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Environmental Management Information Systems (ENVMIS): A reconceptualization
!
Environmental Management information Systems (ENVM~S) : A 1Reconceptualisation
A. G. Kefalas, TIte University of Georgia
The second half of the twentieth century has ushered in the “Age of Systems.” While a substantial number of systems enthusiasts associate the systems era with the so-called systems approach (general systems theory, cybernetics, management sciences, operations research and systems engineering), the majority equate it with “management information systems” (MiS). The more one reads about MIS, the clearer it becomes that the field, both in its theoretical and practical aspects, is engulfed with romanticism and mysticism. A complete account of the deficiencies in academic thinking regarding MiS-----s well as in the practitioner’s experience with its role in managing business and other organizations-only serves to obscure the intended purpose of this article. Students of MIS are familiar with the criticism of MIS which daily has been accumulating either as a result of practitioners’ introspections and reflections upon real-life situations or as a consequence of academic theorizing and empirical research upon the subject. A brief review of the literature reveals that most criticism of MIS centers upon certain key targets : the expounding of heroic assumptions which, to say the le:ast, are hardly justifiable [l] ; the lack of consistent direction in pursuing the design and implementation of MIS [lzi] ; the superficial treatment of certain key variables involved in the designing of MIS (such as the type of problem, the type of organizational context, the type of evidence needed to arrive at a solution for the problem, the mod): of presentation, and the psycholagical type of the user [24]) ; the undesirable side-effects on the user/executive (in terms of reduction of space for free movemen& psychological failure and double bind, leadership based more on competence than on formal power, and decreased feelings of essentiality [3]) ; and the basic negligence of the systems approach [8, 9, 10, 14J. Obviously this small sample of criticism does not even begin to Volume 3, Number 3
Judy, 1975
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sumlrlu;artie the deficiencies
of the accumulated body of knowledge on N[IS. Indeed, it is not intended at this time to delve in greater detail into this subject. Rather, the intention is, as Earl Joseph’s metaphor goes., “to put on tomorrow’s glasses to see where we can go, rather than to wear yesterday’s glasses to see how bad it was” [17]. Through these glasses the inquisitive student of MIS can see very clearly the emergence of what may be termed the “second generation of MIS”-that is, the generation of “environmental management information systems” ( ENVMIS ) . The purpose of this article is to inspire interest in ENVMIS. TWO reasons underlie tbe need for this effort: ( 1) the steadily increasing importance of the external environment as a determinant of managerial policy setting, decision making and control; and, (2) the unwavering preoccupation of MIS experts with the design and implementation of systems intended to generate, manipulate and transmit irtternal data (internal MIS). The article has three foci. The first is the development of a conceptual framework of the organization=environment interface which will put the subject of ENVMIS into proper perspective. The second is the presentation of some empirical findings of a field study conducted to gain empirical knowledge of the external-information acquisition process--i.e., the scanning process [20,21,22]. The third is an effort to draw some inferences and make some recommendations for designing and implementing ENVMIS.
The need for a rigorous conceptual framework of the organizationenvironment interaction system can be justified on two grounds: (1) march of the criticism of internal M’IS centers around conceptual misapprehensions which are considered to impose barriers on the design and successful implementation of MI5 ; and, (2) both the relative novelty of the subject of environmental monitoring and the related paucity of substa.ntive approaches to environmental management necessitate de nove carnceptualization of the organization-environment interface phenomenon. Recent conceptual, as well as empirical, attempts to incorporate “exogenous” variables into the study of organizations employ the open-systems approach. Basically, two steps are involved in this mode of thinking: (I) actively relating the parts to each other and to the whole; and, (2) relating the wholes to their environment. This secand step is an outcome of the recognition tbpt organizations essentially are open systems that depend for their survival uion the ircportatiou df energy and,/or information from their environment [4,5,11,13,18, 23,261.
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The two-way exchange between environment and organization is depicted in the following matrix (see Figure 1) 9 as presented by Emory and Trist 1131. The L’s in the matrix indicate some potentially lawful conneCtion; suffix 1 refers to the organization and suffix 2 to the en= vironment. Thus, LX1refers to processes within the organization; LIZ and L,, refer to exchanges between the organization and its environmenti.e., the area of transactional interdependencies from either direction; LZ2 refers to processes through which parts of the environment become related to each other-i.e., the ares of interdependencies that belong to the environment itself. This article deals with the area of transactional interdependencies-i.e., L,, and L,,. Figure
1: The Environment-Organization
Organization
Interaction
System
I
Environment
Organization
Environment
For the purpose of this article, the environment is treated as information which becomes available to the organization or to which the organization may acquire access via scanning activity. Informationioutinely to the flows about the environment either are communicated organization or can be sought out. The Empirical
Study
While the conceptual framework deals with the scanning process at the systems (organization) level, the empirical study focuses on the scanning process at the subsystems (individual manager) level. At the subsystems level the scanning process is operationally defined as encompassing four scanning (information-acquisition) activities of the individual participants in each organization; these activities, in turn. are influenced mainly by four scanning determinants (see Figure 2). The four scanning activities are: 1 the average amount of time spent by executives in scanning 1. the external environment-i.e., scanning inv&ement; 2. the kinds of external information acqui*-ed or, ahernatively. the distribution-among five external-environment sectors-of “_. (”
-.
..----_
.
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256
Figure
3.
4.
2:
The Scanning
of Business
Research
Process
the time spent in acquiring external information; the sources of external information employed by executives, along with the relative importance and frequency of utilization of each source; and, the ways of obtainirg external information--i.e., rhe manner (solicited vs. unsolicited) as well as the mode (search vs. surveillance).
