Effects of environmental uncertainty on organizational intention to adopt distributed work arrangements

Abstract

Uncertainty in the external environmental context has been shown to affect organizational change and innovation. Distributed work arrangement is an organizational innovation that has the potential to enable a firm to meet the challenges of an uncertain environment more effectively. With the emergence of virtual organizations, such work arrangements are likely to gain increasing popularity. This exploratory empirical study employs a structural model to examine how environmental uncertainty affects organizational predisposition (adoption intention) toward distributed work arrangements. Environmental uncertainty has two different dimensions: environmental complexity (heterogeneity) and environmental variability (dynamism). In this paper, environmental dimensions are modeled to influence adoption of distributed work arrangements through shaping the organizational perceptions of three innovation characteristics: perceived relative advantage; compatibility and complexity. Data analyses using partial least squares statistical technique revealed that environmental complexity is negatively associated with perceived relative advantage, and perceived compatibility. Perceived relative advantage and perceived compatibility are in turn positively related to adoption intention for distributed work arrangements. However, environmental variability has no significant effect on the three innovation characteristics. Contrary to past findings that suggest organizations are more predisposed toward innovations in a complex environment, our study found that organizations in an environment of lower, rather than higher complexity are more likely to adopt distributed work arrangements. Implications for organizations are discussed. © 2004 IEEE.