Taking a Look at the Contingency Theory

The relationship between an organization’s strategy and structure are extremely important because it “directly impacts a firm’s performance” (Rothaermel, 2013, p. 309). Also, as an organization grows, it should reevaluate the current strategy and structure to ensure that it remains the optimal choice for the organization (Rothaermel, 2013). The four types of organizational structures, listed in order of least to most complex according to Rothaermel (2013), are: (1) simple, (2)

The contingency approach, founded in the 1970’s differs from the behavioral approach. “Examining various situational variables is central to understanding leadership in organizations, according to the contingency theorist” (Stojkovic, Klofas & Kalinich, 2012). Fiedler’s Contingency Model is one of those contingency theories.

Why is it important for an organization to have alignment between its strategy and structure?

It is depicted that modern organizations tend to incorporate the aspects of the open systems with those of the natural and rational perspectives. Examples include the institutional, transaction cost, and the contingency and the contingency theories. Organizations adopt the open system that accommodates the other two theoretical perspectives for it to exist (Davis & Scott, 2006). These organizations tend to have structures that are based on the processes, the products, and the function.

Effective contingencies that function as punishers have some basic principles that distinguish them from other ineffective contingencies. Punishment is a response or a contingency that suppresses the future occurrence of a similar response. It is a consequence that causes pain or discomfort and teaches an individual not to repeat what caused the punishment. In the third section of Punishment on trial, Ennio Cipani summarizes six basic principles of effective punishment. These principles are:

In the seventh chapter, the book makes its point through coevolution. Coevolution focuses on interdependent adaptation, the race to adapt to new conditions, and the importance of initial advantage and conditions (Johnson & Russo, 1997). By taking the game theory and the behavioral theory, coevolution bridges the gap and makes the connection between the two theories. Over the course of the first and second section, the book has been building to provide the tool to help managers make better decisions regarding their competitors, the markets in which they compete and outside forces

Next, in contingency theory differentiation and integration is discussed as organizations differ in how they respond to changes in the environment. Because of the market conditions in 2009, The National Police Force creates a new department called Task Force East. They do this by differentiating tasks to create a new structure and procedure and by doing so the National Police Force responds to the changing environment. What they do is to take employees from different departments and integrate them into this new department. However, contingency theory does not focus on intrinsic factors as it believes that the organization success is determined by how well it adjusts to the environment.

According to Miles et al. (1978, p. 547), an organization is both its purpose and the mechanism constructed to achieve the purpose. It means that the concept of organization is embracing both goals and all the elements that represent unique combination. Miles et al. (1978, p. 553) draws the conclusion that structure and the processes taking place inside the organization are closely aligned; it is hard to speak about one without mentioning the other. It is important to understand the conclusion drawn by Miles et al. (1978). It illustrates how the

Conflict theory is the theory that human behavior in social contexts is the result of conflicts between competing groups, as different social groups, be they class-, gender- or race-defined, have unequal power and access to power, yet all groups compete for limited resources. This inevitably gives rise to tension and conflict, albeit often of the subtle variety, as oftentimes the conflicts between groups have been institutionalized in society to such a degree that the conflicts and tensions are such an expected part of society that the conflict, and inequality, itself disappears from public sight, and consciousness. For example, an adherent of a world systems theory of conflict would point to the global competition for resources, particularly the inequality between rich and poor nations struggling to provide the basic necessities of life to their inhabitants, as evidence of global conflict. Conflict theories seek to explain the interactions of groups within society, and assert that social order is preserved involuntarily through the exercise of power one social class holds over another (Lindsey, 2010, 7). The conflict between groups is not always obvious or apparent, so it must be unraveled and examined in order to identify and establish the impact of such conflict on society as a whole, as well as individual members and social groupings.

Before this analysis will begin, it is vital to stress that this model is well-known as an effective instrument. An advantage of this model is that it captures the immediate environment in which the company competes. It allows to clearly understand the forces which

First, the contingency paradigm, a closed system, considers uncertainty and how changes in the environment affect the internal aspect of the firm (Tolbert & Hall, 2009, p. 162). The elements can include items such as size and technology, as it relates to customer demand to name a few. Another example might be that a small firm would function better in a centralized fashion verses a large firm that would benefit more from a decentralized method, whereas, fast paced environments may require high technology and slow paced industries do not. The point here is that there is not one best practice for leading or structuring a firm, hence, the company should fit within the environment depending on internal and external factors (Long, 2014). It is important to note, hhowever, coordination can become problematic in this theory. For illustration, let’s say some environmental factor cause a company to change structure from a simple structure to a more complex one. Problems with coordination in the separate departments could present itself as communication and interaction is vastly different. The key here is for the firm to adapt to the environment, as well as, integrate the activity to make a seamless whole and reduce uncertainty. In fact, the best way to organize should be contingent upon

instance, product differentiation can create a protected domain for a focal organization with boundaries hard to penetrate by other competitors. However, in complex business environments interdependencies often are obscured from focal organizations so that individually coping with the dynamics of these environments becomes problematic (Emery and Trist, 1965). In these situations, collective strategies can supplement competitive strategies as a means of coping with the variation of interdependent environments (Astley and Fombrun, 1983a).

After reading the case of the “Paradoxical Twins Acme and Omega Electronics”, I found Both Acme and Omega produce similar products and offer similar services. Acme president John Tyler is a very tough going individual and he is portrayed to be an autocratic individual because there is one way communication in Acme. The case provides an opportunity to evaluate both Acme and Omega’s organization structure of a business. Both companies used to have the same organizational structure but after they were sold to different investors, as a consequence of this, each company has its own procedures and company

Thus, strategy changes are inevitable in all organizations leading to structure and designing changes. Along with the changing policies the theories of organizational behaviour keep evolving. Hence we have traditional classical theories on one hand while modern contingency approaches on other hand. In this essay, I will explore and discuss classical and contingency theories along with their contributions and limitations with the help of contemporary organizational practices of businesses like McDonalds and Walgreen. The conclusion will be the result of evaluation of various theories and thus answering the question which is the best structure and designing approach for an organization?

Hostility is influenced by competition, by the organization's relationships with unions, government, and other outside groups as well as by the availability of resources to it. The contingency theory figured out a set of responses to the four dimensions mostly about structure and later about strategy.