’
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The four scanning determinants are: 1. 2. 3. 4.
the the the the
external environment of the organization; executive’s hierarchical level; executive’s functional specialty; and, behavioral or personality variab1es.l
Method
The empirical investigation of the sca\nning process was a two-phase survey with data collected through interviews and questionnaires. Three farm-equipment companies (SIC 3522) and three meatpacking firms (SIC 2011 and 2013 were utilized as the study fields and primary data sources. The purpose of the first phase of the study was to classify the external environments of tlhe two industries. The dichotomous classification of stable and dynamic environment was based upon an examination of two sets of Gteria: obiec$ive (the rate of change in sales and the degree of introduction of new products), and subjective (dominant competitive issues and environmental uncertainty) .’ Interpretation of questionnaire as well as of interview data led to classifieation of the farm-equipment industry as a dynamic and the meatpacking industry as a stable environment. The objective of the second phase of the empirical investigation was to collect data on the hypothesized relationships among the three scanning determinants and four scanning activities. Fourteen propositions concerning the impact of the three scanning determinants upon the four scanning activities were suggested and empirically examined.” These propositions were related to previous research done on the subject [2,19] as well as to conceptualization of the scanning process as proposed in the previous section of this article. Findings
Tables 1 through 3 summarize data obtained through a frequency distribution analysis of 89 questionnaires completed by the executives included in the sample. Since the entries in all these tables are self-explanatory, and since the main objective here is to draw inferences-suggested by the data-which can be used to make recommendations for designing and implementing ENVMHS, only selected interpretations OX’some of the data are offered. A more complete data interpretation, as well as details on the research design and resea& instruments, can be found elsewhere [20]. TOW Devoted to Scanning
and Kinds
of External
Informution
The average amount of time devoted to scanning the external business environment by all executives was 1.8 hours per normal working day (h/wd) ; this time was distributed unequally among the five sectors of the external environment (Table 1) e Dynamic-environment executives spent more time acquiring exterial information than did stable-_
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258
Resewch
IZG’ P : Time Devoted to Scanning and Its Distribution in Each of the Sectors of the External EnvironrAt Average Time in Hours per Working Day split Scanning h/wd
Scanning
Determinants
Distribution TechMarket nology I %
External Growth %
Government %
Other &
Total %
Environment dynamic (451a stable (44)
1.7
35.1 32.8
30.0 20.0
6.4 6.9
7.0 17.5
20.7 22.0
100.00 100.00
Hierarchical level upper (37) lower (52)
2.2 1.7
37.4 31.6
22.1 27.6
7.8 6.1
13.5 11.4
19.2 23.3
100.00 100.00
1.7 2.1 1.4
52.5 26.5 28.9
17.0 29.1 51.1
8.0 6.5 2.2
8.5 12.2 10.0
14.0 25.7 7.8
100.00 100.00 100.00
1.9 1.5
34.0 21.0
18.4 25.0
0.0 5.9
15.6 15.7
24.0 32.4
100.00 100.00
1. . 8
33.3
25.0
6.9
12.6
22.2
100.00
1.9
Functional specialty marketing (20) r;d”n’tc$ (22 ) finance, accounting, E corporate planning (26) other (EDP, IR. PR) (12) Overall sample aWumbersin ( ) indicate
number of respondents.
e;!vironment managers.q .41so, upper-level executives (presidents, vice presidents and general managers) devoted more time to scanning the :xternal business environment than did lower-level managers. Specialty seemed to senfe as a good indicator of the kinds of external information which would be acquired by the scanner. Thus, as the data indicate, marketing executives acquired primarily marketing information while production managers monitored the technological Hector of the environment more closely. Zt is interesting to note, however, that finance and accounting executives spent more time scanning the market sector of the external environment than they did any other sector, including their own special interests in external growth (i.e., mergers, acquisitions, etc.). Source of Ihterntd
In~o~mution
Combination Bources (primarily meetings) were the most preferred source of external information -in term.s of usage, importance and frequency of utiiization-in the overall sample (Table 2). The second most preferred source of external information was documentary sources-i.e., printed media ranging fr’om magazines to company reports. Hum;sa sources ranked third iin usage and frequency of utilization, but second in importance. “While marketing executives made greater use of documentary and hu,man sources, R&D managers exhibited an overwhelming preference fcjr combination sources. Ways of Obtaining Etiernal
Information
Two questions were investigated iti this respect:
(1)
was the infor-
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!i’tzbk+ 2: Relative Degrees of Usage, Importance, and Utilization of Sources of External Information’
Frequency
Documentary
Combination
Scanning Determinants
Usage %
Environment dynamic stable Hierarchical upper lower
Frequency
Usage %
Importance
Frequency
.l
Usage %
lmportance
Frequency
56.8 61.0
2.43 2.46
2.55 2.54
53.8 57 .‘-I
2.46 2.64
2.52 2.66
72.9 57.9
3.41 2.95
3.22 2.86
59.3 58.3
2.44 2.49
2.57 2.59
55.2 54.4
2.56 2.64
2.48 2.55
68.7 68.6
3.1.5 3.?4
3.07 2.99
64.4 S9.9 61.1
2.34 2.38 2.o2
2.39 2 . 3! 2.72
62.5 49.2 55.3
3.08 2.54 2.77
2.85 2.46 2.54
70.0 68.7 75.6
3.20 3.20 3.80
3.60 2.36 3.33
54.0 64.0
2.72 2.71
2.57 2.89
55.7 54.5
2.53 2.33
2.46 2.38
67.2 70.2
3.11 2.51
3.00 2.69
58.9
2.61
2.66
5S.l
2.6’5
2.3G
68.3
3.12
3.04
leve 1
Functional specialty marketing production R&D finance, accounting, corporate planning other (EDP, IR, PR) Overall
Irnportance
Human
of
sample
E
represent means of a seven-point scale ‘The figures in the columns labeled “Importance” ranging from least important (1) to most important (7). The columns tensed “Frequency of Utilization” present data on the usage of the sources reported by executives. Again, a se:lenpoint scale was used ranging from (7) daily to (1) less than yearly. Although such a seal:: is lacking in many regards, it does present a measurement of relative frequency of usage.
