What Are the Different Types of Business Environments?

By Indeed Editorial Team

Published May 21, 2022

The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.

If you're planning to establish a more positive workplace culture, you may want to know more about business environments. Various external and internal sources influence work environments. By knowing more about these environments, you can improve employee retention and overall well-being. In this article, we define business environments, discuss the benefits of positive environments, explore the different environment types, and review various ways to improve organizational culture.

What are business environments?

Business environments are dynamic conditions in a workplace that typically result from company policies, structures, and professional relationships within the organization. A business environment usually influences the overall well-being of team members. It also contributes to the ability of team members to accomplish their goals. Both supervisors and team members in organizations generally impact the culture and environment of an organization. This is because most employees contribute to the relationship dynamics and activities within the organization.

Benefits of positive work environments

Here are some benefits of a positive work environment:

Greater retention

Having a positive work environment usually reduces employee turnover in organizations because team members are more motivated to work and remain at the company. You can typically increase loyalty among employees by increasing their happiness and job satisfaction. A positive work environment may also motivate employees to work on tasks and responsibilities more effectively.

Increased success

Those working in positive environments often experience success because they are more likely to have a positive attitude in their role and feel motivated to accomplish tasks. They're also more likely to experience an increase in self-confidence when their supervisors and colleagues listen to their opinion. In this type of work environment, employees may find it easier to share their ideas with the group, including discussing potential solutions to challenges and proposing new ideas for projects. With greater access to multiple viewpoints and ideas, companies may become more successful.

Lower stress levels

A positive work environment often increases well-being and reduces stress among employees. Since these environments typically have more flexibility, employees know they can discuss potential challenges and obstacles with their supervisors. Reducing stress also increases productivity because employees feel less distracted and can focus on their workload.

Increased risk-taking

Positive work environments may increase risk-taking because team members feel comfortable sharing their ideas and making suggestions. This influences the well-being of employees, along with the success of businesses, because team members contribute new ideas that can increase profits and improve products. Taking risks also helps businesses develop services in new markets and develop an in-depth analysis of products to advance their growth.

Types of work environments

Here's a list of different types of work environments you can consider:


Economic environments include the gross domestic product (GDP) and income rates. These environments also include local employment rates and government policies. The economic work environment refers to the economy within which a business or organization operates. These environments consider the business's competition and experience growth and decline phases. An economic work environment experiences influence from governments and obstacles within industries.

The public sector experiences significant government influence, while the private sector typically experiences influence from firms and investors. When there are fluctuations in global currency, this impacts national economies and the industries and specific work environments within it. This is because funding, sales, and investments result from strong economies, while weaker economies affect the amount of funds companies invest into their teams.

Related: What Is a Company Culture? (With a List of Different Types)

Social and cultural

Social and cultural environments consist of the customs and traditions of the society in which a business operates. Cultural norms include traditions of living, education level, and common behaviours. This is important when working for companies that exist internationally because they typically navigate the cultures of employees in different countries. It's beneficial for employees and supervisors alike to have a general understanding of the cultures present within an organization. Different cultures may affect products and services because companies typically receive more diverse feedback and ideas from teams when they include people from various cultures and backgrounds.

Having a diverse work environment helps companies customize their services and products to recognize the social and cultural traditions within a country. For example, some companies filter which kinds of meat to provide their customers, depending on the customs of the country in which they operate. When companies consider and accommodate the culture and social roles of team members, it improves their overall well-being.

Related: What Is Equity in a Company? (With Definition and Types)

Political and legal

Businesses experience varying political and legal environments depending on their industry and the relationship between their governments and the business. This impacts the employees and teams within a company because governments that release more flexible policies or increased funding can affect how much money companies invest into their teams. Laws and legislation also impact the production of services and products, along with the procedures in which companies develop those products.


Technological business environments refer to how companies interact with technology and consider innovation in industry-specific technologies. For example, when companies integrate new technology into their processes, it can positively affect production and the overall work environment. This usually improves the efficiency of their teams, as they can spend less time on their tasks and accomplish more complex responsibilities, giving them an advantage over the competition. For example, companies that require strong sales strategies may implement new technologies that reduce the time for point-of-sale transactions.


The demographic environment refers to the growth of populations and the life expectancy of individuals within particular locations or locations where companies operate. Whether team members live and work in rural or urban settings typically impacts their overall education, skills, and ability to work in the long term. When companies recruit team members from external sources, the demographic environment helps to determine their success in the job. Companies also adapt their expectations and goals depending on the requirements of particular workforces.

For example, some companies implement child care programs when they have many employees with children. This helps accommodate employees with children and prevents them from choosing between their work and their families. These programs can also reduce stress among parents who want to work close to their children. The growth rate and age of populations can equally impact companies because these factors contribute to the demand for products and services.

Related: The Advantages of External Recruitment to a Company

Natural environment

The natural environment of a company refers to the external environment affecting it. These environments consider the availability of resources and whether a company's natural environment remains unharmed by the company. Natural environments include resources like oil reserves, mineral reserves, water, and forests. For example, areas with high mineral content may attract production and manufacturing companies. These environments are important because they affect where teams work and whether they feel comfortable with their surrounding environment.

How to improve organizational culture

Here's a list of ways to improve organizational culture:

1. Improve professional relationships

Improving professional relationships and promoting friendships at work helps to ensure that teams enjoy working with their colleagues. This improves workplace culture because teams are more likely to help each other with tasks and be respectful. Employees who feel heard may also contribute more to their teams and share their viewpoints, which helps the team overcome obstacles.

2. Use employee recognition

Companies that use employee recognition can improve organizational culture by helping to ensure team members feel appreciated. They can do this by implementing specific days throughout the year for employee recognition. Some companies also implement rewards systems for teams that show increased productivity.

3. Encourage autonomy

It's beneficial to consider the autonomy of team members when trying to improve employee well-being and subsequent organizational culture. When employees feel free to make their own decisions and work on their tasks without strict supervision, they may experience increased well-being. To discover which leadership styles teams prefer, supervisors can discuss different leadership methods and request feedback on preferences.

4. Conduct research

It's often useful to research new technologies and current industry standards. This helps to identify new ways for companies to work more productively and new technologies to make employees' lives easier. This approach can improve overall culture and well-being because team members know that their supervisors and members of upper management care about the complexity and difficulty of workloads.

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