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Journal of Marketing Management, 2001,17, 543-558

Nicholas J. AshilP and David Jobber

Defining the Domain of Perceived Environmental Uncertainty: An Exploratory Study of Senior Marketing Executives
At the very core of Marketing Information Systems (MkIS) design is the identification of the marketing information needs of decision-makers. Information needs can be defined as the user specifications of information characteristics involved in information seeking, and refer to those qualities of information perceived by managers to be 'useful' to facilitate their decision-making. Building upon previous qualitative research examining the information needs of senior marketing executives, the authors present the findings of a second qualitative research phase seeking to define the domain of one construct reported by Ashill and Jobber (1999), namely Perceived Environmental Uiicertainty. The results, based on interviews with 20 senior marketing executives suggest that this construct may be multidimensional and associated with three different types of uncertainty conditions.

Victoria University of Wellington, New Zealand Bradford University Management Gentre, UK

Introduction The function of an information system at any level in the organisation is to provide information to enhance the decision-making process (e.g., Jones and McCleod 1986). Since a primary objective of a MkIS is to provide information that facilitates the marketing management decision-making process, the information content of that system must be linked closely to this process. Management accounting systems (MAS) and management information systems (MIS) researchers (e.g., Gordon and Narayanan 1978) suggest that the information needs for decision-making can be considered in terms of general information characteristics. These information requirements are the user specifications of information characteristics involved in information seeking, and refer to those qualities of information perceived by
' Correspondence: School of Marketing and International Business, Victoria University of Wellington, PO Box 600 Wellington, New Zealand. Tel: +64-4-4635430, Fax: +64 4 4635231, email: Nicholas.Ashill@vuw.ac.nz

ISSN0267-257X / 2001 / 05-60543+15 4.00 / 0

Westbum PubUshers Ltd.

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managers to be useful to facilitate their decision-making (e.g., Gordon and Narayanan 1984; Chenhall and Morris 1986; Mangaliso 1995). Research pertaining to MAS and MIS design is largely based on the information characteristic continua advocated by Gorry and Scott-Morton (1971). These researchers suggest that each item of information has a source (information may come from internal or external sources), scope (information may be narrow or wide in its representation), level of aggregation (information may be detailed or aggregated), time-horizon (data items may report what has happened i.e., ex post or what is expected to occur i.e., ex ante), currency (information may report on the most recent events or be older), required accuracy (information may be high or low in its correctness) and frequency of use (information may be used very frequently or infrequently). While studies in MAS and MIS research have enhanced an understanding of what types of information are appropriate in different situations or contexts, there appears to have been no empirical investigation of the importance of information characteristics in MkIS research. This paper is organised into four sections. We first review the conceptualisation reported by Ashill and Jobber (1999) and describe marketing information needs in terms of the user specifications of information characteristics. The next section outlines our research objectives specific to one aspect of the Ashill and Jobber (1999) framework, namely an examination of the domain of Perceived Environmental Uncertainty (PEU). This is followed with data collection procedures, sample selection and analytical methods. Finally, we discuss the results of our study, highlighting their exploratory^ nature and suggesting areas for future research. In this final section, we also acknowledge the study's limitations and offer some insights into how the PEU construct might be operationalised. Conceptual Framework The conceptual framework advocated by Ashill and Jobber (1999) is presented in Figure 1. The framework examines the infiuence of contextual settings on the effective design of MkIS, and draws on three key literature bases and illustrates three categories of antecedents of the usefulness of marketing information characteristics: environmental uncertainty perceptions, decision-maker characteristics and work environment factors (Ashill and Jobber 1999). Environmental uncertainty perceptions are drawn from conceptual frameworks and empirical investigations in organisational design and behavioural decision-making; decision-maker factors are drawn from the personality and cognitive psychology literature; work environment factors are drawn from theories of managerial information processing. Although considerable emphasis has been placed on potential benefits of

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contingency theory applications to accounting research, relatively few empirical investigations exist examining MkIS design.
External Environmental Characteristics - variability - complexityPerceptions of External Environmental Uncertainty - state - effect - response MkIS Design Characteristics Broad Scope Information Timel\' Information Accurate Information Aggregated Information - Current Information Personal Sources Impersonal Sources

