Environmental Scanning Mechanism and Its Effects on the Performance : Evidence from UAE

The current Research aims at figuring out relationships between performance (as measured by ROE and PM) and demographics, interest in scanning, kinds of scanning, scanning frequency, sources of scanning (impersonal and personal), and obstacles of scanning. Experiences of 292 UAE executives have been used to fulfill these objectives. Via SPSS package release ten and seventeen, multivariate analysis (e.g. Multiple Regression), bivariate analysis (e.g. WSRT), and univariate analysis (e.g. descriptive analysis like mean, percentage, and sum) were conducted to explore the network of relationships amongst variables. Significant relationships between performance (as measured ROE) and interest in scanning, scanning frequency, sources of scanning (impersonal), and obstacles of scanning are existed. Significant relationships between performance (as measured by PM) and interest in scanning, scanning frequency, sources of scanning (personal), and sources of scanning (impersonal) are also existed. Finally, the current study revealed that UAE businesses are conducting regular, proactive, and hoc scanning more often than irregular, reactive, and primitive scanning.


Introduction
It generally conceded in business practice that, scanning the external and internal environments is a prerequisite to figure out potential opportunities and threats before formulating the corporate competitive strategy (Toit, 2005;Albright, 2004;and Wheelen and Hunger, 1992) that utilizes the strengths and tries to overcome the weaknesses.The degrees of success any organization can achieve appear to be a function of how effective interactive system the organization has with its environment (Hambrick, 1982;Pfeffer&Salancik 1978).Cheng, (2014) and Toit, (2005) did define the environment as anything found outside the boundaries of the company, or al sets of element that are independent of the organization and are of importance for its success.Actually, organizations are creatures of their surrounding environments, spending much time to learn how to deal with the traumas, vagaries and opportunities created by that environment (Douglas, 1994, p. 703).Nowadays, information collection process has not become an easy task, as firms are working in more complex surroundings than ever before (Van de Ven and Joyce, 1981) that leads to an explosion of the quantity and quality of available information (Subramanian et al., 1993).In the other side, this process is more complicated and challenged by many obstacles.Sawyerret al.(2000); Mrema (1987); Adegbite (1986); Anastoset al. (1980); and Flores (1972) found that research on planning in developing nations has indicated the lack of information as a core reason for the disappearance of formal corporate planning activities in these countries.Also, the lack of infrastructures required for data gathering is another problem in this perspective (Nwachukwu, 1985;and Siffin, 1976).
Before going further in any direction, a common understanding of external environmental scanning (EES) process should be put forward first.EES is a process that scanning and collecting information about events or relationships with a firm's outside environment that would (a) aids top management in leading the company (Elenkov, 1997), (b) inspects and understands related information to detect external opportunities and external threats.It is the radar to detect environmental signals (Albright, 2004), and (c) helps assist of determining the firm's future courses of action (Kamangar, 2013, Aguilar, 1967).EES mechanism includes to monitor, to evaluate, and to disseminate information from the external environment to key executives within their firms (Snyder, 1981) for taking essential organizational decisions (Aguilar, 1967).Therefore, EES is a strategic management tool that links organizations abilities to their external environments.Annex, = EES function as an effective tool to deal with uncertainties and to form adaptive strategies via using tools like SWOT and PESTEL analysis (Kamangar,2013, Toit, 2005;Albright, 2004;Sawyerr et al., 2000;Hagen & Amin, 1995;Zahra, 1987;Hax&Majluf, 1984;Daft &Weick, 1984;Hambrick, 1982;Porter, 1980;Hofer &Schendel, 1978;Pfeffer and Salancik, 1978;Aguilar, 1967).
Logically, all data sources could be used in EES.More specifically, sources of strategic information have been classified into two broad categories: external and internal, and further sub-classified into personal and impersonal (Hidayat, 2015;Toit, 2005;Sawyerret el al., 2000, p. 100;Aguilar, 1967).External sources of information are those originating outside the organization while internal sources created from within the organization.Personal sources of information created from personal contacts with people within and outside the organization while impersonal sources created from non-personal sources such as documents etc. (Daft &Weick, 1984;Aguilar, 1967).All these sources are addressed in the current study.Lawrence and Lorsch (1967) have been among the pioneers who pinpoint the tie between the environmental scanning activities and performance.Compiling evidences have shown that chief managers in high-performing firms scanned their surroundings more comprehensively and more frequently compared with their counterparts in low-performing firms (Daft et al., 1988).Smith et al., (1991); and Zajac and Shortell, (1989) findings in service and product organizations support the linkage between performance and environmental scanning mechanism.Moreover, Subramanian et al., (1993) findings, also, found evidence that support the relationship between firm's performance (as measured by profitability and growth) and sophisticated scanning schemes.Additionally, Auster and Choo (1994) and Daft et al., (1988) have examined the level of uncertainty perceived in the task and remote sectors of the environment.Literature wise, task environment (TE) means the most nearby environment of the firm with elements that have a direct influence on the firm's performance and, in turn, are influenced by firm' activities such as customer, competitor, and supplier (Grant, 1998;Asheghian and Ebrahimi, 1990;and Dill, 1958).Meanwhile, remote environmental (RE) factors include those sectors of the environment that have an indirect influence on the firm's performance, such as the governmental, economical conditions, technological, and socio-cultural sectors (Sawyerret et al., 2000;Grant, 1998;Auster and Choo, 1994;Wheelen and Hunger, 1992;Asheghian and Ebrahimi, 1990;Daft et al., 1988;and Preble et al., 1988).

