Lawrence & Vla- ity (Bourgeois, 1985) is continuous and is overlaid
cboutsicos, 1990; Peng & HeatJi, 1996; Puffer, Mc- by sbarp, discontinuous cbange (Meyer, 1982).
Carthy, & Zbuplev, 1996; Stewart & May, 1998). During tbis period, tbe growtb in unemployment
Tbese factors include unstable economic and polit- (30 percent in 1992) was only surpassed by tbat in
ical environments and a higb degree of political inflation (2,324%); both subsided (to 15 and 11
and ideological influence on business (Elenkov, percent, respectively) in 1997. Industrial output
1997), producing an institutional environment con- fell 40 to 50 percent, and a burdensome tax system
spicuously different from tbat encountered by the spurred growtb in tbe underground economy,
typical Western firm (Ericson, 1991). whicb accounted for approximately 40 percent of
In the wake of the collapse of the Soviet Union, Russia's gross domestic producf (GDP; Business Jn-
managers in fhe Russian Federation face unparal- formation Service for the Newly Independent
leled environmental discontinuity, complexity, States [BISNIS], 1998). Political conditions were
and concomifanf uncerfainfy (WorJd Bank, 1996). also unpredictable, as the Communists expanded
This precipitous environmental cbange should fheir sphere of influence by gaining a majority in
stimulate more extensive searches for environmen- the lower bouse of the state duma (parliament).
tal information (Dutton, Fahey, & Narayanan, Given the unpredictability of Yeltsin's bealth, his
1983), but this proposition is untested in Russia. propensity to summarily dismiss entire segments of
Accordingly, building primarily on the work of his government, and tbe unpredictability of leader
Daft, Sormunen, and Parks (1988), we sougbt to
succession, Russia's political landscape remained a
investigate bow perceptions of tbe environment in-
point of critical uncertainty for both foreign and
fluence tbe scanning bebavior of executives in the
domestic firms [Economist, 1998). Organized crime
Russian Federation in order to examine tbis impor-
reacbed pandemic levels among politicians, cor-
tant strategy process in an environment marked by
rupt government bureaucrats and quasi-business
discontinuous cbange. Empirically testing Western
entities, tbat, left unchecked, could turn Russia
models of organization-environment relations in
countries witb bigbly constrained, transitional en- into a "criminal syndicalist state," constituting a
vironments is an important step in tbe develop- direct security threat to otber nations (Center for
ment of botJi theory and practice. Such inquiry Strategic and International Studies [CSIS], 1997;
affords potential for insigbt into the compreben- 73). Within tbis context, social conditions deterio-
siveness of extant scanning theory by "incorporat- rated, witb bomicide, suicide, divorce, arid alco-
ing local idiosyncratic situations into tbe concep- bolism rising sbarply (Katz, 1996; Powell &
tualization, thereby testing external validity and Palcbikoff, 1997) and life expectancy declining
revising and extending existing theories" (Kim & (Dixon & Polyakov, 1997). Overall, tbese conditions
Lim, 1988: 821). underscored tbe economic, political and sociocul-
tural turbulence that characterized the Yeltsin ad-
ministration and continue to plague transition in
RUSSIA'S TRANSITIONAL ENVIRONMENT tbe Russian Federation.
Gorbachev's sweeping reforms introduced pri- Meanwbile, working witbin tbe largest sector of
vafe ownership via small free cooperafives for such insider-owned and controlled firms in the world,
enterprises as restaurants and repair sbops and eco- Russian managers of privatized organizations are
nomically autonomous production units in large poorly equipped to cope with the cballenges of tbe
state enterprises for tbe first time in Soviet bistory bigbly turbulent environment tbat bas resulted
(Shlapentokh, 1988). Upon taking control of the from market reforms (Holt et al., 1994; May & Bor-
Russian Federation in 1991, Yeltsin declared the mann, 1993; Puffer, 1994; Sbama, 1993; Wrigbt,
Communist Party illegal on Russian territory, and Hoskisson, Filatotcbev, & Buck, 1998). Particularly
over 80 ministries tbat bad controlled tbe Soviet challenging is managers' limited knowledge of stra-
economy collapsed (Sbama & Sementsov, 1992). tegic management processes (Franz & Klepper,
Yeltsin's decision to institute rapid market reforms 1994; Jenner & Gappa, 1991; Jones & Moskoff,
in Russia by abolishing controls over prices, re- 1991). Although the extent of reform varies across
source allocation, wages, and employment resulted enterprises, recent evidence points to widespread
in extraordinary levels of instability and uncer- strategic inertia among Russian managers, and to
tainty (Holt, Ralston, & Terpstra, 1994). tbe need to devote greater managerial attention to
Tbrougbout tbe 1990s, individual sectors of tbe strategic issues of firms and their environments
Russian environment resembled bigb-velocity (Wrigbt et al., 1998). Environmental scanning in
environments (Bourgeois & Eisenbardt, 1988), tbe embryonic free market system seems central to
wherein dynamism (Dess & Beard, 1984) or volatil- addressing tbis deficiency.
2000 May, Stewart, and Sweo 405

THEORETICAL FRAMEWORK tion and diagnosing environmental conditions,


thereby precipitating environmental scanning.
Most researcb definitions of organizational envi-
ronment bave been based on tbe work of Duncan
(1972), wbo defined tbe environment as all of tbe
HYPOTHESES
relevant factors outside an organization's bound-
aries tbat are incorporated into its decision making. Uncertainty in Environmental Sectors
Environmental uncertainty arises from an individ-
An organization's environment can be divided
ual's perceived inability to predict an organiza- into two distinct strata (Bourgeois, 1980), witb tbe
tion's environment (Milliken, 1987), a dilemma distinction based upon tbe directness of influence
created by a lack of information about organiza- on operations and upon organizational goal attain-
tions, activities, and events in tbe environment ment (Daft et al., 1988). Tbe task environment in-
(Huber & Daft, 1987), often stemming from dyna- volves sectors in wbicb tbere is direct interaction
mism and complexity (Dess & Beard, 1984; Duncan, with the organization (suppliers, customers, and
1972). Milliken (1987) defined environmental un- competitors are examples). Tbe general environ-
certainty in terms of tbree different constructs. Per- ment includes sectors with indirect interaction
ceived environmental uncertainty is described as witb tbe organization (sucb as government, eco-
state uncertainty, or being unable to predict the nomic conditions, and sociocultural factors) and
environment, a concept distinct from effect uncer- may influence its long-term decisions. Researchers
tainty (not knowing what tbe impact of an environ- bave attempted to clarify wbetber tbe task or tbe
mental condition will be) and response uncertainty general environment bas more influence on scan-
(not knowing bow to respond to an environmental ning bebavior.
condition). State uncertainty would appear to bave Daft and colleagues (1988) proposed that sectors
the most direct influence on scanning bebavior. in the task environment would create greater per-
Milliken (1987) wrote tbat administrators who are ceived strategic uncertainty for top executives tban
experiencing a bigb degree of state uncertainty will would sectors in tbe general environment because
spend a greater amount of time and resources on tbe task environment changed more rapidly, was
environmental scanning and forecasting tlian will more complex, and was perceived as more impor-
administrators wbo are more confident in their un- tant tban the general environment. Tbe results of
derstanding of the environment. their work, bowever, indicated tbat the task and
general environments did not differ significantly in
Effective strategic decision making becomes
terms of perceived strategic uncertainty, a finding
more problematic wben tbe salient decision vari-
corroborated in Nigeria (Sawyerr, 1993) and in Bul-
ables and tbeir interrelations are indeterminate (Al- garia (Elenkov, 1997). In fact, only one study pro-
dricb, 1979), the degree of environmental stability vides support for tbe idea tbat task environment
being one of the prime considerations (Duncan, sectors are perceived as more strategically uncer-
1972; Lindsay & Rue, 1980). Environmental issues tain tban general environment sectors. Auster and
are often ambiguous (Dutton et al., 1983), entailing Cboo (1993), in a survey of 115 Canadian CEOs in
perceptions and requiring interpretation (Daft & tbe telecommunications and publishing industries,
Weick, 1984; Smircicb & Stubbart, 1985) for issue found that tbree sectors of tbe task environment,
diagnosis. Tbese perceptions of tbe environment, wbicb they called customer, technological, and
as opposed to objective environmental conditions, competition, were rated bigber on perceived stra-
determine managerial decision making (Anderson tegic uncertainty tban tbree general environment
& Paine, 1975; Bourgeois, 1980; Boyd, Dess, & sectors (regulatory, economic, and sociocultural).
Rasbeed, 1993; Cbild, 1972; Daft & Weick, 1984; Recent evidence from Russia indicates tfiat execu-
Dutton & Duncan, 1987; Miles, Snow, & Pfeffer, tives perceive higb levels of environmental turbu-
1974; Starbuck, 1976). Moreover, top managers typ- lence and that tbey consider tbe political/legal,
ically scan according to tbeir perceptions concern- customer, economic, and resource sectors of tbe
ing the necessity of information (Pfeffer & Salancik, environment to be tbe sectors most important to
1978). Daft and colleagues (1988) proposed tbat organizational success (May & Stewart, 1998), but
only when perceived uncertainty (complexity and not nec'essarily the most uncertain.
rate of cbange) was deemed important to a firm's During the Soviet era, enterprise managers relied
goal attainment would tbe pbenomenon actually beavily on personal contacts and informal interor-
create strategic uncertainty in environmental sec- ganizational links as a means of securing scarce
tors for top managers. According to tbe authors, resources and supplies necessary to meet the often
strategic uncertainty necessitates seeking informa- unrealistic goals set by tbe State Planning Commit-
406 Academy of Management Journal June

