ENVIRONMENTAL VOLATILITY: A REASSESSMENT OF THE CONSTRUCT

Abstract

Environmental volatility is a central construct in strategy studies. This paper argues that three factors confound the literature on volatility: asymmetry in conceptualization, asymmetry in operationalization, and lack of attention to level of analysis. These limitations inhibit the development of the concept and make much of the research on volatility non‐additive. However, environments do matter and to make better sense of it we need a meta‐conceptualization. To do this, the paper presents a process‐based resources‐oriented view of volatility that argues that the volatility experienced by the firm is largely a function of the resources it has available to meet the demands made of it. It is proposed that volatility originates from four basic resource configurations: managerial‐human resources configuration, physical resources‐conversion configuration, intangible resources configuration, and positional configuration. Propositions consistent with prior theories and incorporating the new resources‐oriented viewpoint are presented and discussed.

Citation

Dugal, M. and Gopalakrishnan, S. (2000), "ENVIRONMENTAL VOLATILITY: A REASSESSMENT OF THE CONSTRUCT", The International Journal of Organizational Analysis, Vol. 8 No. 4, pp. 401-424. https://doi.org/10.1108/eb028925