Previous Work
In this perspective, Auster and Choo's (1994) results provided full support for the importance of the task environment sectors.However, Daft et al., (1988) provided partial support for that importance to decision makers.In the same line of logic, Sawyerret et al., (2000) found that environmental scanning frequency does not vary significantly for the task and remote environments.However, remote environment (RE) received greater attention from decision-makers (Auster & Choo, 1994;Daft et al., 1988;Preble et al., 1988).One explanation behind that could be the sectors in the task environment are most relevant for goal setting and goal attainment and as such should receive greater attention from executives (Grant, 1998;Boultonet et al., 1982;Dill, 1958).To bridge part of this gap in the literature, the current study attempts to address both RE and TE in UAE context and their relationships with performance.
Addressing the topic from a different perspective in hotel context, Costa and Teare (2000) have distinguished between two main areas affecting the development of a formal environmental scanning process: (a) decision making and managerial attitudes related.It includes fluctuation in the current organizational culture, company perspectives towards the importance of information, its dissemination and sharing with colleagues.(b)environmental scanning process related e.g. its quality, objectivity and formatting of the information produced; the organization of the scanning process; the system to store, process and disseminate the information; and the definition of information needs and sources.
Most recently, Manuel, (2005) promoted for the use of seven factors i.e. competitive, market, technology, regulatory, resource, broad, and other factorsin a Malaysian context juxtapose with USA practices in environmental scanning.It worth mentioning that competitive factors are all information connected with competitor (present and potential) including their moves, decisions, strategies, plans, strength, and weaknesses.Market factors are all information about the markets excluding matters related to competition.It includes market potential, customers' needs and taste, distribution channels, and promotion reactions.Technology factors are all information about present and potential commodities and production techniques.For regulatory factors, it includes all information regarding regulations that could affect firm' operations, such as e.g. regulatory and labor agencies.Resource factors are all information on financial, labor and raw material markets that affect tangibles and intangibles, resources and services procured by the firm for carrying out its operations.Broad issues are all information on demographic, social, economic and political trends.Finally, other factors are all the information on factors not included in any of the earlier categories.
Notably, the cyclical link between performance outcomes and scanning activities has been, with some exceptions (for example, Milliken and Lant, 1991), ignored in the literature (Elenkov, 1997, p. 115).From this perspective, the idea for this study has been ignited as a result of Subramanian et al., (1993) recommendation of replicating his study by using bigger and different samples would help gain a better perspective on comprehensive environmental scanning practices and its link with company performance.Before that, Kim and Lim (1988) addressed and confirmed the same desire for enlarging the sample in another context for the sake of examining and enhancing the external validity.Consequently, the current research is an endeavor in this perspective in UAE context as Sawyerret et al., (2000) recommended replicating what they have found in the Nigerian market in another developing country in order to add external validity.In other words, the need for more sample size to reexamines and updating concepts that have been explored in previous researches was the igniting power behind pursuing the current study aims.
In the current study, a more comprehensive approach is deployed as it addresses most of the commonly agreed variables in environmental scanning's literature.More specifically, two subscales i.e. frequency of scanning, and interest in scanning are used to measure environmental scanning (Sawyerret et al., 2000;Ebrahimi, 2000;Elenkov, 1997;Boyd and Fulk, 1996;Sawyerr, 1993;Daft et al., 1988;and Farhet al., 1984).The fact of the matter, Hambrick (1981) promoted for three subscales to measure environmental scanning: frequency of scanning, interest in scanning, and number of hours spent scanning.However, Farhet al., (1984) have verified the reliability and validity of these subscales and found number of hours not reliable.Performance is measured by ROE rate and profit margin (PM) as used by Sawyerret et al., (2000).Environmental obstacles are measured by government bureaucracy, information in a different language, inadequate management education/training, uncertainty regarding government long-term policies, absence of data sources, and the quality of available information, as identified from corporate planning literature especially in developing countries (Elenkov, 1997;Mrema, 1987;Adegbite, 1986;Fubara, 1986;and O'Shaughnessy, 1985).Scanning sources are measured by trade journals, reports of trade and professional associations, customers, company-sponsored surveys, scientific journals, governmental publications (Subramanian et al., 1993), and newspaper (Jain, 1984).Finally, demographics are the firm size that measured by number of employees using Sawyerr's (1985) classification, which are: (a) small firms are those with 50 employees or less; (b) medium firms are those with 51-1000 employees; and big firms are those with 1001 and more.However, sales volume could be another viable alternative to measure firm size as suggested by Subramanian et al., (1993).Respondents' positions, ages, educational levels, and number of years in business i.e. experience are another demographic variables as suggested by Lotayif (2004), Lotayif and El-Ragal (2004), Lotayif (2003) and Hambrick and Mason, (1984).