tee (Linz, 1988). Personal relationships were also tbat the components of perceived uncertainty, and
essential in currying political favor witbin tbe tbus, of strategic uncertainty, bave unique impli-
Communist Party bierarchy for the interests of en- cations for scanning and sbould be examined as
terprise and personal career advancement (Puffer & separate constructs. Tbe cited autbors found sig-
McCarthy, 1995). Tbus, Russian managers bave a nificant support for tbeir proposed positive rela-
tradition of exploiting highly politicized condi- tionship between perceived importance and scan-
tions in tbe political/legal sector of the environ- ning frequency, botb as a main effect and as an
ment and tigbtly connected supplier networks in interaction witb perceived variability.
tbe resource sector (Sanna, 1993). What may be Altbougb tbese findings raise important ques-
most unfamiliar, and tbus generate tbe greatest per- tions concerning the appropriateness of relying
ceived uncertainty, are those environmental sectors solely on tbe Daft et al. (1988) strategic uncertainty
that did not exist during tbe Soviet era, and tbose composite measure to predict scanning, we know
tbat existed in sucb an entirely different form as to of no additional empirical studies tbat bave tested
render unrecognizable tbe current models, namely tbe relationsbip between perceived uncertainty
tbe market economy, customers, and competitors and scanning witb a disaggregated approacb.
(May, Bormann-Young, & Ledgerwood, 1998; Ratber, tbe scanning literature, particularly the em-
Puffer et al., 1996; Shama, 1993; Warner, Denezh- pirical examinations of non-Western samples rele-
kina, & Campbell, 1994; Wright et al., 1998). Tbus, vant to our research, bas relied on the composite
we expected to find a mix of levels of perceived measure of strategic uncertainty supported by Daft
strategic uncertainty across task and general envi- and his colleagues (1988) as the central predictor of
ronment sectors in Russia that would be consistent scanning behavior.
witb previous findings. Moreover, we anticipated Sawyerr (1993) and Elenkov (1997) replicated
tbat tbe sectors generating tbe greatest perceived Daft and colleagues' (1988) researcb by testing tbe
strategic uncertainty would be tbose sectors least relationsbip between strategic uncertainty and
familiar to Russian managers; scanning frequency in non-Western environments
cliaracterized by significant political and economic
Hypothesis 1. Environmental sectors ranked in
transition. Tbe results were inconclusive, with
order of Russian managers' perceived strategic Sawyerr (1993) concluding that Nigerian managers
uncertainty will reflect a mixed pattern of task increased scanning frequency in response to in-
and general sectors. creased perceptions of strategic uncertainty in four
Hypothesis 2. The customer, competitor, and of seven environmental sectors, and Elenkov (1997)
economic sectors of the Russian environment failing to find support for tbe proposed relationsbip
will generate the highest levels of perceived in Bulgaria. Tbe conflicting results from the West-
strategic uncertainty. ern and non-Western studies led us to believe tbat
tbe key to explaining scanning frequency migbt lie
in the unique situational characteristics of the tran-
Scanning Frequency sitional environment.
Daft and bis coautbors (1988) advanced scanning A potentially important explanatory factor of
tbeory by proposing that the multiplicative con- scanning activity, largely excluded from researcb
struct of strategic uncertainty (rate of cbange plus since tbe early 1980s, is the construct of perceived
complexity, weighted by importance) predicts information accessibility. O'Reilly (1982) provided
scanning bebavior, botb in scope and frequency. evidence for the importance of accessibility as a
Tbeir results, along witb tbose of Auster and Cboo determinant of information usage for managerial
(1993), provide support for tbe theory tbat higb decision making, and Culnan's (1983) results indi-
levels of perceived strategic uncertainty will lead to cated tbat tbe frequency of usage of essentially all
an increase in scanning frequency across environ- information sources is positively related to tbeir
mental sectors, at least among managers from Nortb perceived accessibility. More recently, Auster and
American firms. More recently, Boyd and Fulk Cboo (1993) incorporated accessibility into tbeir
(1996) contributed evidence that indicates tbat tbe conceptual framework for explaining scanning be-
Daft et al. (1988) composite measure of strategic bavior among Canadian managers, but the results
uncertainty masks tbe components' individual ef- did not support tbe proposed relationsbip between
fects on scanning frequency, suggesting tbat re- tbe perceived accessibility of information and scan-
searcbers sbould disaggregate tbe strategic uncer- ning mode frequency.
tainty construct in order to examine its individual Since Russia's adoption of a free market orienta-
components. Boyd and Fulk's (1996) proposition tion in tbe early 1990s, one of tbe most cballenging
was primarily based on Milliken's (1987) assertion obstacles for businesses bas been a severe shortage
2000 May, Stewart, and Sweo 407

of relevant market data (BISNIS, 1997). This prob- Hypothesis 3a. Higher levels of perceived stra-
lem exists not only for industry (Puffer & Sheksh- tegic uncertainty will be associated with higher
nia, 1996; Shekshnia, 1994), but also for many busi- levels of scanning frequency among Russian
ness schools in Russian universities (Mockler, executives.
Chao, & Dologite, 1996). Use of on-line resources Hypothesis 3b. The interaction of strategic un-
via the Internet lags behind that in the West largely certainty and perceived source accessibility
because of the antiquated telecommunications in- will be positively related to the scanning fre-
frastructure in Russia and a shortage of personal quency of Russian executives.
computers in most businesses (BISNIS, 1997).
Perhaps the critical shortage of information ex-
plains why many Russian executives w^ho go Modes of Scanning
abroad for training exhibit voracious appetites for
data of all kinds regardless of its particular rele- Modes of scanning, or sources of information, are
defined by the nature and acquisition of data, de-
vance for the Russian business environment (May
pending on an organization's mode of interpreta-
et al., 1998; Warner et al., 1994). This behavior
tion (Daft & Weick, 1984). Environmental informa-
raises questions concerning whether Russian man-
tion is obtained from internal or external sources,
agers possess the knowledge and skills necessary to and from personal or impersonal sources (Aguilar,
acquire and discriminate among sources of relevant 1967; Daft & Lengel, 1986; Keegan, 1974). An inter-
information about their environments, even if in- nal source is within the organization; an external
formation is readily accessible. Elenkov (1997) source is outside it. Impersonal sources include
noted that Bulgarian managers underutilized cer- documents like internal reports and externally gen-
tain information resources because they lacked the erated documents such as newspapers and govern-
knowledge necessary to handle complex business ment reports, and personal sources involve direct
documentation and management information sys- communication with other individuals either
tems. Sawyerr (1993) also observed that two of the within or outside of the organization.
characteristic features of developing countries are Top managers tend to seek information about the
the lack of systematic information sources and the environment from personal sources (Aguilar, 1967;
absence of the social and political infrastructures Keegan, 1974), particularly in changing environ-
necessary to support scanning. Hence, accessibility ments (Eisenhardt, 1989), where interaction with
of information as a possible influence on scanning outsiders affords an opportunity to avoid the man-
behavior should be viewed not only as a pure sup- agers' selective biases (Van de Ven, 1986) and to
ply issue, but also as an issue of individuals know- draw upon richer information with which to revise
ing where and how to access information. or develop strategies (Daft & Lengel, 1986). In a
In light of the previous disparate findings con- dynamic, uncertain environment, managers also
cerning the antecedents of scanning, Bluedorn, tend to prefer verbal over written sources of envi-
ronmental information (Kurke & Aldrich, 1983) and
Johnson, Cartwright, and Barringer (1994) coun-
to rely more on personal sources of information
seled that it would be prudent to consider accessi-
to interpret unclear issues (Daft & Weick, 1984;
bility of information as a potential moderator in
Weick, 1979). Managers in cultures dominated by
future scanning research. Given the documented social or group orientations are more likely to use
shortages of data in Russia, one might expect personal and subjective sources (Schneider, 1989;
perceptions of information accessibility among Yoshino, 1979).
Russian executives to moderate the relationship
Although substantial evidence points to an in-
between environmental perceptions and environ-
creased use of personal sources as uncertainty in-
mental scanning. Thus, we propose an extension of
creases. Daft and colleagues (1988) and Auster and
the Daft et al. (1988) model to include an interac- Choo (1993) discovered that higher levels of strate-
tion between strategic uncertainty and source ac- gic uncertainty were associated with increased fre-
cessibility, such that Russian managers who per- quency of scanning in both the personal and im-
ceive high levels of strategic uncertainty and personal modes. Outside North America, however,
believe that the information they need is accessible Sawyerr (1993) reported that increased perceptions
will be more likely to expend time and effort on of strategic uncertainty among Nigerian managers
scanning activities than will executives who sense were associated with more frequent scanning of
a high level of strategic uncertainty, but do not impersonal sources, but not personal sources. Con-
perceive that they have access to affordable, perti- versely, Elenkov's (1997) findings in Bulgaria sup-
nent information. ported the relationship between strategic uncer-
408 Academy of Management Journal June