Decision-Maker Characteristics - duration/variet)' of experience - locus of control - tolerance of ambiguit)' Work Environment Factors - decision type - decision importance - decision arrival time - task difficult) - task variabilit)-

Figure 1. A Conceptual Model of Factors Affecting the Perceived Usefulness of MkIS Design Characteristics (Ashill and Jobber 1999) Using the Gorry and Scott-Morton (1971) information characteristic continua and empirical work cited in the information systems literature (e.g., Chenhall and Morris 1986), the authors suggest that the information needs of senior marketing executives can be operationalised in terms of the perceived usefulness of seven information characteristics: broad scope information, timely information, current information, aggregated information, accurate information, personal information sources and impersonal information sources. Information scope represents the scope of events, places, people, and things that are represented by information (Gorr}- and Scott-Morton 1971; Senn 1987). Broad scope information thus describes information that is wide or broad in its representation (wide or broad sets of information inputs are required to facilitate marketing management decision-making). Timely information describes receiving information quickly and on time (e.g., Chenhall and Morris 1986; Mangaliso 1995). Information aggregation refers to the degree of summarisation performed on information (e.g., Chenhall and Morris 1986; Specht 1986; Mangaliso 1995). For example, a MkIS can provide information in various forms of aggregation ranging from the provision of raw marketing data to a variety of aggregations around periods of time and areas of responsibility such as product/markets. Information currenc}^ refers to the age of the information appropriate for decision-making (Senn 1987; Li

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1997), and describes the length of time between something occurring and the event being refiected in the information. Current marketing information thus describes marketing data that reports on the most recent events. Information accuracy refers to the extent to which the output information is sufficiently correct to satisfy its intended use (Li 1997). Accurate information thus describes data, which is correct for its intended use. Personal information sources involve direct contact with other individuals (such as face-to-face conversations, telephone conversations and meetings); impersonal information sources describe those sources of information which are written in nature, such as computer generated reports and market research reports. The propositions advanced by Ashill and Jobber (1999) posit that MkIS design should be aligned to a range of contextual factors. These include external environment factors (variability and complexits^), environmental uncertainty perceptions (state, effect and response), decision-maker characteristics (experience, tolerance of ambiguity and locus of control) and work environment factors (nature of marketing management decision activits^ decision importance, decision arrival time, task difficulty and task variability). The framework suggests that user specifications of information characteristics may depend on the nature of the external marketing environment, work conditions that decision-makers have to deal with, and the psychological disposition of the decision-maker. The authors discuss the components of the framework elsewhere (see Ashill and Jobber 1999) and develop a set of research propositions for empirical study. Perceived Fnvironmental Characteristics Uncertainty and Information

The relationship between the perceived usefulness of information system characteristics and the contextual variable of PEU has been studied by numerous MAS and MIS writers (e.g., Gordon and Narayanan 1984; Chenhall and Morris 1986; Gul and Chia 1994; Mangaliso 1995). The level of uncertainty faced by decision-makers has been cited as an important determinant of behaviour in both psychological decision theories and theories of organisational design (e.g., Thompson 1967; Duncan 1972). Environmental uncertainty exists when decision-makers do not feel confident that they understand what the major events or trends are, or when they feel unable to accurately assign probabilities to the likelihood that particular events and/or changes will occur (Duncan 1972; Milliken 1987). The most commonly cited definitions describe environmental uncertainty as a perceptual phenomenon (e.g., Weick 1969; Duncan 1972; Downey and Slocum 1975; Tung 1979; Daft and Weick 1984; Milliken 1987), but diverge when specifying the nature of the uncertainty, which is experienced. The