mation solicited or unsolicited? ; and, (2) was the acquired infore mation a result of surveillance activity (i.e., viewing and monitoring) or of search activity (i.e., investigation and research)? As the data in Table 3 indicate, solicited information predominated in all executive information-acquisition behavior. This was more true for lower-level than for upper-level executives and also more true for dynamic-environment than for stable-environment executives. Finance, accounting and corporate-planning executives acquired the highest percentage of unsolicited information, while R&D managers received the most solicited information. Most of the external information was acquired via search activity. Information-acquisition behavior of the surveillance type seemed to predominate among dynamic-environment, upper-level executives. Finance, accounting and corporate-planning managers acquired the highest percentage of external information via surveillance activity. Imp&cations and Recommertdations
A number of implications for MIS follow from the findings of this study. The importance and frequency of utilization of meetingsespecially “informal meetings inside”-as a source of exkrnal information indicate that, in this era of instant circuitry (including on-line, real-time information retrieval systems and otber co,01 media f.~s]), environmental scanning is a soGal process involving person-to-pemon contact. This implies that, since meetings are used most frequently and also are regarded as the most important source of exterki in-
Overall sample
t
Functional specialty marketing managers production managers R 4 D managers finance, accounting, Fa corporate-planningmanagers other (EDP, IR, PR) managers
Yierarchical level upper lower
Environment dynamic stable
Search
Surveillance
Modes of Information Acquisition
Acquisition
37.30
42.40 33.33
57.60 66.67
62.70
35.00 39.56 27.78
37.27
65.00 60.44 72.22
39.21
60.79
36.00 3B.64
62.73
64.00 61.36
26.74
26.40 25.00
26.00 26.08 33.33
23.42 28.83
23.11 30.45
25.94
22.40 32.50
25.00 23.48 27.78
24.31
25.79
25.33 25.00
52.68
48.80 57.70
51.00 49.56 61.11
53.14
49.21
48.44 55.45
23.82
25.20 25.00
21.50 24.79 18.89
24.12
23.95
26.22 21.36
23.50
26.00 17.50
27.50 25.65 20.00
26.84 22.74
25.34 23.19
47.32
51.20 42.50
49.00 50.44 38.89
50.79 46.86
51.56 44.55
solicited Unsolicited Research Investigation Total Monitoring Viewing Total % % % % % % % %
Manners of Information Acquisition
3: Relative Impbrtance of the Manners and Modes of Information
Information Acquisition Determinants
?‘a&
Environmental Mhnagement Information Systems
261
formation, organizations should attempt both to facilitate access to these sources and to increase their informativeness. At the same time, however, businesses should stress the necessity of outside contacts either on a formal or informal level. Another implication emerging from this study concerns the relatively low emphasis placed on surveillance as a mode of scanning. While businesses devote large sums of financial resources to rationally organized technological and market research, surveillance activityaimed at familiarizing executives with novel and unstructured problems and opportunities- is not the result of rationally planned organizational effort. Although many companies do maintain “news clippings outfits,” which usually are under &e authority of public relations departments, the organizational effort devoted to this type of scanning activity is virtually negligr ble.” In light of the findings of this study and their implications for MIS, certain recommendations can be made for future consideration. These suggestions should be interpreted as innovative recommendations intended to provoke thought rather than to offer remed&. Furthermore, the small number of firms involved in the study necessitates the exercise of extreme caution in forming generalizations. It is apparent, however, that the entire subject of acquisition of information-whether internal or external-deserves more attention than it currently is being given. Most of the literature on decisionmaking models presupposes the existence of the information needed to “plug into” the model. Heavy emphasis then is placed on the determination of the information structure or system that will best enable the decision maker to make “optimal” decisions. The “best” information structure usually is determined on the basis of estimated costbenefits analyses (payoffs) of the two alternative information structures or systems. The first recommendation, then, is that a new, systematic way of approaching the subject of information is needed. In this new approach, the subject of information acquisition should play the protagonist’s role. Considerable effort and resources could be saved if the systemic assumptions underlying every effort to understand human informationacquisition behavior- instead of being regarded as correct, ipso facto-would constitute the &us of the endeavor. The second rcvzornmendation concerns internal versus external information. What this really involves is the opening-at long last-of the “conceptually closed-system” enterprise to its environment. Complications involved in such a process are tremendous, as this %urfacescratching” study has shown. Nevertheless, it is an unavoidable cost that must be borne by a society striving for relevancy. The external business environment is not a hostile nature playing equally hostile
262
Journal of Business Research
games with the organization. It is much more benign than is usually assumed and lends itself to systemic investigation more than is gem= ally b&v&, mat is being suggested here is the necessity of understanding and admitting that one must contend with a highly complex system which is not, however, totally unapproachable. The &ird recommendation involves broadening the concept of the “environBnent.” In restricting one’s understanding of the external environment by confining such understanding to market-analytical types of endeavors, the error is made of considering a part rather than the whole. The interactive-systems type of analysis used in this study, by viewing the phenomenon of the environment-organization interaction as a set of interfaces between the organization and the different sectors of the external environment, serves to encompass the wholeand thus is most highly recommended. How can these recommendations be incorporated into the design and implementation of ENVMIS? One method is the straightforward extension of existing, internal MIS to ENVMIS. Another way is the design of completely new MIS for the external environment based upon Buckminster