Development in
Organization Theory
(continued)
The Contingency Theory
Approach
Learning Objectives
1. Discuss the reasons for the
emergence and popularity of
Contingency Theory
2. Identify the key features and
proponents of Contingency Theory
3. Appreciate how Contingency
Theory seeks o incorporate both
Classical and Human approach
4. Implications fro organizational
change of Contingency Theory
Contingency Theory
Approach
This theory emerged in the
1960s.
Base on the premise that
organization are open systems
whose internal operation and
effectiveness is dependent upon
particular situation.
This is consistent with evidence
that not all organizations have
the same structure even within
organizations itself.
There are 3 most important
contingencies :
1. Environmental uncertainty and
dependence
2. Technology
3. Size
The main figures in developing and
establishing this theory was
academics in Britain and USA.
The Importance of
Environment
Figures : Tom Burns and George Stalker
They identify 5 different types of environment
based upon the level of uncertainty , ranging
from stable to least predictable
They also identify 2 ideal forms of structure:
1. Mechanistic structure, with characteristic:
• the specialization of tasks
• closely defined duties, responsibilities and
technical method
• a clear hierarchical structure
2. The Organic form, is characterized :
• Much greater flexibility
• Adjustment and continual redefinition of
tasks
• A network structure of control, authority
& communication
• Lateral consultation based on
information and advice
• Commitment to the work group and its
tasks
• Important and prestige being
determined by an individual’s
contribution to the tasks
Features : Paul Lawrence & Jay
Lorsch
Their work were interested in how
individual departments within
companies responded to, and
organized themselves, and aspects
of external environment.
The structure of firms was analyzed in
terms :
1. Degree of Differentiation;
2. Degree of Integration;
Environmental Uncertainty
and Dependence
Features : James Thompson
His influential work took environmental
perspective toward 3 ways :
1. Although organizational are not
rational entities, they strive to be so
2. Different levels of an organizational
need different structures and operate
on more or less rational basis
3. The organizational effectiveness is
also on degree of internal
dependence
He formulated a 3 types classification
in relation to internal dependence :
1. Pooled interdependence; for simple
organizations
2. Sequential interdependence
3. Reciprocal interdependence
Number 2 & 3 for more complex
organization and in most complex
organizations, all 3 forms may be
present.
The Case for Technology
Features : Joan Woodward
She demonstrated the need to take into
account technology variables in
designing organization, specially in
spans of control.
She identified 3 types of production
technology, ranging from least to
most complex :
1. Small batch (or unit) production
2. Large batch (or mass) production
3. Process production
Features : Charles Perrow
He continued Joan worked, by
drawing 2 major dimensions of
technology :
1. The extent to which the work
being carried out is variable or
predictable (variability)
2. The extent to which the
technology can be analyzed and
categorized (analyzed &
categorization)
The Case for Size
Features : The Aston Group
They found that size was the most
powerful predictor of
specialization,use of procedures
and reliance on paperwork.
The larger organization, the more
likely need a mechanistic
(bureaucratic) structure and the
smaller organization need organic
(flexible) structure.
Summary
1. Organizations are open systems
2. Performance depends on structure
3. The main situational variables are:
1. Environmental Uncertainty
2. Technology
3. Size
4. Change is a rational process of
collecting and evaluating
information