tainty and the use of personal information sources, lated to scanning of impersonal sources by
but not impersonal sources. Elenkov (1997) rea- Russian executives.
soned that because personal connections and infor-
Daft and Weick (1984] posited that when the
mal influence are so crucial to the accomplishment
of organizational goals in the business culture of environment is perceived to be less analyzable,
Eastern Europe (Beamish, 1992; Pearce, 1991; managers are more likely to use external informa-
Puffer, 1994], it is logical to expect Bulgarian man- tion gleaned from personal contacts, particularly in
agers to rely more heavily on personal sources of organizations that are undirected in their scanning.
information when strategic uncertainty is per- In addition, evidence indicates that multinational
ceived to be high. companies (Keegan, 1974) and those with high per-
formance (Thomas, Clark, & Gioia, 1993] rely more
Because Russians have a similar tradition of on external information than on information ac-
heavy reliance on personal connections with peo- quired internally. Daft and colleagues [1988] and
ple in influential positions, sometimes referred to Auster and Choo (1993) found that managers from
as seeking Wat (Puffer & McCarthy, 1995], we ex- the United States and Canada increased scanning
pected that Russian managers w^ould increase scan- frequency in both external and internal information
ning among personal sources when higher levels of modes when strategic uncertainty escalated. Saw-
strategic uncertainty were perceived. We also ex- yerr (1993) and Elenkov (1997), however, found
pected to see an increase in the use of impersonal support only for the relationship between strategic
sources of information, given that managers may uncertainty and use of external sources in their
perceive the need to look beyond their long-stand- non-Western samples. Because neither study de-
ing personal contacts to acquire information about tected a relationship between strategic uncertainty
the nascent free market environment in Russia. Ad- and the frequency of scanning internal sources, and
ditionally, evidence indicates that Russian firms because the Russian situation shares many similar-
place a high premium on written material acquired ities with both the Nigerian and Bulgarian situ-
through Western consultants, market-oriented ations, we did not expect to find a relationship
business schools, and training and development between strategic uncertainty and scanning of in-
programs (May et al., 1998; Mockler et al., 1996; ternal sources either. Given that Russian executives
Warner et al., 1994]. The degree to which personal have little experience functioning in a market-
and impersonal modes of information are used by oriented econoniy and frequently encounter short-
Russian managers is likely to depend, at least in ages of relevant business/market data, we antici-
part, on their proximity to influential persons and pated that these managers would rely more on
the funding and/or knowledge they possess with external sources for information. Additionally, we
which impersonal sources of information can be expected managers' efforts to obtain external infor-
accessed. Thus, we propose that perceived source mation to be conditioned by their perceptions of
accessibility is likely to moderate the relationship source accessibility.
between strategic uncertainty and the use of per-
sonal and impersonal sources of information by Hypothesis 5a. Higher levels of perceived stra-
Russian managers. tegic uncertainty will be associated with higher
levels of scanning external sources of informa-
Hypothesis 4a. Higher levels of perceived stra- tion by Russian executives.
tegic uncertainty will be associated with higher
levels of scanning of personal sources of infor- Hypothesis 5b. The interaction of strategic un-
mation by Russian executives. certainty and the perceived accessibility of ex-
ternal sources will be positively related to the
Hypothesis 4b. The interaction of perceived scanning of external sources by Russian exec-
strategic uncertainty and perceived accessibil- utives.
ity of personal sources will be positively re-
lated to scanning of personal sources of infor- Hypothesis 6. There will be no relationship
mation by Russian executives. between perceived strategic uncertainty and
the scanning of internal sources of information
Hypothesis 4c. Higher levels of perceived stra- by Russian executives.
tegic uncertainty will be associated with higher
levels of scanning of impersonal sources of
information by Russian executives. METHODS
Sample and Data Collection
Hypothesis 4d. The interaction of perceived
strategic uncertainty and perceived accessibil- A primary obstacle to the research was collecting
ity of impersonal sources will be positively re- data in Russia, where researchers must overcome
2000 May, Stewart, and Sweo 409

the inefficiencies of tbe postal system, a deartb of ports, aluminum, cellulose, and timber, wbich
dependable, systematic a priori lists of potential must be transported from Irkutsk on an overbur-
respondents, and most importantly, tbe inberent dened and oft;en inefficient Trans-Siberian Rail-
suspicion of surveys and reticence that remain way. More than 80 percent of the 35,000 business
from the Soviet era (Vlacboutsicos & Lawrence, entities and 4,000 industrial enterprises in the re-
1996). Therefore, to support the requirements of tbe gion have been started or privatized since 1993,
researcb, we determined tbat tbese conditions ne- creating a massive shift of control and increased
cessitated a departure from the traditional mail sur- uncertainty. A severe cash crunch has been an
veys tbat bave been used in scanning researcb. added burden, forcing many barter-based transac-
Alternatively, we asked senior-level business stu- tions between businesses. "For a people wbo were
dents in Russia to solicit participation in the study used to no unemployment, very little crime and a
and to collect survey data. Tbe rationale for tbis fixed pace of growtb, the economic changes of the
decision was twofold. First, we believed that Rus- past few years have come as a shock. Managers are
sian students, familiar witb tbe cultural intricacies still trying to adjust to a very different climate than
associated witb approaching potential respon- the one they were trained to deal with" (Irkutsk
dents, would be better received than would foreign Oblast Department of Economics, 1998: 5).
researchers. Second, owing to company sponsor- As a result of student involvement, the survey
ship of students in the academic program, the stu- was administered to 106 Russian executives. We
dents had personal contacts with Russian manag- purged two responses because of missing data.
ers. We reasoned that these relationships would Also, there were eight cases where more than one
increase the likelihood of ca:reful, forthright re- individual from a firm completed the survey, a
sponses to the questionnaire, thereby also reducing violation of the sampling rules. In these cases, we
nonresponse bias and increasing tbe resulting sam- retained the higher-ranking manager in the sample
ple size. and discarded the other response. The resulting
Over 40 students in a joint degree program of- final usable data set consisted of 96 executives.
fered by tbe Siberian-American Department of Sixty-one men and 35 women ranging in age from
Management at Irkutsk University voluntarily par- 20 to 63 comprised tbe sample, with the average
ticipated in data collection. Before beginning tbis age being 39. Individuals identified themselves by
process, the students were exposed to the concepts position as follows; 33 as either owner or general
of environmental scanning as part of their instruc- director (president), 22 as deputy director (execu-
tion in a strategic management class taught by one tive vice president), and 41 as vice president. Tbe
of the authors. The requirements for an executive's executives bad worked for their respective firms
participation in the study were then outlined to the, over time periods that ranged from two months to
students who opted to collect data. Students were 41.5 years, with the average firm tenure being 8
instructed to use their personal contacts to access years. Tbe 96 firms were from a cross section of six
senior-level managers (vice presidents or higher) in industry categories, and the firms ranged in age
firms with more than five employees that operated from 1 to 71 years, with an average firm age of 14
in a primary line of business. We asked students to years. On average, the firms had 50 to 100 employ-
solicit participation across multiple industries, a ees and annual revenues of $1,000,000 to
recommendation made by Hambrick (1981b) for $5,000,000, making the sample comparable in
extending scanning researcb, and to approacb only terms of organization size to tbose of previous scan-
one executive per firm. ning studies (e.g.. Daft et al., 1988; Elenkov, 1997;
During the last week of March and the first week Sawyerr, 1993).
of April, 1998, the survey was administered to Rus- Although the sample was one of convenience,
sian executives, primarily individuals from central several benefits accrued from our sampling tech-
Siberia, most of whom were from the Irkutsk re- nique. First, the rate of response, estimated from
gion. Irkutsk is a city of 700,000 people in the student feedback, was approximately 95 percent.
center of the Irkutsk region [oblast] of approxi- Given that the response rate for the typical mail
mately 2.8 million people. Although Irkutsk has survey of top executives averages between 10 and
recently surpassed St. Petersburg to rank second to 12 percent (Hambrick, Geletkanycz, & Fredrickson,
tbe Moscow region in terms of GDP per capita 1993), the degree of participation in this study in-
(Irkutsk Oblast Department of Economics, 1998), it dicates less concern with nonresponse bias than
remains beavily dependent on otber parts of Russia there is in the usual mail survey. Also, under the
for most of its food and manufactured products. aforementioned circumstances, the use of personal
The area is also vulnerable to swings in world contacts may have facilitated more forthright re-
market commodity prices of its three primary ex- sponses from the executives to the survey ques-
410 Academy of Management Journal June