Fuller’s grand design for a global MIS. A compromise de sign would begin with a reconceptualization of the organization’s position within its immediate universe. Buckminster Fuller states the “‘golden rule,” which is applicable to every designer: “I always start with the universe: an organization of regenerativ 3 principles frequently manifest as energy [and/or information] systerns of which all our experiences, and possible experiences,, are only Socal instances. . . . Whenever I draw a circle, I immediately qwant“io step out of it” [ 151. The conceptual framework presented in this article adheres to this ‘“golden rule” ; and, it is due to the utility assigned to this rule that the feasibility of straightforward extensions of existing MIS to accommodate the monitoring of the external environment is questioned. Most MIS are designed to serve “local instances.” To the extent that such systems become entangled in the straightjacket of these local instances, their convertability to ENVMIS is extremely limited. Whether these &US constitute the rule, or the exception to the rule, is debatable. However, one thing is clear: “stepping out 0P’ the “circle” of internal MIS becomes more difficult, the smaller the circle. Nevertheless, existing software/hardware technology does 1er;d itself to a reconceptualization. In conclusion, the need for ENVMIS becomes more apparent every day; furthermore, this need is more urgent now than it was when the scanning-process study described in the previous section was conducted. Since then, several important developments have occurred. on January 1, 1978, the National Environmental Policy Act was
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signed into law with the objective of establishing a national policy to “maintain conditions under which man and n,ature can exist in productive harmony, and fulfill the social, economic, and other requirements of present and future generations of Americans’9 [z’?]. The same year saw the creation of the Environmental Protection Agency (EPA) 9 thus marking the end of the piecemeal approach to our nation’s environmental problems. The EPA joined together for the first time in a single agency the major environmental control programs of the federal government. Since its formation, e EPA has been credited with mounting an integrated, coordinate attack on the environmental problems of air and water pollu olid wastes management, pesticides, radiation, and noise-in short., every major industrial activity has been or will be affected and regulated by the EPA. During the first years of its operation, the EPA was heralded by some environmentalists as the deus ex machina to environmental problems; at the same time, however, it was condemned by othersprimarily by business- as the villain of the free enterprise system [6,7,12]. While some of this backlash from business was justified, much of it represented a symptomatic, widespread lack of foresight on the part of MIS designers in failing to incorporate the generic pbenomenon of the organization-environment interface into WS. While environmental protection via the EPA aims at monitoring the side-effects of the output of an enterprise, the Office of Technological Assessment (OTA) monitors corporate technological progress and the most recently created Federal Energy Administration (FEA j monitors the input aspects of organizational activities. It should be recalled that monitoring demands continuo;ls data acquisition, processing, and utilization. Such data must be supplied by the organization. Thus, the need to incorporate this kind of data into MIS deserves more than cursory attention, By the same token,, however, data contained in these governmental depositories are of tremendous value to an organization or industry. It is imperative, therefore, that snch organizations and industries design and maintain formal, external ENVMIS which will supersede the conventional, piecemeal approaches currently being utilized by conventional MIS designers.
264
jotsrncrl
of
Business
Research
Footsums l&&&r&n
of the fourth determinant of scanning, shown in F&we 2 (behavioral or personaliFjvariabkm),was deferred for future extensions of this study.
‘These two Sets of criteria were borrowed from Lawrence. and Lotsch [233. As adapted for this study, the criteria were as follows: A. Objective Criteria 1. me rate of growth-i.e., the rate of change in sales revenue for the period between 1964 and 1%7 as compared to the rate of growth of population and the Gross National Product. 2. Product ionovation--i.e., the degree of introduction of new products for the period between 1947 and 1963. B. Subjective Criteria (i.e., the executives’ own assessment of their organimtion’s external environment) 1. Major or dominant competitive issues confronting the industry. 2. k&ironmental uncertainty with respect to (a) clarity of information, (b) clarity of causal relationships between external environmental developments and their impact upon the organization, and (ci time span of definitive feedback concerning actions taken by the organization. Utilizing these two sets of criteria, the following definitions of stable versus diverse and dynamic environments were adopted: A sta&l~, environment is characterized by r’a3 slow rate of growth, 0~) low degree of introduction of new products, (c) small innovative capacity, and (d) low environmental. uncertainty. A diverse and dynamic environment, on the other hand, is characterized by (a) fast rate of growth, Cb) higb degree of introduction of new products, (cl high innovative capacity-that is, emphasis on innovation as a competitive strategy, and (d) high environmental uncertainty, aFor a sample of the propositions, see 1221. 4AltholJgh a rigorous test of statistical dirhit~ nf the findings was not the stated ob_ective of the study, the chi-square test of asP’W%QziOn was performed on the data and found to be not significant at the .05 Eevd. Lev& of significance generally parallel those of previous research which served as the basis for this study 12, 193. aAt the time of the research the author had all intuitive feeling that the substantial ground swell of institutionalization of environmental concern would evoke the creation of environmental surveillance task forces or departments within U. 2. a0rporation.s. Preliminary research does indicate that this, indeed, is happening. Cprrently a research group spear. headed by the author and Dr. A. B. Carroll is et&aged in a national survey research project aimed at assessing the degree of corporate institutionalization of environmental surveillantx and monitoring units.