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three most common definitions to be found in the literature are: a) an inability to assign probabilities to the likelihood of future events (e.g., Duncan 1972; Milliken 1987), b) a lack of information about cause-effect relationships (e.g., Duncan 1972; Milliken 1987) and/or c) an inabilitv^ to predict accurately what the outcomes of a decision might be (e.g., Duncan 1972; Downey and Slocum 1975; Milliken 1987). Milliken (1987 1990) suggests that there are three types of uncertaintv about environments, which may account for these different definitions. These uncertainty types are called state uncertainty, effect uncertainty and response uncertainty. State uncertainty occurs when a decision-maker perceives an organisation's environment to be unpredictable. Here, managers do not feel confident that they understand what the major e\ ents or trends in an environment are or feel unable to accurateh' assign probabilities to the likelihood that particular e\ents or changes will occur. Effect uncertainty refers to the inabilit)^ to predict the nature of the effect of a future state of the environment on the organisation i.e., an understanding of cause-effect relationships. This type of uncertainty' is more specific than state uncertainty because the experience involves an inability to understand the impact of events on the organisation, not an inability to predict the state of the external environment. The third uncertainty experience Milliken (1987) identifies is response uncertainty^; this represents an inability to predict the likely consequences of a response choice, and is experienced when decisionmakers attempt to understand the range of strategic responses open to them and attempt to evaluate the relative utility of possible options. There exists a long list of empirical research examining environmental uncertainty perceptions in a diverse range of organisational settings. While the conceptual meaning of these constructs is not controversial, operational definitions do differ widely. Measures of environmental characteristics and uncertainty perceptions are either induced from properties of the decisionmaking process (e.g., Duncan 1972; Tung 1979; Gerloff et al 1991) or take a more literal meaning as reflecting a property- of the environment (e.g., Achrol and Stern 1988; Teo and King 1997). Because of the wide differences in the way that PEU has been defined in the organisational beha\iour and behavioural decision-making literatures, we decided to define the concept empirically so as to provide a definition that senior marketing executixes could understand. It was believed that by involving senior marketing executives in defining uncertainty, it would be conceptualised and operationalised in such a way that it would have meaning to these decisionmakers. We also recognise that one of the shortcomings of much of the theoretical and empirical research on organisational environments has been the failure to clearly conceptualise the elements comprising it (Duncan 1972). Previous

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research examining environmental uncertainty in a marketing context (e.g., Achrol and Stern 1988) has failed to identify the source of PEU, in other words the domain of the external markefing environment which the decision-maker is uncertain about (e.g., competitors, suppliers etc). Duncan (1972) defines the organisational environment as the totality of physical and social factors that are taken directly into considerafion in the decisionmaking behaviour of individuals in the organisation. If the environment is defined in this way, there are clearly factors within the boundaries of the organisation or specific decision-maker environment that must be considered as part of that environment. Given the diversity in operational definitions and the failure to identify the source of uncertainty in a marketing decision-making context, this paper now proceeds to report the findings of a second qualitative research phase examining the domain of the environmental uncertainty concept. The objectives of the research were twofold: first, to conceptualise the boundaries of the external markefing environment i.e., the specific boundaries comprising it, so as to identify those factors outside the boundaries of the decision-maker that are taken into consideration in marketing management decision-making; second, to present a conceptualisation of PEU in a marketing management context. In summary, our work seeks to identify the factors that makeup the external marketing environment as well as the specific dimensions of PEU. Research Approach Since the PEU construct has been well delineated in previous literature, this study did not follow a purely inductive (grounded theory) approach to data collection (Strauss and Corbin 1992). Its design was partly confirmatory, so as to further explicate the work of Milliken (1987 1990) and Gerloff et al (1991) in their reconceptualisation based on the earlier work of Duncan (1972), and partly exploratory, to shed some light on the construct within a marketing decision-making context. To this end, in-depth personal interviews were used as the data collection method (Miles and Huberman 1994). An experience survey (key informant survey) of 20 senior markefing executives was selected as the data collection method, given its applicability for studying decision-makers (Robson and Foster 1989). The unit of analysis was the senior marketing executive regardless of formal title, the senior person responsible for markefing in the organisation (those managers who make all or most of the marketing management decisions for the organisation). While no pretence is made that the firms contacted constitute anything but a convenience sample, every effort was made at the selection stage to ensure substantial variability among the respondents in terms of the

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industries represented. The sampling frame consisted of large (employing 100-1- full-time employees) manufacturing, business-to-business and service organisations identified as operating a MkIS (Statistics New Zealand 1996). Past literature on uncertainty and decision-making reported by Ashill and Jobber (1999) was used to develop questions to be included in a semistructured, undisguised interview guide regarding the nature of the senior marketing executive's external environment and the marketing decisionmaking process. The choice of a semi-structured versus a structured questionnaire was made due to the partly exploratory nature of the study (Strauss and Corbin 1990). The length of the instrument was such that the interviews would last approximately one hour. That part of the research instrument, which focused on the domain of PEU, centred on the following questions: a) What does your external marketing environment look like (the makeup of this external environment in terms of customers, suppliers, competitors etc)? What are the factors (things other than people) outside the organisation that you have to take directh' into consideration in making marketing management decisions on your job? What does 'uncertainty' mean to you on your job? Describe some situations where you experienced uncertainty. Why were you uncertain? Are there factors in the external marketing environment that cause you uncertainty when making marketing management decisions?

