Strategic Goals, Perceived Uncertainty, and Economic Performance in Volatile Environments

Abstract

An untested proposition in the normative strategic management literature is that strategists should make decisions based on accurate assessments of their external environments. Empirical organization theory literature holds the assumption that high levels of perceived uncertainty are detrimental to performance. Both literatures assume goal consensus to be important to effectiveness. This study investigated the relationship between top management perceptions of uncertainty, corporate Goal structures, and industry volatility in explaining economic performance in 20 firms. Findings suggested that attempts to avoid true environmental uncertainty and to seek high levels of goal congruence may be dysfunctional.