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Environmental Management information Systems (ENVM~S) : A 1Reconceptualisation
A. G. Kefalas, TIte University of Georgia
The second half of the twentieth century has ushered in the “Age of Systems.” While a substantial number of systems enthusiasts associate the systems era with the so-called systems approach (general systems theory, cybernetics, management sciences, operations research and systems engineering), the majority equate it with “management information systems” (MiS). The more one reads about MIS, the clearer it becomes that the field, both in its theoretical and practical aspects, is engulfed with romanticism and mysticism. A complete account of the deficiencies in academic thinking regarding MiS-----s well as in the practitioner’s experience with its role in managing business and other organizations-only serves to obscure the intended purpose of this article. Students of MIS are familiar with the criticism of MIS which daily has been accumulating either as a result of practitioners’ introspections and reflections upon real-life situations or as a consequence of academic theorizing and empirical research upon the subject. A brief review of the literature reveals that most criticism of MIS centers upon certain key targets : the expounding of heroic assumptions which, to say the le:ast, are hardly justifiable [l] ; the lack of consistent direction in pursuing the design and implementation of MIS [lzi] ; the superficial treatment of certain key variables involved in the designing of MIS (such as the type of problem, the type of organizational context, the type of evidence needed to arrive at a solution for the problem, the mod): of presentation, and the psycholagical type of the user [24]) ; the undesirable side-effects on the user/executive (in terms of reduction of space for free movemen& psychological failure and double bind, leadership based more on competence than on formal power, and decreased feelings of essentiality [3]) ; and the basic negligence of the systems approach [8, 9, 10, 14J. Obviously this small sample of criticism does not even begin to Volume 3, Number 3
Judy, 1975
254,
Juwnd of Business Research
sumlrlu;artie the deficiencies
of the accumulated body of knowledge on N[IS. Indeed, it is not intended at this time to delve in greater detail into this subject. Rather, the intention is, as Earl Joseph’s metaphor goes., “to put on tomorrow’s glasses to see where we can go, rather than to wear yesterday’s glasses to see how bad it was” [17]. Through these glasses the inquisitive student of MIS can see very clearly the emergence of what may be termed the “second generation of MIS”-that is, the generation of “environmental management information systems” ( ENVMIS ) . The purpose of this article is to inspire interest in ENVMIS. TWO reasons underlie tbe need for this effort: ( 1) the steadily increasing importance of the external environment as a determinant of managerial policy setting, decision making and control; and, (2) the unwavering preoccupation of MIS experts with the design and implementation of systems intended to generate, manipulate and transmit irtternal data (internal MIS). The article has three foci. The first is the development of a conceptual framework of the organization=environment interface which will put the subject of ENVMIS into proper perspective. The second is the presentation of some empirical findings of a field study conducted to gain empirical knowledge of the external-information acquisition process--i.e., the scanning process [20,21,22]. The third is an effort to draw some inferences and make some recommendations for designing and implementing ENVMIS.
The need for a rigorous conceptual framework of the organizationenvironment interaction system can be justified on two grounds: (1) march of the criticism of internal M’IS centers around conceptual misapprehensions which are considered to impose barriers on the design and successful implementation of MI5 ; and, (2) both the relative novelty of the subject of environmental monitoring and the related paucity of substa.ntive approaches to environmental management necessitate de nove carnceptualization of the organization-environment interface phenomenon. Recent conceptual, as well as empirical, attempts to incorporate “exogenous” variables into the study of organizations employ the open-systems approach. Basically, two steps are involved in this mode of thinking: (I) actively relating the parts to each other and to the whole; and, (2) relating the wholes to their environment. This secand step is an outcome of the recognition tbpt organizations essentially are open systems that depend for their survival uion the ircportatiou df energy and,/or information from their environment [4,5,11,13,18, 23,261.
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The two-way exchange between environment and organization is depicted in the following matrix (see Figure 1) 9 as presented by Emory and Trist 1131. The L’s in the matrix indicate some potentially lawful conneCtion; suffix 1 refers to the organization and suffix 2 to the en= vironment. Thus, LX1refers to processes within the organization; LIZ and L,, refer to exchanges between the organization and its environmenti.e., the area of transactional interdependencies from either direction; LZ2 refers to processes through which parts of the environment become related to each other-i.e., the ares of interdependencies that belong to the environment itself. This article deals with the area of transactional interdependencies-i.e., L,, and L,,. Figure
1: The Environment-Organization
Organization
Interaction
System
I
Environment
Organization
Environment
For the purpose of this article, the environment is treated as information which becomes available to the organization or to which the organization may acquire access via scanning activity. Informationioutinely to the flows about the environment either are communicated organization or can be sought out. The Empirical
Study
While the conceptual framework deals with the scanning process at the systems (organization) level, the empirical study focuses on the scanning process at the subsystems (individual manager) level. At the subsystems level the scanning process is operationally defined as encompassing four scanning (information-acquisition) activities of the individual participants in each organization; these activities, in turn. are influenced mainly by four scanning determinants (see Figure 2). The four scanning activities are: 1 the average amount of time spent by executives in scanning 1. the external environment-i.e., scanning inv&ement; 2. the kinds of external information acqui*-ed or, ahernatively. the distribution-among five external-environment sectors-of “_. (”
-.
..----_
.
Journal
256
Figure
3.
4.
2:
The Scanning
of Business
Research
Process
the time spent in acquiring external information; the sources of external information employed by executives, along with the relative importance and frequency of utilization of each source; and, the ways of obtainirg external information--i.e., rhe manner (solicited vs. unsolicited) as well as the mode (search vs. surveillance).