tions. Finally, the respondents were not anony- the extent to which you are readily aware of where
mous, and we carefully inspected the returned to get the information."
surveys and verified each response. The respondents were asked to evaluate the rate
of change and level of complexity for each of the
seven environmental sectors and then to indicate
the level of importance for accomplishing organi-
Variables and Instrumentation
zational goals attributable to each sector. Therefore,
We reviewed several scanning instruments de- a total of 21 items, 7 per variable, comprised the
signed in the West that use hypothetical scenarios measures of the three main environmental vari-
as items for assessing perceived environmental un- ables. Using Daft et al.'s (1988) formula, we tben
certainty in various sectors (e.g., Boyd & Fulk, multiplied the sum of the rate-of-change items and
1996; Hambrick, 1981b; Miles & Snow, 1978). Tbe the complexity items by the sum of the importance
known poor reliability of scenario-type scales in items to create the strategic uncertainty variable, as
countries outside tbat of their origin (Buchko, 1994; follows; strategic uncertainty = [rate of change +
Ireland, Hitt, Bettis, & de Porras, 1987) would be complexity) X importance.
exacerbated in tbe post-Communist environment in Following the evidence that a frequency ap-
which neophyte Russian executives operate. There- proach to scanning measurement is more valid than
fore, following the methods of Daft et al. (1988) and using estimates of hours devoted to the task (Farh et
Sawyerr (1993), we developed an instrument that al., 1984), we focused on the measurement of scan-
more directly measured the perceived rate of ning frequency, a decision that also enhanced com-
change, complexity, and importance of seven envi- parison to Daft and colleagues' (1988) work. Using
ronmental sectors [political/legal, competition, a matrix format similar to theirs, we measured the
economic, sociocultural, technology, customer/ frequency with which participants collected or re-
market, and resources) and the frequency of scan- ceived information about each of the seven envi-
ning across the four different information modes; ronmental sectors on a five-point scale (5 = daily,
impersonal external, personal external, impersonal 4 = weekly, 3 = monthly, 2 = a few times per year,
internal, and personal internal. 1 = less than once a year). Four matrixes comprised
We measured the perceptions of change, com- the survey instrument, one for each mode of infor-
plexity, and importance using Daft and colleagues' mation scanning; there were 7 items per matrix, for
(1988) five-point Likert scale (5 = very high, 1 = a total of 28 items measuring scanning. This format
very low) with seven items (one per sector) for each allowed examination of the frequency of scanning
variahle. Rate of change was defined as "the fre- on a per environmental sector basis or a per infor-
quency and speed of change that you see in the mation mode basis, as well as examination of total
trends, issues and conditions in each environmen- scanning across all sectors and modes. The final
tal sector," and complexity was defined as "the portion of the survey included questions about the
number and diversity of events occurring in envi- individuals and their firms so that we could control
ronmental sectors outside the operations of your for potential demographic confounds.
company." Tbis measurement of complexity fo- Measurement equivalency. We carefully con-
cused on heterogeneity. Two potential subdimen- sidered the possibility that the environment con-
sions of complexity, predictability and analyzabil- structs would not have the same meaning in Russia,
ity, were problematic in Russia because of a conceptual equivalency issue that has plagued
translation problems. More importantly, tbese as- cross-cultural research (Drenth, 1985; Sekaran,
sessments were not a part of Russian managers' 1981; Steers, 1989). Therefore, following the advice
roles and experience under the centrally planned of Riordan and Vandenberg (1994), we attempted to
system, posing measurement equivalency prob- strengtben measurement equivalency by first over-
lems. To assess perceived importance, we asked the seeing tbe translation of the instrument into
executives the following: "How important do you Russian and then obtaining an independent back-
consider each environmental sector to be in accom- translation into English. Throughout the process,
plishing your company's goals?" Respondents were ail identified problems in the Russian version, or
also asked to evaluate the accessibility of each in- inconsistencies between it and the English version,
formation mode on a five-point scale adapted from were noted and corrected. This technique should
Culnan (1983; 5 = extremely accessible, 1 = not have limited misunderstandings due to language
very accessible at all), resulting in a four-item mea- differences, but it did not guarantee conceptual
sure of total perceived accessibility. Accessibility equivalency (Peng, Peterson, & Shyi, 1991). There-
was defined as "tbe ease with which you can ac- fore, we did a pilot study of the survey with a group
quire this information at reasonable to no cost, and of bilingual students to verify the conceptual equiv-
2000 May, Stewart, and Sweo 411

alence of the two versions of the instrument. These loaded as expected with critical t-values above the
students also sought input from managers who did 1.96 level, with the exception of the resource sector
not participate in the survey in order to ensure item on complexity, v^rhich had a t-score of 1.90,
functional equivalence in instrumentation. Addi- significant at the .10 level. Finally, Cronbach alpha
tionally, we provided thorough explanations of the estimates for rate of change, complexity, impor-
constructs in the questionnaire, which the students tance, and accessibility were .66, .66, .73, and .60,
reviewed with the respondents. Overall, given respectively, and the alpha for scanning frequency
the comhined effect of careful translation, hack- was .94, providing additional evidence of construct
translation, pilot study, and careful explanation of validity (Nunnally & Bernstein, 1994).
the operational definitions, we believe that the Rus- Control variables. A number of demographic
sian questionnaire was conceptually and function- variables can affect perceptions and strategic activ-
ally equivalent to its English counterpart and that it ities. Accordingly, we collected information on the
was consistently interpreted hy the respondents. age, years of formal education, firm tenure (Ham-
Measurement validation. Previous studies from brick & Mason, 1984), functional career background
which the instrumentation was drawn provide lim- (Hambrick & Mason, 1984; Keegan, 1974), and man-
ited evidence of the psychometric properties of the agement position (Hambrick, 1981b; Ireland et al.,
scales. Therefore, we used confirmatory factor anal- 1987) of each respondent. We also asked each re-
ysis to assess the measurement properties of the spondent to identify his or her firm's primary in-
primary predictors. In so doing, we first specified a dustry group (Daft et al., 1988; Duncan, 1972; Fa-
recursive four-factor model corresponding to the hey & King, 1977), number of employees, annual
four theoretically derived predictors: rate of revenues, and year of founding. Given the stark
change, complexity, importance, and accessibility. differences in the predominant ideologies of the
Second, because of divergent validity concerns as- Soviet and free market eras, we suspected that there
sociated with the significant correlation between might be significant differences in the perceptions
rate of change and complexity, we also specified a and behavior of executives employed by firms that
rival three-factor model in order to comparatively had operated under years of Soviet control and
assess the dimensionality of measurement. those that had emerged in the post-perestroika era.
The most common estimation methods in struc-
tural equation modeling are based on the assump-
RESULTS
tion of large samples. Thus, parameter estimates
may be inaccurate in samples of less than 200 Correlations, means and standard deviations for
(Marsh, Balla, & MacDonald, 1988), particularly in all variables are presented in Table 1. As expected,
producing a chi-square distribution (Kelloway, significant correlations exist among some of the
1998). Therefore, instead of chi-square, we used the demographic characteristics and among many of
root-mean-square' error of approximation (RMSEA) the constructs of primary interest. Given that stra-
as the index of absolute and comparative model fit. tegic uncertainty is a combination of perceived rate
The RMSEA has the advantages of being indepen- of change, complexity, and importance, the aggre-
dent of sample size and adjusting for model com- gate construct is significantly related to its compo-
plexity, thereby generating a better estimate of com- nents, as are the main effect variables with the
parative parsimonious model fit (Kelloway, 1998). interaction terms. The same holds true for the four
The index is normed and produces a confidence scanning modes and the combination variable, total
interval (C.I.) for the point estimate. A range of scanning. As subsequently discussed, we ad-
RMSEA values from .05 to .10 represents a good fit dressed the accompanying multicollinearity con-
to the data (Stieger, 1990). cerns through our data analytic technique.
The results support the proposed four-factor
model (RMSEA = .10; CL, .08, .13) over the three-
Environmental Sectors
factor model (RMSEA = .13; C.I., .11, .15). Because
model fit does not address the validity of the indi- The first hypothesis predicts that, ranked in or-
vidual predictions within the model (Joreskog, der of perceived strategic uncertainty, task and gen-
1993), we also examined the variance accounted for eral sectors will show a mixed pattern. Hypothesis
in the four-factor model. The adjusted population 2 indicates the expectation that the economic, com-
gamma index (equivalent to a multiple squared cor- petitor, and customer sectors will generate the
relation [R^]) was .73 (C.I., .69, .78), an acceptable highest levels of perceived strategic uncertainty.
level. Moreover, at an alpha level of .05, condition Table 2 presents the results of the paired t-tests and
9 tests of the parameters of the model (Kelloway, compares the rankings with those of other studies.
1998) indicated that all of the items significantly As predicted in the hypotheses, the results indicate
412 Academy of Management Journal June