b) c)

Each interview was taped and then transcribed. The analysis followed the sequence of steps described in Miles and Huberman (1994, p. 10), who "define analysis as consisting of three concurrent flows of activity: data reduction, data display, and conclusion drawing/verification". Data reduction was undertaken for each of the 20 interviews, using a list of basic codes devised prior to fieldwork. Subcodes were added to categorise information further within each of the main codes. However, not all codes were pre-specified. Additional insights frequently surfaced during data collection, transcription and analysis, with additional codes emerging as a result. The codes were arranged in the form of 20 within-case displays which took the form of a matrix or a network according to which was most appropriate to the interview being analysed (Miles and Huberman 1994). The within-case analysis provided a descriptive understanding of the PEU construct as perceived by each senior marketing executive and generated insights into why environmental uncertainty occurs. The within-case displays were then reduced in order to create conceptually ordered meta-

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matrices that assemble the descriptive data from each of the within-case displays in a standard format (Miles and Huberman 1994). Findings The first objective of the exploratory work was to identify the source of uncertainty, in other words, the domain of the external marketing environment, which the decision-maker is uncertain about. Table 1 summarises aspects of the external marketing environment of concern/relevance for marketing management decision-making, and identifies potential sources of PEU for a senior marketing executive. Following Duncan (1972) we suggest that these factors can be used to facilitate the identification if PEU experienced by senior marketing executives. Table 1. The Domain of a Senior Marketing Executive's External Marketing Environment External Marketing Environment Factors Distributors Actual End Users Market Characteristics Competitors Suppliers Economic factors Political/Legal factors Technology factors Socio-cultural factors Natural/Physical factors Description Intermediary customers of the organisation's products/services i.e., organisations that acquire \ our products/services for sale. End-user customers of the organisation's products/services and their buyer behaviour. Market size/demand patterns, segmentation, products/services, prices, distribution channels, and promotions in this market Competitors of the organisation's products/services e.g., numbers, market positions and strategies. Suppliers of raw materials components, suppliers of equipments, suppliers of services. Inflation, interest rates, exchange rates, economic growth Regulatory constraints such as trade/industry practices, advertising, distribution, and pricing constraints The application of new technological advances that are profoundly affecting the economics of our industry, innovations in product/service production and delivery. Population factors such as age shifts, changes in consumer lifestyles and social values affecting product/service demand. Supply shortages or excesses, production shortages and surpluses, weather conditions

The second research objective sought to present a conceptualisation of the

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PEU construct in a marketing management context, in other words, to identify the specific dimensions of PEU. As previously stated, because of the wide differences in the way the concept has been defined, we decided to define it empirically in order to provide a definition that senior marketing executives could understand. Although there was some difficulty experienced in getting respondents to verbalise their conception of uncertainty, there was a degree of similarity with regard to the way in which the concept was ultimately defined. In talking about the concept of uncertainty there were three components that were mentioned by some or all of the 20 respondents. The three components were as follows: a) The lack of information regarding environmental factors comprising the decision-maker's environment/not being able to predict what is going to happen. b) Not knowing the impact of changes in the external marketing environment on the organisation and marketing management decision-making. c) Not knowing how to respond to what is happening in the external marketing environment. Table 2 illustrates a conceptually ordered meta-matrix that incorporates all of the (reduced) data from the 20 single cases. Conceptualh' ordered displays order the display by concepts or variables (Miles and Huberman 1994). The language used in describing uncertainty by respondents \\ as very similar to that used by respondents studied on other organisational contexts (Duncan 1972; Milliken 1987; Gerloff et al. 1991) except that the terminology referred to a marketing management operating environment. In the discussion that follows, we focus on the domain of PEU as percei\'ed by senior marketing executives. The number by each code represents the senior marketing executives, that mentioned the corresponding codes. Most respondents described an inability to predict what is happening in the external marketing environment (a particular factor or factors comprising that environment) as characterising their perception of uncertainty. Following Milliken (1987), we labelled this type of uncertainty condition 'State Environmental Uncertainty' to describe a lack of information and knowledge about factors comprising the external marketing environment, and an inability to predict what is going to happen in the external marketplace. For example, the Marketing Manager of Organisation 2 stated: "Uncertainty represents a lack of information and knowledge of what is eoing on externally". Respondents made similar statements from Organisations 5, 9,10,12,15 and 19. For example, the Marketing Manager of Organisation 19 stated: "If you are making marketing decisions and you

