Open & Combined Systems

Question 1

Burns & Stalker 1961

Answer 1

Start the discussion of Open systems/contingency theory movement by saying that there is not one correct way to organize

• Introduce Mechanistic & Organic Structures (on a continuum)
• Mechanistic - (1) Hierarchal (2) differentiated functional areas with (3) distinct tasks and (4) set SOPs. Interactions characterized by (5) vertical communication, (6) strong governance, & (7) loyalty.
• Organic is just opposite (1) Flat structures, (2) looser tasks defined & (3) redefined by (4) the whole. Interactions are (5) lateral, governed by the org as (6) a whole.

Question 2

Lawrence & Lorch 1967

Answer 2

• coined the term contingency theory (1967)
• different environments place differing requirements on organizations and the best way to organize is “contingent” on the environment
  -Tenet: Organizations whose internal features are the best match for their environments will achieve the best adaptation
• Proposition: The structural features of the organization (differentiation&integration) and each subunit should fit with its environment.
  Complex Environment —> best for Differentiated Org, less complex is better for integrated org.

Question 3

Pugh 1973

Answer 3

CONTRIBUTION: Studied six organizations to test the does context matter question (contingency question).
FINDING: about 50% of the structure is related to context– i.e., CONTEXT MATTERS!
- Opposed Woodword, Technology doesn’t matter if you control for size.

Question 4

Donaldson 2001

Answer 4

Explains issues with Early contingency theory to introduce Neo-contigency theory
- Early contingency theory was a theory of equilibrium (Orgs move into FIT with their environment by changing its structure).. a process of regaining equilibrium.
- Early contingency theory never said why a firm would be stuck in misfit in the first place (Donaldson says because of a change its contingencies (internal or external)
2001 - NeoContingency Theory
- Orgs are constantly teetering back and forth across perfect fit in a state of quasi-fit. .
Performance Driven Change Model: Change in structure in orgs is predominantly in response to change in performance.
- borrows from portfolio theory & economics to develop neo-contingency theory.

Question 5

Contingency theory

Answer 5

Organizations are like organisms interacting with their environments.

How to build off contingency theory:

• Contingency theorists see organizations as complex social systems (like resource dependence and population ecology
• Orgs rely on the environment for resources (RBV).
• TCE is an open system (interactions via transactions).

Question 6

Thompson (1967)

Answer 6

Says it is possible that rational, natural, and open systems are all correct and and they can be reconciled within a single model and that all system might be applicable to a single organization.
The Levels Model
Open ——> Institutional level (part of org that determines domain, boundaries and secures legitimacy)
Natural —> Managerial level (system control level)
Rational —> Technical level (shop floors)