’
Environmental
Manugement Information Systems
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The four scanning determinants are: 1. 2. 3. 4.
the the the the
external environment of the organization; executive’s hierarchical level; executive’s functional specialty; and, behavioral or personality variab1es.l
Method
The empirical investigation of the sca\nning process was a two-phase survey with data collected through interviews and questionnaires. Three farm-equipment companies (SIC 3522) and three meatpacking firms (SIC 2011 and 2013 were utilized as the study fields and primary data sources. The purpose of the first phase of the study was to classify the external environments of tlhe two industries. The dichotomous classification of stable and dynamic environment was based upon an examination of two sets of Gteria: obiec$ive (the rate of change in sales and the degree of introduction of new products), and subjective (dominant competitive issues and environmental uncertainty) .’ Interpretation of questionnaire as well as of interview data led to classifieation of the farm-equipment industry as a dynamic and the meatpacking industry as a stable environment. The objective of the second phase of the empirical investigation was to collect data on the hypothesized relationships among the three scanning determinants and four scanning activities. Fourteen propositions concerning the impact of the three scanning determinants upon the four scanning activities were suggested and empirically examined.” These propositions were related to previous research done on the subject [2,19] as well as to conceptualization of the scanning process as proposed in the previous section of this article. Findings
Tables 1 through 3 summarize data obtained through a frequency distribution analysis of 89 questionnaires completed by the executives included in the sample. Since the entries in all these tables are self-explanatory, and since the main objective here is to draw inferences-suggested by the data-which can be used to make recommendations for designing and implementing ENVMHS, only selected interpretations OX’some of the data are offered. A more complete data interpretation, as well as details on the research design and resea& instruments, can be found elsewhere [20]. TOW Devoted to Scanning
and Kinds
of External
Informution
The average amount of time devoted to scanning the external business environment by all executives was 1.8 hours per normal working day (h/wd) ; this time was distributed unequally among the five sectors of the external environment (Table 1) e Dynamic-environment executives spent more time acquiring exterial information than did stable-_
journui? of Business
258
Resewch
IZG’ P : Time Devoted to Scanning and Its Distribution in Each of the Sectors of the External EnvironrAt Average Time in Hours per Working Day split Scanning h/wd
Scanning
Determinants
Distribution TechMarket nology I %
External Growth %
Government %
Other &
Total %
Environment dynamic (451a stable (44)
1.7
35.1 32.8
30.0 20.0
6.4 6.9
7.0 17.5
20.7 22.0
100.00 100.00
Hierarchical level upper (37) lower (52)
2.2 1.7
37.4 31.6
22.1 27.6
7.8 6.1
13.5 11.4
19.2 23.3
100.00 100.00
1.7 2.1 1.4
52.5 26.5 28.9
17.0 29.1 51.1
8.0 6.5 2.2
8.5 12.2 10.0
14.0 25.7 7.8
100.00 100.00 100.00
1.9 1.5
34.0 21.0
18.4 25.0
0.0 5.9
15.6 15.7
24.0 32.4
100.00 100.00
1. . 8
33.3
25.0
6.9
12.6
22.2
100.00
1.9
Functional specialty marketing (20) r;d”n’tc$ (22 ) finance, accounting, E corporate planning (26) other (EDP, IR. PR) (12) Overall sample aWumbersin ( ) indicate
number of respondents.
e;!vironment managers.q .41so, upper-level executives (presidents, vice presidents and general managers) devoted more time to scanning the :xternal business environment than did lower-level managers. Specialty seemed to senfe as a good indicator of the kinds of external information which would be acquired by the scanner. Thus, as the data indicate, marketing executives acquired primarily marketing information while production managers monitored the technological Hector of the environment more closely. Zt is interesting to note, however, that finance and accounting executives spent more time scanning the market sector of the external environment than they did any other sector, including their own special interests in external growth (i.e., mergers, acquisitions, etc.). Source of Ihterntd
In~o~mution
Combination Bources (primarily meetings) were the most preferred source of external information -in term.s of usage, importance and frequency of utiiization-in the overall sample (Table 2). The second most preferred source of external information was documentary sources-i.e., printed media ranging fr’om magazines to company reports. Hum;sa sources ranked third iin usage and frequency of utilization, but second in importance. “While marketing executives made greater use of documentary and hu,man sources, R&D managers exhibited an overwhelming preference fcjr combination sources. Ways of Obtaining Etiernal
Information
Two questions were investigated iti this respect:
(1)
was the infor-
Envitonmentd
Management Bnjonnation Systems
259
!i’tzbk+ 2: Relative Degrees of Usage, Importance, and Utilization of Sources of External Information’
Frequency
Documentary
Combination
Scanning Determinants
Usage %
Environment dynamic stable Hierarchical upper lower
Frequency
Usage %
Importance
Frequency
.l
Usage %
lmportance
Frequency
56.8 61.0
2.43 2.46
2.55 2.54
53.8 57 .‘-I
2.46 2.64
2.52 2.66
72.9 57.9
3.41 2.95
3.22 2.86
59.3 58.3
2.44 2.49
2.57 2.59
55.2 54.4
2.56 2.64
2.48 2.55
68.7 68.6
3.1.5 3.?4
3.07 2.99
64.4 S9.9 61.1
2.34 2.38 2.o2
2.39 2 . 3! 2.72
62.5 49.2 55.3
3.08 2.54 2.77
2.85 2.46 2.54
70.0 68.7 75.6
3.20 3.20 3.80
3.60 2.36 3.33
54.0 64.0
2.72 2.71
2.57 2.89
55.7 54.5
2.53 2.33
2.46 2.38
67.2 70.2
3.11 2.51
3.00 2.69
58.9
2.61
2.66
5S.l
2.6’5
2.3G
68.3
3.12
3.04
leve 1
Functional specialty marketing production R&D finance, accounting, corporate planning other (EDP, IR, PR) Overall
Irnportance
Human
of
sample
E
represent means of a seven-point scale ‘The figures in the columns labeled “Importance” ranging from least important (1) to most important (7). The columns tensed “Frequency of Utilization” present data on the usage of the sources reported by executives. Again, a se:lenpoint scale was used ranging from (7) daily to (1) less than yearly. Although such a seal:: is lacking in many regards, it does present a measurement of relative frequency of usage.