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Table 2. Meta-Matrix: Senior Marketing Executive Uncertainty Perceptions


Type of Uncertainty Condition Experienced
1. An inability to predict what is going to happen in the external marketing environment (state environmental uncertaintv)

Code and Description

Illustration (Examples)

"Our external environment is changing very - A lack of information about how environmental factors will change in the future quickly because of technology and this affects uncertainty because you never know what the (2,5,9,12, 13 19) competition is going to do" - A lack of understanding of the external "We don't have the ability to predict with any marketing environment in which we compete degree of hand on heart certainty what the market is (2, S, 10,12, 15 19) going to do" - The inability to predict what is going to happen in the marketplace (3, 4, 6, 9, 10, 18 20) "It is about not having enough information and - The inability to predict which environmental knowledge about what is going on in the market" "If you are making decisions and yes, you don't factors will be important considerations in have the information (i.e., the full picture) then yes, future marketing management decisionyou do feel ver)' uncertain" making (4, 9, 10, 13, 18 20) "Our industry' is changing \ ery slowly, it is not volatile and we can predict what is likely to happen and what things we need to keep abreast of when making decisions" - The inability to predict the impact/effect of changes in the external marketing environment on marketing management decision-making (4, 6, 11, 14 20) - N'ot understandmg the effect of changes in the external marketing environment on marketing management decision-making (4, 11, 14 20) - Confidence/sureness as to how external factors will affect marketing management decision-making (7, 11, 12 20) - Length of time before knowing the effect of changes in the external environment on marketing management decision-making (4, 7, 11,13 20) - Not being able to quantify' the impact of what is going to happen in the external marketing environment on marketing management decision-making (3, 4, 6, 11, 12, 14)

2. An inability to predict the impact/effect oi changes in the external marketing environment on the organisation and marketing management decision-making (effect environmental uncertaint\)

"We don't know how the introduction of new competitors will affect us" "We have no idea about how changes in the legal environment are going to affect us and our customers" "Sometimes we have difficulty in working out how a change in our external environment will affect sales and profitability" "Something new which means that we suddenly don't know where we stand, and what it means for us" "We don't have uncertainty as to which way the marketing is going to go, but to quantify it is a lot harder" "Uncertainty is about quantifying what is going to happen. We know what is going to happen, but we don't know how significant the event is going to be, and how it is going to affect us" "You don't know what the impact is going to be on your customers and what the impact is going to be on you"

3 An inability to predict what the marketing response options are and/or the value or utility of each marketing course of action in terms of achieving desired organisational outcomes (response en\ ironmental uncertainty)

- The inability to identify and evaluate different alternatives before making marketing management decisions (5, 8, 13 20) - The inability to anticipate the outcomes/consequences of marketing management decision-making before they are made (5, 8 20) - The inability to work out what the marketing response options should be in light of changes in the external marketing envirorunent (8, 9,18 19) - Knowledge of how to respnsnd / react to changes in the external marketing environment (5, 6, 8, 9, 13, 18) - Not knowing which direction to take in response to changes in the external marketing environment (5, 6, 9, 13,18 19)

"We don't know which way to go in response to competitor activity" "At times I feel very unsure about which way we should go with our marketing strategy" "We are uncertain as to how we should change our marketing programmes in response to these shifts in consumer attitudes" "You can't make a decision and know what the outcome is going to be"

