Contingency theory

Contingency Theory

Contingency theory

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Contingency theory is a class of behavioral theory that claims that there is no best way to organize a corporation, to lead a company, or to make decisions. Instead, the optimal course of action is contingent (dependent) upon the internal and external situation. Several contingency approaches were developed concurrently in the late 1960s.

They suggested that previous theories such as Weber's bureaucracy and Taylor's scientific management had failed because they neglected that management style and organizational structure were influenced by various aspects of the environment: the contingency factors. There could not be "one best way" for leadership or organization.

Historically, contingency theory has sought to formulate broad generalizations about the formal structures that are typically associated with or best fit the use of different technologies. The perspective originated with the work of Joan Woodward (1958), who argued that technologies directly determine differences in such organizational attributes as span of control, centralization of authority, and the formalization of rules and procedures.

Gareth Morgan in his book Images of Organization describes the main ideas underlying contingency in a nutshell:
  • Organizations are open systems that need careful management to satisfy and balance internal needs and to adapt to environmental circumstances
  • There is no one best way of organizing. The appropriate form depends on the kind of task or environment one is......
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