mation solicited or unsolicited? ; and, (2) was the acquired infore mation a result of surveillance activity (i.e., viewing and monitoring) or of search activity (i.e., investigation and research)? As the data in Table 3 indicate, solicited information predominated in all executive information-acquisition behavior. This was more true for lower-level than for upper-level executives and also more true for dynamic-environment than for stable-environment executives. Finance, accounting and corporate-planning executives acquired the highest percentage of unsolicited information, while R&D managers received the most solicited information. Most of the external information was acquired via search activity. Information-acquisition behavior of the surveillance type seemed to predominate among dynamic-environment, upper-level executives. Finance, accounting and corporate-planning managers acquired the highest percentage of external information via surveillance activity. Imp&cations and Recommertdations
A number of implications for MIS follow from the findings of this study. The importance and frequency of utilization of meetingsespecially “informal meetings inside”-as a source of exkrnal information indicate that, in this era of instant circuitry (including on-line, real-time information retrieval systems and otber co,01 media f.~s]), environmental scanning is a soGal process involving person-to-pemon contact. This implies that, since meetings are used most frequently and also are regarded as the most important source of exterki in-
Overall sample
t
Functional specialty marketing managers production managers R 4 D managers finance, accounting, Fa corporate-planningmanagers other (EDP, IR, PR) managers
Yierarchical level upper lower
Environment dynamic stable
Search
Surveillance
Modes of Information Acquisition
Acquisition
37.30
42.40 33.33
57.60 66.67
62.70
35.00 39.56 27.78
37.27
65.00 60.44 72.22
39.21
60.79
36.00 3B.64
62.73
64.00 61.36
26.74
26.40 25.00
26.00 26.08 33.33
23.42 28.83
23.11 30.45
25.94
22.40 32.50
25.00 23.48 27.78
24.31
25.79
25.33 25.00
52.68
48.80 57.70
51.00 49.56 61.11
53.14
49.21
48.44 55.45
23.82
25.20 25.00
21.50 24.79 18.89
24.12
23.95
26.22 21.36
23.50
26.00 17.50
27.50 25.65 20.00
26.84 22.74
25.34 23.19
47.32
51.20 42.50
49.00 50.44 38.89
50.79 46.86
51.56 44.55
solicited Unsolicited Research Investigation Total Monitoring Viewing Total % % % % % % % %
Manners of Information Acquisition
3: Relative Impbrtance of the Manners and Modes of Information
Information Acquisition Determinants
?‘a&
Environmental Mhnagement Information Systems
261
formation, organizations should attempt both to facilitate access to these sources and to increase their informativeness. At the same time, however, businesses should stress the necessity of outside contacts either on a formal or informal level. Another implication emerging from this study concerns the relatively low emphasis placed on surveillance as a mode of scanning. While businesses devote large sums of financial resources to rationally organized technological and market research, surveillance activityaimed at familiarizing executives with novel and unstructured problems and opportunities- is not the result of rationally planned organizational effort. Although many companies do maintain “news clippings outfits,” which usually are under &e authority of public relations departments, the organizational effort devoted to this type of scanning activity is virtually negligr ble.” In light of the findings of this study and their implications for MIS, certain recommendations can be made for future consideration. These suggestions should be interpreted as innovative recommendations intended to provoke thought rather than to offer remed&. Furthermore, the small number of firms involved in the study necessitates the exercise of extreme caution in forming generalizations. It is apparent, however, that the entire subject of acquisition of information-whether internal or external-deserves more attention than it currently is being given. Most of the literature on decisionmaking models presupposes the existence of the information needed to “plug into” the model. Heavy emphasis then is placed on the determination of the information structure or system that will best enable the decision maker to make “optimal” decisions. The “best” information structure usually is determined on the basis of estimated costbenefits analyses (payoffs) of the two alternative information structures or systems. The first recommendation, then, is that a new, systematic way of approaching the subject of information is needed. In this new approach, the subject of information acquisition should play the protagonist’s role. Considerable effort and resources could be saved if the systemic assumptions underlying every effort to understand human informationacquisition behavior- instead of being regarded as correct, ipso facto-would constitute the &us of the endeavor. The second rcvzornmendation concerns internal versus external information. What this really involves is the opening-at long last-of the “conceptually closed-system” enterprise to its environment. Complications involved in such a process are tremendous, as this %urfacescratching” study has shown. Nevertheless, it is an unavoidable cost that must be borne by a society striving for relevancy. The external business environment is not a hostile nature playing equally hostile
262
Journal of Business Research
games with the organization. It is much more benign than is usually assumed and lends itself to systemic investigation more than is gem= ally b&v&, mat is being suggested here is the necessity of understanding and admitting that one must contend with a highly complex system which is not, however, totally unapproachable. The &ird recommendation involves broadening the concept of the “environBnent.” In restricting one’s understanding of the external environment by confining such understanding to market-analytical types of endeavors, the error is made of considering a part rather than the whole. The interactive-systems type of analysis used in this study, by viewing the phenomenon of the environment-organization interaction as a set of interfaces between the organization and the different sectors of the external environment, serves to encompass the wholeand thus is most highly recommended. How can these recommendations be incorporated into the design and implementation of ENVMIS? One method is the straightforward extension of existing, internal MIS to ENVMIS. Another way is the design of completely new MIS for the external environment based upon Buckminster Fuller’s grand design for a