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don't have the information, then yes, you do feel ver)' uncertain". In addition to a lack of information about environmental factors, respondents described uncertainty about the 'state' of their external marketing environment in terms of not being able to predict what is going to happen. For example, the Marketing Director of Organisation 4 stated: "Uncertainty' is the inability to predict with any degree of hand-on certainty vyhat the market is going to do". Similar statements were made by respondents from Organisations 3, 5, 6, 9,10, 15, 18 and 20. The inability to predict/determine the effect or impact of vyhat is happening in the external marketing environment on the organisation and marketing management decision-making vyas also an issue described by respondents as characterising environmental uncertainty. Following Milliken (1987) we labelled this type of uncertainty condifion 'Effect Environmental Uncertainty'. Respondents described this uncertaintycondition with not being able to predict the impact/effect of changes in the external marketing environment, not knovying how marketing env ironment factors will affect organisational performance and decision-making, the level of confidence/sureness as to how factors in the external marketing environment vyill affect decision-making, the length of time before knowing the effect of changes in the external marketing environment on the organisafion, and not being able to quantify the effect or impact of vyhat is going to happen in the external marketing env ironment. While this type of uncertainty relates to conditions of the external marketing environment, it does not mean that there exists uncertainty- about the nature of these conditions. For example, the Marketing Director of Organisafion 6 stated: "we understand what is happening in our marketplace, but vye remain uncertain as how these trends will affect us in the future". Similarh', the Markefing Manager of Organisafion 12 stated: stated: "We don't have uncertainty as to vyhich way the market is going to go. We know vyhich way it is going to go, but to quanfify it is a lot harder". Similar comments vyere made by respondents fi-om Organisafions 4, 11 and 14 suggesfing that these senior marketing execufives know what is going to happen in their external markefing environment, but don't know how significant these changes will be and how they might impact on the organisation and markehng management decision-making. A third grouping of respondent comments characterised uncertainty in terms of a lack of informafion or knowledge about what the response opfions are and/or the inability to predict the likely consequences of a response choice. Following Milliken (1987) we labelled this uncertainty condifion 'Response Environmental Uncertainty'. Senior marketing executives described this type of uncertainty with not being able to identify and evaluate different alternatives before making marketing management

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decisions, not knowing which direction to take in response to changes in the external environment, being unsure about how to respond/react to changes in the external marketing environment, uncertainty as to whether marketing strategies should be changed in response to environmental shifts, and the inability to anticipate the outcomes of marketing decisions before they are made. The Marketing Manager of Organisation 5 stated: "Uncertainty is about not knowing which way to go, having to weigh up the pros and cons of something and then in the end making a decision". Respondents made similar comments from Organisations 6, 9, 13, 18 and 19. The Marketing Manager of Organisation 18 stated: "we had to go from CFC's to hydrocarbon in aerosols so there was a major shift in consumer attitudes because of that . . . this raised some serious issues such as whether to go to a totally new delivery system, and whether customers would actually like that because at the end of the day they are still looking for a product that performs". Similarly, the Marketing Director of Organisation 19 stated: "we are not clear about which direction to take. We have identified some very key trends in our industry, and these present some significant threats . . . but we are still uncertain as to how we should respond to these trends with our marketing strategies". Discussion and Measurement Issues The patterns of these results appear to be consistent with the conceptual and empirical work of Milliken (1987 1990) and Gerloff et al (1991). Our findings suggest that senior marketing executives associate PEU with state, effect and response uncertainty conditions, indicating the need for a large number of indictors to adequately tap the multidimensional and multifaceted nature of the PEU concept. While our findings suggest that senior marketing executives experience different types of uncertainty conditions, the research findings also indicate that senior marketing executives experience levels of uncertainty when all three uncertainty conditions are experienced. For example, the Marketing Director of Organisation 20 stated: "Uncertainty means when you cannot predict what changes are going to happen, and you therefore don't know what the implications of these changes are, and how to react to these changes". Further support for the multidimensional and multifaceted nature of PEU can be found in the organisational behaviour and behavioural decision-making literatures. Although our findings suggest that uncertainty perceptions are associated with all three-uncertainty conditions, there still remains the issue of whether these conditions should be aggregated into a single overall measure of uncertainty or disaggregated as suggested by Milliken (1987). Milliken (1987) asserts that while the organisational and behavioural decision-making literatures have attributed

