Environmental change affects the structure of an organization by influencing the predictability of the firm's work and, therefore, the method of coordination used to integrate work activities. Stable environments allow for mechanistic structures, while dynamic environments require organic structuring. The degree to which an organization's environment is complicated and difficult to understand. Simple environment - relatively few parts, not much that can affect organizational performance. Complexity influences structural effectiveness by affecting the amount of knowledge and information people must process to understand the environment and cope with its demands.
Complexity influences the suitability of centralization as an internist coordination mechanism.
Simple environments are conducive to centralization while complex environments are better handled through decentralization. In a complex environment, there is simply too much information for a few people to process. Environmental Uncertainty - A combination of Change and Complexity Reflects the absence of information about environmental factors, activities, and events. It undermines an organization's ability to manage current circumstances and plan for the future. To cope with uncertainty, organizations try to find better ways of acquiring information about the environment Environmental Receptivity.