SATM 6.2.2.1 Introduction to Contingency Theory

By about 1970 the contingency approach to the study of organizations and their management had become the established paradigm in organization theory. 

Contingency theory, based upon the organismic analogy, views organizations as consisting of a series of interdependent subsystems, each of which has a function to perform within the context of the organization as a whole.

Contingency theorists are not in complete agreement as to which subsystems should be singled out as critical. For the purpose of this account, I will identify four subsystems of significance: the goal, human, technical, and managerial subsystems.

The goal subsystem is concerned with overall purpose and objectives.

The human subsystem embraces the people in the organization, their leadership, and their motivation.

The technical subsystem is involved with the transformation of the input into the organization (matter, energy, information) into useful output (products, services, energy, information). 

The managerial subsystem must co-ordinate the other subsystems and look to the organization's relationship with the environment.

Contingency theory additionally rests upon the open systems view that regards the organization as dependent upon the wider environment. The organization and environment are seen as being in a state of mutual influence and interdependence. The organization must be adapted in certain ways if it is to survive in its environment.

In Figure 6.1, showing the primary subsystems of the organization as an open system.

Figure 6.1 The Primary Subsystems of the Organization as an Open System

Contingency theory depends equally on the conclusions emerging from the results of various empirical investigations. There seem to be four of these.

First, there is no one best way to structure the activities of an organization in all circumstances.

Second, certain contextual factors determine the nature of the structure because of the constrains they impose.

Third, it follows that depending on circumstances (i.e. on the context), some form of organization structure is likely to be more effective than others.

Finally, empirical work can be conducted to establish what is the appropriate match between the organizational structure and the nature of the demands placed on it by humans, technology, environment and size.

The Key strategic contingencies and the effect these have upon each other and upon the most suitable organizational structure.

(Jackson, Michael. (2000). Systems Approaches to Management. Kluwer Academic / Plenum Publishers. NY. P109~111)