TABLE 1
Correlation Matrix and Descriptive Statistics for All Variables in Regression Analyses"
Variable Mean S.d. 1 2 3 4 5 6 7 8 9

1. Position'' 1.08 0.87


2. Age 39.25 8.75 .03
3. Tenure'^ 96.86 96.95 .17 .57***
4. Education'' 15.05 3.27 -.05 .28** .05
5. Age of organization 14.25 15.72 .26** .30** • .62*** .01
6. Rate of change 21.79 4.22 -.02 -.35*** -.26** -.06 -.26**
7. Complexity 22.98 4.06 .03 -.19+ .01 -.10 .03 .51***
8. Importance 25.61 4.43 -.04 -.15 -.07 .05 -.15 .16 .25**
9. Strategic uncertainty 1,154.44 306.61 -.01 -.29** -.12 -.02 -.18 .62*** .67*** .81***
10. Accessibility, all modes 15.42 2.36 -.06 -.26** -.32*** -.04 -.11 .25** .09 .29** .28**
11. Strategic uncertainty X 18,012.81 6,001.09 -.03 -.32*** -.20^ -.01 -.17 .59*** .58*** .76*** .92***
accessibility, all modes
12. Importance X 398.18 101.87 -.05 -.23** -.21* .03 -.15 .23** .21* .84*** .70***
accessibility, all modes
13. Accessibility, personal 7.69 1.29 -.02 -.26** -.22** -.05 -.10 .23** .11 .31** .29**
14. Accessibility, 7.72 1.46 -.08 -.18 -.32*** -.02 -.10 .20+ .06 .20+ .20+
impersonal
15. Accessibility, external 7.10 1.51 -.09 -.19^ -.32*** .03 -.11 .13 -.06 .11 .08
16. Accessibility, internal 8.32 1.36 -.01 -.23** -.20+ -.11 -.07 .28** .22** .38*** .40***
17. Strategic uncertainty X 99.46 25.94 -.03 -.23** -.16 .01 -.14 .23** .21* .83*** .70***
accessibility, personal
18. Strategic uncertainty X 99.63 28.04 -.07 -.20^ -.23** .04 -.14 .21* .17 .76*** .63***
accessibility, impersonal
19. Strategic uncertainty x 91.36 26.45 -.09 -.20+ -.25** .08 -.15 .16 .08 .68*** .53***
accessibility, external
20. Strategic uncertainty X 107.72 29.04 -.02 -.21* -.14 -.02 -.12 .25** .28** .85*** .75***
accessibility, internal
21. Scanning frequency, all 22.40 4.66 .11 -.14 -.15 .05 -.02 .03 .01 .40*** .28**
modes
22. Scanning frequency. 45.31 10.31 .10 -.13 -.11 .03 .01 .06 .01 .32** .25**
personal
23. Scanning frequency. 44.30 9.74 .11 -.14 -.16 .05 -.04 -.01 .01 .39*** .28**
impersonal
24. Scanning frequency. 43.95 9.23 .07 -.09 -.14 .05 -.02 -.02 -.01 .39*** .26**
external
25. Scanning frequency. 45.65 10.82 .13 -.17 -.13 .03 -.01 .06 .03 .32*** .27**
internal

° N = 96 individuals/firms.
^ Coding: 3 = owner, director general, or president; 2 = deputy director; 1 = vice president.
"^ In months.
•^ In years.
+ p < .10
* p < .05
**p < .01
***p < .001

a mixed pattern of task and general environment er/market (Elenkov, 1997; Sawyerr, 1993) and eco-
sector effects, with the customer, competitor, and nomic (Sawyerr, 1993) sectors in other developing
economic sectors producing significantly higher economies.
levels of strategic uncertainty. The results support We used hierarchical set regression analysis to
the expectation that the sectors in which reforms test the remaining hypotheses in order to conduct
have produced the most sweeping changes are an independent examination of the unique effects
those that Russian executives perceive as generat- of each of the variables on scanning frequency and
ing the most strategic uncertainty. As illustrated in scanning modes, a recommended analysis of de-
Table 2, these results are generally comparable to composed effects (Boyd & Fulk, 1996), Also, the
the sector rankings from previous studies, particu- technique allows for variance partitioning of corre-
larly those of Daft and colleagues (1988), and are lated independent variables, wherein each step
also comparable to rankings found for the custom- presents the unique variance explained, thereby
2000 May, Stewart, and Sweo 413

TABLE 1 (continued)

10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

.62***

.76*** .87***

.83*** .55*** .66***


.87*** .52*** .64*** .45***

.84*** .40*** .56*** .64*** .78***


.80*** .63*** .69*** .73*** .64*** .34***
.68*** .82*** .94*** .78*** .40*** .46*** .67***

.75*** .82*** .95*** .47*** .78*** .59*** .64*** .78***

.77*** .75*** .91*** .62*** .69*** .79*** .45*** .82*** .89***

.63*** .85*** .93*** .59*** .49*** .25** .81*** .90*** .85*** .68***

.29** .37*** .45*** .18 .30** .32*** .14 .38*** .47*** .50*** .34***

.31** .36*** .43*** .24** .29** .36*** .14 .38*** .43*** .49*** .30** .94***

.22** .33*** .41*** .09 .27** .23** .11 .33*** .44*** .43*** .33*** .93*** .73***

.24** .33*** .43*** .15 .25** .33*** .05 .37*** .44*** .51*** .29** .92*** .86*** .86***

.29** .36*** .41*** .18 .30** .28** .19+ .34*** .43*** .42*** .33*** .94*** .88*** .87*** .73***

eliminating the effects of multicoUinearity and in- 0,92, p = .47) and annual sales (F = 1.67, p = .15),
creasing the stability of the estimates (Cohen & had no statistically significant influences on scan-
Cohen, 1983). The effectiveness of the hierarchical ning frequency across modes. In the interest of
procedure in dealing with multicoUinearity was model parsimony, these variables were excluded
confirmed by diagnostics of the regression models, from further analysis.
which indicated high tolerance levelsTb^lhe pre- We then constructed the hierarchy of analysis in
dictors and acceptable variance inflationVactors accordance with existing theory, the priorities of
(Hays, 1994), Additionally," oUr-^focus on sets of the research, and the guidelines for causal se-
variables and concomitant use of Fisher's prjstected quence. Because demographic variables are likely
t-tests reduced me "experimentwise" likelihood of candidates for causal priority in behavioral studies
making a Type l^em)r and maxiinized the extrac- (Cohen & Cohen, 1983), and because we wanted to
tion of causal inference (CcrheTr& Cohen, 1983). control for their effects, we entered the demo-
Before specifying and analyzing the hierarchical graphic variables first. Next, we entered all possible
models, we first checked the potential confounds permutations of the three components of strategic
for any significant effects. One-way analyses of uncertainty (rate of change, complexity, and impor-
variance (ANOVAs) indicated that career path [F = tance). In each case the results were the same. We
0.94, p = .49), industry (F = 1,06, p = ,39), and firm present the hierarchical sequence that is most con-
size, in terms of both number of employees (F = sistent with Daft and colleagues' (1988) formula-
o