global MIS. A compromise de sign would begin with a reconceptualization of the organization’s position within its immediate universe. Buckminster Fuller states the “‘golden rule,” which is applicable to every designer: “I always start with the universe: an organization of regenerativ 3 principles frequently manifest as energy [and/or information] systerns of which all our experiences, and possible experiences,, are only Socal instances. . . . Whenever I draw a circle, I immediately qwant“io step out of it” [ 151. The conceptual framework presented in this article adheres to this ‘“golden rule” ; and, it is due to the utility assigned to this rule that the feasibility of straightforward extensions of existing MIS to accommodate the monitoring of the external environment is questioned. Most MIS are designed to serve “local instances.” To the extent that such systems become entangled in the straightjacket of these local instances, their convertability to ENVMIS is extremely limited. Whether these &US constitute the rule, or the exception to the rule, is debatable. However, one thing is clear: “stepping out 0P’ the “circle” of internal MIS becomes more difficult, the smaller the circle. Nevertheless, existing software/hardware technology does 1er;d itself to a reconceptualization. In conclusion, the need for ENVMIS becomes more apparent every day; furthermore, this need is more urgent now than it was when the scanning-process study described in the previous section was conducted. Since then, several important developments have occurred. on January 1, 1978, the National Environmental Policy Act was
Environmental
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signed into law with the objective of establishing a national policy to “maintain conditions under which man and n,ature can exist in productive harmony, and fulfill the social, economic, and other requirements of present and future generations of Americans’9 [z’?]. The same year saw the creation of the Environmental Protection Agency (EPA) 9 thus marking the end of the piecemeal approach to our nation’s environmental problems. The EPA joined together for the first time in a single agency the major environmental control programs of the federal government. Since its formation, e EPA has been credited with mounting an integrated, coordinate attack on the environmental problems of air and water pollu olid wastes management, pesticides, radiation, and noise-in short., every major industrial activity has been or will be affected and regulated by the EPA. During the first years of its operation, the EPA was heralded by some environmentalists as the deus ex machina to environmental problems; at the same time, however, it was condemned by othersprimarily by business- as the villain of the free enterprise system [6,7,12]. While some of this backlash from business was justified, much of it represented a symptomatic, widespread lack of foresight on the part of MIS designers in failing to incorporate the generic pbenomenon of the organization-environment interface into WS. While environmental protection via the EPA aims at monitoring the side-effects of the output of an enterprise, the Office of Technological Assessment (OTA) monitors corporate technological progress and the most recently created Federal Energy Administration (FEA j monitors the input aspects of organizational activities. It should be recalled that monitoring demands continuo;ls data acquisition, processing, and utilization. Such data must be supplied by the organization. Thus, the need to incorporate this kind of data into MIS deserves more than cursory attention, By the same token,, however, data contained in these governmental depositories are of tremendous value to an organization or industry. It is imperative, therefore, that snch organizations and industries design and maintain formal, external ENVMIS which will supersede the conventional, piecemeal approaches currently being utilized by conventional MIS designers.
264
jotsrncrl
of
Business
Research
Footsums l&&&r&n
of the fourth determinant of scanning, shown in F&we 2 (behavioral or personaliFjvariabkm),was deferred for future extensions of this study.
‘These two Sets of criteria were borrowed from Lawrence. and Lotsch [233. As adapted for this study, the criteria were as follows: A. Objective Criteria 1. me rate of growth-i.e., the rate of change in sales revenue for the period between 1964 and 1%7 as compared to the rate of growth of population and the Gross National Product. 2. Product ionovation--i.e., the degree of introduction of new products for the period between 1947 and 1963. B. Subjective Criteria (i.e., the executives’ own assessment of their organimtion’s external environment) 1. Major or dominant competitive issues confronting the industry. 2. k&ironmental uncertainty with respect to (a) clarity of information, (b) clarity of causal relationships between external environmental developments and their impact upon the organization, and (ci time span of definitive feedback concerning actions taken by the organization. Utilizing these two sets of criteria, the following definitions of stable versus diverse and dynamic environments were adopted: A sta&l~, environment is characterized by r’a3 slow rate of growth, 0~) low degree of introduction of new products, (c) small innovative capacity, and (d) low environmental. uncertainty. A diverse and dynamic environment, on the other hand, is characterized by (a) fast rate of growth, Cb) higb degree of introduction of new products, (cl high innovative capacity-that is, emphasis on innovation as a competitive strategy, and (d) high environmental uncertainty, aFor a sample of the propositions, see 1221. 4AltholJgh a rigorous test of statistical dirhit~ nf the findings was not the stated ob_ective of the study, the chi-square test of asP’W%QziOn was performed on the data and found to be not significant at the .05 Eevd. Lev& of significance generally parallel those of previous research which served as the basis for this study 12, 193. aAt the time of the research the author had all intuitive feeling that the substantial ground swell of institutionalization of environmental concern would evoke the creation of environmental surveillance task forces or departments within U. 2. a0rporation.s. Preliminary research does indicate that this, indeed, is happening. Cprrently a research group spear. headed by the author and Dr. A. B. Carroll is et&aged in a national survey research project aimed at assessing the degree of corporate institutionalization of environmental surveillantx and monitoring units.
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