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great theoretical significance to the construct, research has generally yielded inconsistent and often difficult to interpret results. Problems largely centre on findings of poor reliability and validity evidence for measurement instruments. MiUiken (1987) suggests that external validity may be ambiguous because the subscales involve unidimensional measures. An underlying assumption in previous research measuring PEU is that the items or indicators used to measure the latent \'ariable are reflective in nature. Such items are viewed as affected by the same underlying concept i.e., the latent variable. However, we suggest that measuring PEU in this way may be inappropriate. A construct with reflective indicators is one where the observable variables are expressed as a function of the construct (Fornell and Larcker 1981). The variables reflect the construct (the construct precedes the indicators in a causal sense). However, if formative indicators are considered, the unobservables are considered effects rather than causes. In this case, the construct is an observable construct, which is formed, or is a result of combining in a linear form, the observed \ ariables. It is in essence an index (Chin and Todd 1995). For example, an overall measure of PEU could be formed by conditions associated with an inability' to predict the state of the external marketing environment, an inability to predict the effect or impact of change, and the inability to determine how to respond to what is happening in the extemal environment. The multidimensional and multifaceted nature of the construct could therefore be specified as a summative index. We suggest that a researcher seeking to measure PEU needs to think carefully about whether it is more correct to think of the underlying construct as 'causing' the observed measures i.e., a reflecti\ e relationship, OR of the measures as 'causing; (or defining) the construct i.e., a formati\'e relationship. Many researchers routinely use retlective indicators in their models, which means that observed variables are regarded as manifestations of underh ing constructs. However, this does not always make sense. To illustrate this point, consider the findings presented from this exploratory study. Indicators that cause or form the latent variable PEU could include state uncertainty conditions, effect uncertainty conditions and response uncertainty conditions. If a senior marketing executive experiences an inabihty to predict what is going to happen in the external marketing environment, then PEU would be negatively affected. BUT to say that a negative change has occurred in the executive's PEU does not imply that there exists an inability to predict what is going to happen in the extemal marketing environment. Furthermore a change in an indicator such as the inability to predict the effect of environmental change on marketing management decision-making does not necessarily imply a similar directional change for the other indicators i.e., an inability to predict what is

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going to happen in the external marketing environment and an inability to predict what the marketing response options should be. If indicators to measure PEU are truly refiective, then an increase in the inability to predict what is going to happen in the external marketing environment would also imply an inability to predict the effect of changes in the external marketing environment on marketing decision-making and an inability to determine what the marketing response options should be, since they are all meant to tap the same concept or phenomenon i.e., PEU. Whereas for the formative measures, an increase in one type of uncertainty condition does not imply similar increases in the other types of conditions. Conclusions and Future Research Directions The research reported in this paper set out to explore the domain of one of the independent variables reported by Ashill and Jobber (1999) in their model of MkIS design. Our findings support the work of Milliken (1987) and Gerloff et al (1991) who advocate the use of separate scales to measure different forms of uncertainty conditions. Given the multidimensional and multifaceted nature of the PEU concept, research models should include separate scales representing each of the three uncertainty experiences. We also suggest that a measure of PEU should consider the use of formative indicators to characterise the construct's multidimensional nature. Although our findings suggest a linkage between the three uncertainty conditions (senior marketing executives described higher levels of uncertainty when all three uncertainty conditions exist), each condition may not be correlated with the other conditions. Given the exploratory nature of this study, the results require further empirical verification. We suggest that the psychometric properties of all scales developed (for state, effect and response conditions) will have to be addressed before they could be used in future work (Spector 1992). Rigorous psychometric analysis should be undertaken to assess the dimensionality, reliability, and validity of derived scales, using survey data from a population of senior marketing executives. It will be important to establish convergent and discriminant validity among the three types of PEU. References Achrol, R.S. and Stern, L.W. (1988), "Environmental Determinants of Decision Making Uncertainty in Marketing Channels", Journal of Marketing Research, 25, pp. 36-50. Ashill, N, and Jobber, D. (1999), "The Impact of Environmental Uncertainty perceptions, Decision-Maker Characteristics and Work Environment

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About the Authors


Nicholas Ashill is a Senior Lecturer in Marketing in the School of Marketing and International Business at Victoria University of Wellington, New Zealand. His research interests focus on MkIS design, market planning process and implementation, and measuring sponsorship effectiveness. He has published articles on these topics in journals such as the ]ournal of Marketing Management , European Journal of Marketing, Journal of Strategic Marketing, QMR: An International Journal and The International Journal of Sports Marketing and Sponsorship. David Jobber is Professor of Markefing at the University of Bradford Management Centre. His research interests are marketing research and information systems, and sales management. He has published over 100 articles on these and other related areas.