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2000 May, Stewart, and Sweo 415

tion of strategic uncertainty and the concomitant posing the strategic uncertainty construct into its
presumptive logic of causality: individual demo- component parts for analysis. Here, the signifi-
graphics, firm age, rate of change, complexity, im- cance of importance explained the majority of the
portance, the composite strategic uncertainty score, variance in scanning frequency, as Boyd and Fulk
source accessibility, and the multiplicative interac- (1996) suggested, and produced a more highly sig-
tion of strategic uncertainty and source accessibil- nificant interaction term with accessibility as it
ity, entered after the main effects, as recommended bears on scanning frequency.
by Cohen and Cohen (1983) and by Jaccard, Turrisi,
and Wan (1990). In assessing the models, we first
Scanning Modes
analyzed each fully partialled model and, when it
was significant, tested the significance of each step Hypothesis 4a posits that, across environmental
in the hierarchy by examining the change in R^ sectors, higher levels of perceived strategic uncer-
associated with that step. At each step, the focus tainty will be positively associated with the use of
centers on the direct effects of the set that has just personal information sources, and Hypothesis 4b
been entered into the model. When the step was predicts that the relationship will be moderated by
significant, we then assessed the individual t-test perceived source accessibility. Similarly, Hypothe-
for the variable or variables in the set. An exami- sis 4c suggests that higher perceptions of strategic
nation of residuals showed no violations of regres- uncertainty will be associated with more frequent
sion assumptions. scanning of impersonal sources, and Hypothesis 4d
elaborates, stating that this relationship will be
moderated by perceived source accessibility. Like
Scanning Frequency the results of the previous analysis, the results re-
Hypothesis 3a posits that higher levels of per- ported in Table 4 showed no significant effects for
ceived strategic uncertainty will be related to the demographic variables or for rate of change and
higher levels of scanning frequency. Hypothesis 3b complexity. Again, there was a strong direct effect
predicts that scanning will be more frequent when for perceived importance for both personal and im-
strategic uncertainty is high and the source of in- personal sources, but no significant main effect for
formation is perceived as more accessible. Table 3 strategic uncertainty or perceived accessibility. As
presents the results of the analysis. None of the a result. Hypotheses 4a and 4c were not supported.
individual demographic variables or firm age sig- Step 8, containing the interaction term in both
nificantly influenced scanning. Notably, there was models, was significant in both instances, support-
a significant effect for one component of the strate- ing Hypotheses 4b and 4d. When personal and
gic uncertainty construct, importance, but there impersonal sources are perceived to be more acces-
were no significant, direct effects for rate of change sible, strategic uncertainty prompts scanning of
or complexity. Neither were there any significant both sources of information.
main effects for strategic uncertainty, a finding fail- Because of the significance of importance, we
ing to support Hypotheses 3a; however, the inter- again respecified the models for post hoc examina-
action with perceived accessibility was significant, tion, excluding strategic uncertainty and incorpo-
supporting Hypothesis 3b. The effects of strategic rating an interaction term for importance and per-
uncertainty on scanning frequency were condi- ceived accessibility into the last step. These
tioned by how accessible the source of information interaction terms for the personal (AB^ = .06, p <
was perceived to be. Simple slope analysis (Aiken .01; t = 2.56, p = .012) and impersonal [AR^ = .05,
& West, 1991; Jaccard et al., 1990) revealed that p < .05; t = 2.39, p = .019) modes were significant.
higher levels of strategic uncertainty led to a signif- The post hoc analysis suggests that importance,
icant increase in scanning when the sources of conditioned by perceived source accessibility, in-
information were perceived to be more accessible. creases the use of both personal and impersonal
Given that there was no significant main effect sources of information. If an issue is deemed im-
for strategic uncertainty and that the importance portant, and people or documentation are per-
component displayed a highly significant, unique ceived to be accessible, Russian managers appear to
effect, we respecified the model, excluding strate- tap both sources of information about the environ-
gic uncertainty, to conduct a post hoc analysis. The ment.
results, also displayed in Table 3 for comparison, In Hypothesis 5a, we predicted that, across envi-
demonstrate that the parsimonious revised model ronmental sectors, perceived strategic uncertainty
marginally outperforms the original model. In con- would be positively correlated with the use of ex-
cordance with the position of Boyd and Fulk ternal sources. Hypothesis 5b posits that the rela-
(1996), the results demonstrate the value of decom- tionship between strategic uncertainty and the use
416 Academy of Management Journal June

TABLE 3
Results of Hierarchical Regression Analyses of Scanning Frequency
Daft, Sormunen, and Parks Model with Accessibility Post Hoc Revised Model

Variable b s.e. t Variable b s.e. t

Step 1 Step 1
Constant 22.50 2.93 7.68 Constant 22.50 2.93 7.68
Position 0.14 0.55 1.31 Position 0.14 0.55 1.31
Age -0.11 0.07 -0.84 Age -0.11 0.07 -0.84
Tenure -0.11 0.01 -0.87 Tenure -0.11 0.01 -0.87
Education 0.09 0.15 0.84 Education 0.09 0.15 0.84
^R^ .05** Afl^ .05**
AF 1.22 AF 1.22

Step 2 Step 2
Age of organization 0.09 0.04 0.64 Age of organization 0.09 0.04 0.64
.01 Afl^ .01
AF -0.17 AF -0.17

Step 3 Step 3
Rate of change -0.03 0.12 -0.23 Rate of change -0.03 0.12 -0.23
Ai?2 .00 Afl2 .00
AF -0.17 AF -0.17

Step 4 Step 4
Complexity 0.01 0.14 0.10 Complexity 0.01 0.14 0.10
Afl^ .00 Afl' .00
Af -0.13 AF -0.13

Step 5 Step 5
Importance 0.41 0.11 4.05*** Importance 0.41 0.11 4.05***
Afl^ .15*** Afl^ .15***
AF 2.07 AF 2.07

Step 6 Step 6
Strategic uncertainty 0.93 0.01 1.20 Strategic uncertainty 0.16 0.21 1.48
Afl^ .01 AR" .02
AF -0.15 AF -0.03

Step 7 Step 7
Accessibility 0.20 0.22 1.83^ Importance X accessibility 2.67 0.04 3.30***
Afl2 .03 Afl^ .08***
AF 0.14 AF 1.10

Step 8
Strategic uncertainty X 2.00 0.00 2.40**
accessibility
Afl^ .05*
AF 0.41

Overall R^ .30 Overall R^ .31


Adjusted R^ .20 Adjusted R^ .23
Model F 3.21*** Model F 3.88***

^p < .10
p < .05
p < .01
p< .001

of external sources will be moderated by percep- internal sources. Table 5 shows that, as with per-
tions of the accessibility of external sources. Hy- sonal and impersonal sources of information, there
pothesis 6 suggests that there will be no relation- was a significant, direct effect for perceived impor-
ship between strategic uncertainty and the use of tance for both the external and internal modes, but
2000 May, Stewart, and Sweo 417

TABLE 4
Results of Hierarchical Regression Analyses of Scanning Personal and Impersonal Modes
Personal Mode Impersonal Mode

Variable s.e. Variable b s.e. t

Step 1 Step 1
Constant 46.44 6.52 7.12 Constant 43.54 6.10 7.14
Position 0.11 0.12 1.09 Position 0.14 1.15 1.37
Age -0.12 0.16 -0.89 Age -0.09 0.15 -0.66
Tenure -0.07 0.01 -0.51 Tenure -0.14 0.01 -1.13
Education 0.07 0.34 0.69 Education 0.09 0.32 0.87
Afl^ .04** Afl' .06**
AF 0.83 AF 1.34

Step 2 Step 2
Age of organization 0.09 0.09 0.70 Age of organization 0.06 0.08 0.48
^R^ .00 Ai?" .00
AF -0.07 AF -0.23

Step 3 Step 3
Rate of change 0.02 0.28 0.20 Rate of change -0.07 0.26 -0.67
^R'' .00 Afl^ .00
^F -0.13 AF -0.12

Step 4 Step 4
Complexity -0.02 0.32 -0.18 Complexity 0.05 0.30 0.38
Afl^ .00 Afl^ .00
AF -0.09 AF -0.13

Step 5 Step 5
Importance 0.35 0.24 3.35*** Importance 0.42 0.22 4.13***
Afl^ .11*** Afl' .16***
AF 1.39 AF 2.16

Step 6 Step 6
Strategic uncertainty 0.77 0.03 0.94 Accessibility 0.96 0.03 1.24
Afl^ .01 Afl' .01
AF -0.12 AF -0.15

Step 7 Step 7
Accessibility 0.16 0.89 1.39 Accessibility 0.20 0.69 l.Ol'^
Afl^' .02 Afl^ .03^
AF 0.03 AF 0.16