Study Aims
The current study aims at achieving the following aims: (1) Exploring the causality relationship between the environmental scanning (i.e.demographics, interest in scanning, scanning frequency,kinds of scanning, sources of scanning (impersonal), sources of scanning (personal), and obstacles of scanning) and performance as measured by ROE and PM.Therefore, the following seven sub-aims could be driven from this broad aim: A. Exploring the relationship between demographics and performance (measured by ROE and PM).G. Exploring the relationship between obstacles of scanning, and performance (measured by ROE and PM).
(2) Shedding light on the adopted environmental scanning in UAE.

StudyHypotheses
The above mentioned aimswill be achieved via the following hypotheses.

The Study Findings
In this part of the study, sample normality, regressors multi-collinearity, scale validity, instrument reliability, hypotheses testing, conclusion and recommendations will be discussed.

Hypotheses Testing
As indicated in


The process of data entry did not affected by the process of entry order, as Durbin-Watson test reported values > 1.4 for all dependent variables, as shown in Table (8).


The explanation powers of these models are weak, as "R square" and "adjusted R" values indicate.More specifically, these four IVs {i.e. interest in scanning, scanning frequency, sources of scanning (impersonal), and obstacles of scanning} are responsible only for 0.141, 0.049, 0.142, and 0.050respectively of the behavior of DV (performance as measured by ROE).However, if the adjusted R square has been taken into consideration, the magnitude of IVs shrink tosmall proportions, as shown in Table 8.Notes:- (***) There is a significant relationship between at least one of the independent variables and model dependent variable as p < 0.05.
 R Square = indicates the effect the independent variables have on the dependent one in the sample.
 Adjusted R Square = reflects the model goodness of fit for the population.
 Durbin-Watson is a test to indicate the effect of data entry order in the analysis, therefore if it is > 1.4 it means the order has no effect on the analysis and if it is less it means the order has affected the analysis (Stat graphics 2000).
Statistically, if the MR model is significant it does not mean that all the IVs within the regression equation have significant relationships with the dependent variable, but it does, explicitly, mean that only (at least) one significant relationship exist (Ashour, 1993).Therefore it is necessary to determine the effect that each IV has in the MR equation.More specifically, competition (X3) and economical scanning (X6) are the only two independent variables (within the construct of scanning interest from X2 to X8) that have significant relationships with performance as measured by ROE, as p = 0.002, and 0.009.Governmental reports (X32) is the only independent variable (within the construct of impersonal sources of scanning from X28 to X38) that has significant relationship with performance as measured by ROE, as p = 0.020.Finally, uncertainty regarding government long-term policies(X61) is the only independent variable (within obstacles of scanning from X58 to X64) that has significant relationship with performance as measured by ROE, as p = 0.018, as shown in Table 9. Notes: - Interest in Scanning from X2 = customer scanning, (X3) = competition scanning, (X4) = sources of resources scanning, (X5) =political and legal scanning, (X6) = economical scanning, (X7) = technological scanning , and (X8) = socio-cultural scanning.
Where: -= y The dependent variable (performance as measured by ROE); ∝= The value of y if all X's (from x , or the response.The β represent the regression coefficient associated with each i X ; i X = The independent variables (e.g. 4 constructs); and ∈= Model' error, ∈is assumed to be zero.


