Development in Organization Theory (continued)

1
Development in Organization Theory (continued)

• The Contingency Theory
• Approach

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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

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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.

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• There are 3 most important contingencies
• Environmental uncertainty and dependence
• Technology
• Size
• The main figures in developing and establishing
  this theory was academics in Britain and USA.

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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
• Mechanistic structure, with characteristic
• the specialization of tasks
• closely defined duties, responsibilities and
  technical method
• a clear hierarchical structure

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• 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
  individuals contribution to the tasks

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• 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
• Degree of Differentiation
• Degree of Integration

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Environmental Uncertainty and Dependence

• Features James Thompson
• His influential work took environmental
  perspective toward 3 ways
• Although organizational are not rational
  entities, they strive to be so
• Different levels of an organizational need
  different structures and operate on more or less
  rational basis
• The organizational effectiveness is also on
  degree of internal dependence

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• He formulated a 3 types classification in
  relation to internal dependence
• Pooled interdependence for simple organizations
• Sequential interdependence
• Reciprocal interdependence
• Number 2 3 for more complex organization and in
  most complex organizations, all 3 forms may be
  present.

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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
• Small batch (or unit) production
• Large batch (or mass) production
• Process production

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• Features Charles Perrow
• He continued Joan worked, by drawing 2 major
  dimensions of technology
• The extent to which the work being carried out is
  variable or predictable (variability)
• The extent to which the technology can be
  analyzed and categorized (analyzed
  categorization)

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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.

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Summary

1. Organizations are open systems
2. Performance depends on structure
3. The main situational variables are
4. Environmental Uncertainty
5. Technology
6. Size
7. Change is a rational process of collecting and
   evaluating information