Step 8 Step 8
Strategic uncertainty X 1.41 0.01 1.71* Strategic uncertainty X 1.31 0.00 1.77*
accessibility accessibility
.03^ AR' .03^
AF 0.14 AF 0.11

Overall R^ .21 Overall R^ .29


Adjusted R'^ .10 Adjusted R^ .20
Model F 1.98* Model F 3.11***

Post hoc revised model Post hoc revised model


Overall R" .22 Overall R' .29
Adjusted R^ .13 Adjusted R'^ .21
Model F 2.43* Model F 3.48***

^p < .10
*p < .05
** p < .01
*** p < .001
418 Academy of Management Journal June

TABLE 5
Results of Hierarchical Regression Analyses of Scanning External and Internal Modes
External Mode Internal Mode

Variable b s.e. t Variable b s.e. t

Step 1 Step 1
Constant 42.42 5.85 7.25 Constant 47.56 6.76 7.04
Position 0.10 1.11 0.96 Position 0.15 1.28 1.45
Age -0.04 0.14 -0.30 Age -0.16 0.16 -1.20
Tenure -0.14 0.01 -1.05 Tenure -0.08 0.01 -0.60
Education 0.08 0.31 0.71 Education 0.09 0.35 0.84
.03* .06**
AF 0.78 AF 1.41

Step 2 Step 2
Age of organization 0.09 0.08 0.68 Age of organization 0.07 0.09 0.52
.01 .00
AF -0.07 AF -0.23

Step 3 Step 3
Rate of change -0.06 0.25 -0.51 Rate of change 0.00 0.29 0.04
.00 .00
AF -0.08 AF -0.21

Step 4 Step 4
Complexity 0.01 0.28 0.11 Complexity 0.01 0.33 0.08
.00 .00
AF -0.09 AF -0.15

Step 5 Step 5
Importance 0.43 0.21 4.28*** Importance 0.34 0.25 3.26**
.17*** .10**
AF 2.32 AF 1.30

Step 6 Step 6
Strategic uncertainty 0.49 0.02 0.62 Strategic uncertainty 1.19 0.03 1.47'^
.00 .02
AF -0.30 AF 0.03

Step 7 Step 7
Accessibility 0.29 0.62 2.86** Accessibility 0.08 0.90 0.71
.07*** .01
AF 0.76 AF -0.17

Step 8 Step 8
Strategic uncertainty x 1.60 0.00 2.30* Strategic uncertainty X 1.85 0.01 2.17*
accessibility accessibility
Afl^ .04* .04*
AF 0.33 AF 0.32

Overall R^ .32 Overall R^ .23


Adjusted R^ .24 Adjusted R^ .13
Model F 3.65*** Model F 2.30*

Post boc revised model Post boc revised model


Overall R^ .35 Overall R^ .21
Adjusted R^ .27 Adjusted R^ .12
Model F 4.56*** Model F 2.28*

•"p < .10


* p < .05
** p < .01
**p < .001
2000 May, Stewart, and Sweo 419

the nonsignificance of the direct effect of strategic showed that rate of change and complexity alone
uncertainty failed to support Hypothesis 5a. The are insufficient for explaining scanning frequency
main effect for perceived accessibility was also if the importance of the environmental sectors to an
highly significant for external sources of informa- organization are not considered. Our results, how-
tion. Step 8, significant in both models, shows that ever, indicate that among Russian executives, rate
the interaction between strategic uncertainty and of change and complexity are not only insufficient,
perceived source accessibility is significant. This but are also not necessary for predicting scanning
finding supports Hypothesis 5b in terms of the ef- behavior. In fact, importance alone, moderated by
fect on the use of external sources, but the signifi- perceptions of source accessibility, is the superior
cant interaction between strategic uncertainty and predictor of scanning frequency.
perceived source accessibility was not predicted The primacy of importance in predicting Russian
for internal sources, as stated in Hypothesis 6. Ap- scanning frequency is compatible with Western ev-
parently, if strategic uncertainty is high and infor- idence indicating that managers have little interest
mation is believed to be accessible, the executives in external events unless they are considered im-
will increase their use of both external and internal portant to organizational performance (Aaker,
sources of information. 1983; Aguilar, 1967; Ansoff, 1975; Boyd & Fulk,
As with the previous hypotheses, we conducted 1996; Daft et al., 1988; Dutton & Freedman, 1984;
post hoc analyses because perceived importance Pfeffer & Salancik, 1978). Given that rate of change
was significant. The revised model outperformed (Bourgeois, 1985; Duncan, 1972; Lindsay & Rue,
the original model, with the interaction between 1980) and complexity (Boyd & Fulk, 1996) have
importance and accessibility significant for the ex- been supported in studies as antecedents of scan-
ternal mode (Afl^ = .08, p < .01; t = 3.24, p = .002) ning frequency, the noticeable absence of any ef-
as well as for the internal mode (Afl^ = .05, p < .05; fects for these two constructs in the Russian sample
t = 2.24, p = .028). Perceived source accessibility emphasizes the need to reevaluate Western models
appears to condition how importance translates of strategic behavior in the context of the transi-
into the gathering of information either inside or tional environmental turbulence that currently
outside a firm. If a source is perceived to be more dominates much of the global arena. Perhaps when
accessible and a sector is deemed important, exec- one is managing in the midst of unfamiliar, chaotic,
utives increase the frequency of the scanning of and often threatening conditions, the most effective
both internal and external sources. means of coping is to disregard the pace of change
and complexity and to focus instead on what is
deemed most important to organizational survival.
DISCUSSION
In relatively stable environments, executives may
Our primary purpose was to test Western envi- be more reactive to changing events and increasing
ronmental scanning theory in the context of the complexity hecause they have not become desensi-
discontinuous economic, political, and social tized to these phenomena. In environments charac-
changes that characterize the current environment terized by stability, abrupt change and periods of
of the Russian Federation. Although there are sim- intense complexity are more the exception than the
ilarities, the results suggest that the scanning be- rule. Alternatively, these two dimensions of envi-
haviors of Russian executives experiencing these ronmental uncertainty may lose some of their
conditions depart from those of Western managers. power to prompt scanning in transitional environ-
Unfortunately, a theoretical basis for explaining the ments.
differences is somewhat limited owing to the afore- Theory developed in the West suggests that,
mentioned lack of knowledge about strategic man- when managers face threatening, unknown condi-
agement practices in Russia and to concerns about tions, their response is typically threat rigidity,
the applicability of Western theory. which truncates information gathering and solu-
As anticipated, the Russian executives ranked tion generation and culminates in tightened.con-
the sectors that are newest to the Russian environ- trol, restricted information flows, and centralized
ment as highest in strategic uncertainty (customer/ decision making (D'Aunno & Sutton, 1992; Glad-
market, economic, and competition), irrespective stein & Reilly, 1985; Griffin, Tesluk, & Jacobs, 1995;
of the sectors' classification in either the task or Miller, Droge, & Vickery, 1997; Staw, Sandelands,
general environment category. Yet the finding that & Dutton, 1981). Threatened individuals may fail to
perceived strategic uncertainty across sectors does heed warnings (Wolfenstein, 1957) or may freeze
not appear to prompt executives to scan more fre- up (Glass, 1955), therehy narrowing their attention
quently in the form suggested by Daft and col- to only the most dominant cues (Easterhrook, 1959;
leagues (1988) was not expected. Those authors Eysenck, 1976; Wachtel, 1968; Wine, 1971). Our
420 Academy of Management Journal June

