Development in Organization Theory (continued)

1. Development in Organization Theory (continued) The Contingency Theory Approach

2. Learning Objectives • Discuss the reasons for the emergence and popularity of Contingency Theory • Identify the key features and proponents of Contingency Theory • Appreciate how Contingency Theory seeks o incorporate both Classical and Human approach • Implications fro organizational change of Contingency Theory

3. 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.

4. 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.

5. 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

6. 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

7. 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;

8. 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

9. 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.

10. 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

11. 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)

12. 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.

13. Summary • Organizations are open systems • Performance depends on structure • The main situational variables are: • Environmental Uncertainty • Technology • Size • Change is a rational process of collecting and evaluating information