The process of data entry did not affected by the process of entry order, as Durbin-Watson test reported values > 1.4 for all dependent variables, as shown in Table (10).


The explanation powers of these models are weak, as "R square" and "adjusted R" values indicate.More specifically, these four IVs {i.e. interest in scanning, scanning frequency, sources of scanning (impersonal), and sources of scanning (personal)} are responsible only for 0.117, 0.079, 0.166, and 0.156respectively, of the behavior of the DV (performance as measured by PM.However, if the adjusted R square has been taken into consideration, the magnitude of IVs shrink tosmall proportions, as shown in Table (10  Primitive scanning is the kind of scanning that accept all antecedences and consequences imposed by the external environment as an inevitable and dealing with these information by unsystematic, and unintentionally way (Jain (1984). Hoc scanning is the kind of scanning that enables from watching a few areas that need to be watched carefully.


Reactive scanning is the kind of scanning that follows the footsteps of the leader in the market by an unplanned, and unstructured way. Proactive scanning is a panned and structured process aims at intentionally monitoring specific areas considered crucial for reaping competitive advantages.The objective of the proactive scanning system is to predict the environment for a desired future (Subramanian et al., 1993).

Conclusion and Recommendations
In the current research, evidences from a booming middle east economy (UAE)have proved the tie amongst performance (as measured by ROE and PM) and interest in scanning, scanning frequency, sources of scanning (impersonal and personal), and obstacles of scanning.However, the explanation powers of multiple regression models are weak, other regressors rather than those used in the current study are recommended to be added.Consequently, other scholars are invited to explore other variables.Moreover, UAE businesses are conducting regular, proactive, and hoc scanning more often than irregular, reactive, and primitive scanning.
As the current study adopted ROE and PM as performance measuring tools, other scholars are invited for testing some other tools in a middle east context.Number of added or deleted products and services in the period followed the scanning process was used by Elenkov (1997) to measure the performance.It is worth copying that approach in a middle east context.Also, some other scholars (i.e.Subramanian et al., 1993) used the profitability (measured by ROA) and growth in sales.
B. Exploring the relationship between interest in scanning and performance (measured by ROE and PM).C. Exploring the relationship between frequency of scanning and performance (measured by ROE and PM).D. Exploring the relationship between kinds of scanning and performance (measured by ROE and PM).E.Exploring the relationship between sources of impersonal scanning, and performance (measured by ROE and PM).

F
. Exploring the relationship between sources of personal scanning, and performance (measured by ROE and PM).