results indicate that the most dominant or strategi- sources. Although we had not expected executives
cally important cues in the sectors of Russian ex- to turn to internal sources when perceptions of
ecutives' environment, conditioned by the per- strategic uncertainty increased, our results indicate
ceived accessibility of information, are motivating that Russian managers will attempt to scan infor-
scanning behavior. mation obtained internally as well as externally as
From a Western perspective, the cost and time long as the information source is perceived to be
required for external information search as part of a accessible. In the new market economy of Russia,
comprehensive decision process may not always power and influence still remain highly concen-
benefit organizations in volatile environments trated in informal networks both at the regional and
(Fredrickson, 1984; Fredrickson & Iaquinto, 1989; national levels, and information sharing occurs pri-
Fredrickson & Mitchell, 1984). Managers may be marily within the context of close personal alli-
forced to abandon rational, comprehensive analysis ances. Our results point to such in-group informa-
owing to cognitive and resource limits (Cyert & tion hoarding, a phenomenon typically found in
March, 1963; Simon, 1957) and may instead focus coUectivist cultures (Espinoza & Garza, 1985). Con-
on considering several alternatives, an approach sistent with evidence that Russians rely on per-
that is effective in fast-paced environments (Eisen- sonal trust in network contacts to reduce uncer-
hardt, 1989). The traditional way to avoid strategic tainty in a changing environment (Burawoy &
errors during fast-paced environmental change is to Krotov, 1992), this finding highlights the potential
imitate competitors or wait to see how conditions importance of trust among in-group members (Peng
unfold (Bourgeois & Eisenhardt, 1988). All of these & Heath, 1996; Triandis, 1967) as an underlying
perspectives may be germane to the experience of explanatory factor for the propensity of Russian
Russian executives, who are attempting to cope in a executives to seek information internally as well as
reconfigured system that is an enigma to most and externally.
is highly unpredictable at best. The evidence that information source accessibil-
We found no effect for the composite measure of ity appears to condition scanning activities for
strategic uncertainty on the use of any of the four these high-level executives, even within their own
information modes. Instead, perceived importance companies, is most likely due to the aforemen-
across environmental sectors emerged again as a tioned information shortage issues in Russia. It also
significant predictor of information mode scan- reiterates the concern noted by Sawyerr (1993) and
ning. The post hoc analyses support Boyd and Elenkov (1997) as to whether executives in devel-
Fulk's (1996) contention that the components of oping countries are prepared to collect and inter-
environmental uncertainty should be examined for nally manage complex market data. Longitudinal
their unique effects and also demonstrate the value evidence over a six-year period from China indi-
of considering accessibility of information sources cates that state-owned enterprises undergoing mar-
when examining scanning behavior in environ- ket transition have yet to adapt their organizational
ments where the information infrastructure is un- information systems for strategic advantage, partic-
like those of Western countries. Perhaps the reason ularly for capturing information about the external
that Sawyerr (1993) and Elenkov (1997) found in- environment (Dologite, Fang, Chen, Mockler, &
conclusive evidence to support the proposed rela- Chao, 1997; Franz, Wynne, & Fu, 1991). Similarly,
tionship between strategic uncertainty and scan- we would expect that even if Russian managers
ning in personal and impersonal modes in their understood the potential value of creating internal
non-Western samples is because they only exam- customer/market databases, for instance, that many
ined the relationship with the composite measure firms would not have the necessary funds or the
of strategic uncertainty, rather than the individual requisite knowledge to determine their particular
components of the construct. In addition, they did information system needs in order to make the
not consider the possibility that source accessibil- most effective use of such an investment.
ity might have significant bearing on executives'
propensity to choose from personal and/or imper-
Limitations and Future Research
sonal information sources.
We found the proposed moderating effect of per- The potential limitations of the study are primar-
ceived source accessibility on strategic uncertainty ily those associated with the lack of control in a
to be significant in predicting the use of personal, survey of a sample of convenience, and those in-
impersonal, and external information sources. In herent in relying on self-report items on a single
addition, strategic uncertainty, moderated by per- questionnaire. A Harman's single-factor test of the
ceived source accessibility, emerged as a signifi- primary variables in the study did not produce a
cant predictor of the executives' use of internal single factor or a general factor explaining the mar
2000 May, Stewart, and Sweo 421

jority of covariance in predictor and criterion vari- Moreover, additional research is needed to substan-
ables, conditions indicative of common method tiate and extend our conclusions.
variance (Podsakoff & Organ, 1986). This indication Future research probing the issues of organiza-
that common method variance did not drive the tion-environment relationships with elaborated
results of the study may be due to sample variation construct conceptualizations drawn from grounded
across an array of individual and organizational theory and addressing contextual measurement
contexts, circumstances that reduce method vari- complexities is needed for further refinement of
ance (Mitchell, 1985). Nevertheless, we had no con- environmental scanning theory. Our results sup-
trol over selection and the conditions during re- port Boyd and Fulk's (1996) warning that relying
sponse, and the research context precluded only on the composite measure of strategic uncer-
multimethod data collection, common circum- tainty to predict scanning, as opposed to its indi-
stances in field research. We did attempt to vidual components, may lead to inconclusive or
strengthen our case by paying careful attention to misleading results. A decomposed approach to the
measurement equivalence and by providing ex- analysis of scanning, like the one presented here,
plicit guidelines for survey administration and would seem to be particularly important for inquiry
thorough explication of the constructs. Although a in transitional environments where even less is
relatively high rate of response across a wide array known about the perceptions of environmental un-
of industries and individuals may cancel chance certainty dimensions and their potential role in
imbalances (Isaac & Michael, 1990) and enhance explaining scanning behavior. The results pre-
generalizability (Neale & Liebert, 1986), the poten- sented here provide a baseline for assessing change
tial limitations should be considered. in scanning behavior over time as Russian man-
agers become more experienced and adept at
There is no consensus on how organization en- managing within a market economy.
vironments and uncertainty should be conceptual-
ized and measured (cf. Boyd et al., 1993). We de- The results have broad implications for theory
cided to focus on measurement precision and extension, but we limit the following discussion to
equivalency and on achieving direct comparability two primary areas of investigation. The first is re-
fining understanding of scanning activities and
with previous research by following the measure-
their antecedents, particularly in non-Western con-
ment framework of Daft and his colleagues (1988)
texts. Given the evidence that source accessibility
and the two non-Western scanning studies by Saw-
is a significant moderator of scanning frequency
yerr (1993) and Elenkov (1997). Although we be-
among Russian executives, it is likely that other
lieve this decision maximized the outcomes of the
individual or situational variables may mediate or
study, it did involve trade-offs. First, we used one
moderate scanning behavior, particularly in transi-
item per environmental sector to tap perceptions tional settings. For example, in formerly Commu-
about each of the three environmental constructs nist countries, individual control expectations may
(seven items per construct). Yet, in light of the affect the perceived value and frequency of scan-
nature of the environment in Russia, the use of ning, given the empirical evidence of a significant
multiple items per environmental sector could pro- relationship between managers' locus of control
vide more insight, particularly in drawing con- and their scanning behavior (Hodgkinson, 1992;
clusions about the relative consequences of the en- Miller, Kets de Vries, & Toulouse, 1982). Percep-
vironmental sectors. Second, the use of this tions of the quality and reliability of information
instrumentation precluded the measurement of sources (Auster & Choo, 1993) might also influence
proposed subdimensions of complexity, such as scanning frequency and the choice of information
predictability and analyzability. As a result, the modes. Evidence also indicates that scanning be-
theoretical breadth of the complexity construct was havior is influenced by organizational strategy
necessarily circumscribed to include environmen- (Hambrick, 1982; Hrebiniak & Joyce, 1985), as well
tal heterogeneity only. We deemed this decision as by a firm's structure and processes (Hodgkinson
prudent because of the aforementioned cross- & Johnson, 1994; Weick, 1979). Investigation of the
cultural measurement equivalency concerns asso- effects of these factors on scanning and other
ciated with using the scenario-based instrumenta- boundary-spanning activities in different environ-
tion that examines the subdimensions of mental contexts may be instructive. Finally, the
complexity, a concern substantiated in the pilot recommendation by Bluedorn and colleagues
testing of the survey. In summary, although we do (1994) that researchers consider how executives
not believe that these measurement limitations scan their internal environments would also be par-
jeopardize the usefulness of our findings, they ticularly interesting to examine in transitional con-
should be considered in evaluating the results. texts. Because organizations in Russia and other
422 Academy of Management Journal June

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theory and policy at the University of North Texas. Her
Vlachoutsicos, C. A., & Lawrence, P. R. 1996. How man- current research interests include environmental scan-
agerial learning can assist in economic transforma- ning, work behaviors, and organizational change in tran-
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Wachtel, P. L. 1968. Anxiety, attention and coping with Wayne H. Stewart, Jr. is an assistant professor of man-
threat. Journal of Abnormal and Social Psychol- agement at Clemson University. He earned his Ph.D. in
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Warner, M., Denezhkina, E., & Campbell, A. 1994. How North Texas. His current research interests include en-
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Weick, K. W. 1979. The social psychology of organizing mies of Europe.
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Wine, J. 1971. Test anxiety and direction of attention. grams at University of Maryland University College
Psychological Bulletin, 76: 92-104. (UMUC). His duties include oversight of UMUG's two
Russian joint venture programs. He earned his Ph.D. in
Wolfenstein, M. 1957. Disaster: A psychological essay.
organizational theory and policy at the University of
Glencoe, IL: Free Press.
North Texas. His current research interests include meth-
World Bank. 1996. From plan to market: World devel- ods to increase access to higher education and ways
opment report 1996. New York: Oxford University of adapting higher education administration to a high-
Press. technology, rapid-growth environment.

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