β
The general liner model slopes of i ).
A 7 ) are designed for the first research's aim.For the second research's aim, hypotheses (H 8 ), (H 9 ), and (H 9 ) Firstly; for research philosophy, qualitativeapproach through using a structured questionnaire was deployed.Secondly, a convenience sample of 350 executives in UAEhas been use in the current research.Thirdly, a seven parts structured questionnaire with seven-point Likert scale was deployed, as shown in Appendix (A).These seven parts are demographics (e.g.age, education, executive experience, business experience, and number of employees), interest in scanning (from X2 to X8), frequency of scanning (from X10 to X16), performance measures (X18, and X19), kinds of scanning (from X21 to X26), sources of scanning (from X28 to X38 for impersonal sources and from X41 to X56 for personal sources), and obstacles of scanning (from X58 to X64).The questionnaire and the covering letter were sent to every executive.The response rate was 83.4 percent, as the completed and returned questionnaires were292 out of 350 questionnaires.Finally, SPSS release seventeen was used as data analysis software.Multiple regression, Wilcoxon Signed Ranks Test (WSRT), and descriptive techniques were deployed.
Hypotheses from (H 1 , H A H H 1 : "There is a significant relationship between demographics (e.g.age, education level, executive experience, business experience, and number of employees) and company's performance as measured by return on equity" H A 1 : "There is a significant relationship between demographics (e.g.age, education level, executive experience, business experience, and number of employees) and company's performance as measured by profit margin" H 2 :"There is a significant relationship between interest in scanning and company's performance as measured by return on equity" H A 2 :"There is a significant relationship between interest in scanning and company's performance as measured by profit margin" H 3 :"There is a significant relationship between scanning frequency and company's performance as measured by return on equity" H A 3 :"There is a significant relationship between scanning frequency and company's performance as measured by profit margin" H 4 :"There is a significant relationship between kinds of scanning and company's performance as measured by return on equity" H A 4 :"There is a significant relationship between kinds of scanning and company's performance as measured by profit margin" H 5 :"There is a significant relationship between impersonal source of scanning and company's performance as measured by return on equity" H A 5 :"There is a significant relationship between impersonal source of scanning and company's performance as measured by profit margin" H 6 :"There is a significant relationship between personal sources of scanning and company's performance as measured by return on equity" H A 6 :"There is a significant relationship between personal sources of scanning and company's performance as measured by profit margin" H 7 :"There is a significant relationship between obstacles of scanning and company's performance as measured by return on equity" H A 7 :"There is a significant relationship between obstacles of scanning and company's performance as measured by profit margin" H 8 : "UAE businesses conducting regular more frequently than irregular scanning".

Table 1 .
Reliability of Instrument and Concepts

Table 3 .
Multi-collinearity of Regressors( Interest in Scanning) Note: -Interest in Scanning from X2 to X8, as shown in Appendix (A).

Table 4 .
Multi-collinearity of Regressors (Frequency of Scanning) Note: -Frequency of Scanning from X10 to X16, as shown in Appendix (A).

Table 6 .
Multi-collinearity of Regressors( Personal Sources) Note: -Personal Sources from X41 to X56, as shown in Appendix (A).

Table 7 .
Multi-collinearity of Regressors (Obstacles of Scanning) Table8and based on Multiple Regression (MR) results, there are significant relationships Interest of scanning, its frequency, the impersonal sources of scanning, and obstacles of scanning affect the performance of profit oriented businesses.
3 , H 5 , and H 7 are supported.However, no relationships are existed between performance as measured by ROE and demographics, kinds of scanning, and sources of scanning (personal) as p = 0.103, 0.244, and0.354>0.05 respectively.Therefore, the alternative hypotheses H 1 , H 4 , and H 6 are not supported.The most remarkable things are: 

Table 8 .
Multiple Regressions between Scanning Concepts and Performance {Measured by ROE)}

Table 9 .
The Weight of Each Regressor on the Dependent Variable (Performance as measured by ROE) Table (8) and based on Multiple Regression (MR) results, there are significant relationships between performance as measured by profit margin (PM) and interest in scanning, scanning frequency, sources

Table 10 .
Multiple Regressions between Scanning Concepts and Performance (Measured by PM) members of rivals (X33) are the only three IVs within the construct of impersonal sources of scanning from X28 to X38) that have significant relationships with performance as measured by PM, as p = 0.000, 0.026 and 0.008, as shown in Table(11).Competition scanning (X3),and socio-cultural scanning (X8) are the only two IVs (within

Table 12 .
Wilcoxon Signed Ranks Test (WSRT) Mean …meansadding up all the values and divide by the number of values;  Sum is the total score of that variable within the sample.

Table 13 .
Kinds of scanning percentages