contingency theory

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Suggests that the effectiveness of an organization is dependent upon managers taking into account various factors that can impact in a negative or positive manner on the organization—the main contingent factors being environment, technology, size, product diversity, and people employed. In fact, it is misleading to use the term contingency theory, since there are a number of contingency approaches, all of which differ in terms of the particular contingency they stress as being most influential. There is a further complication with the contingency approach. Some commentators tend to imply that the organization should adapt to its particular circumstances, others suggest that the organization, through its actions, can influence or change its circumstances. Whilst the contingency approach rejects the idea that there is one best way of managing/organizing, it tends to suggest there is one most appropriate way for each particular set of circumstances (contingencies). This leads critics to argue that the contingency approach fails to explain how and why different organizations can achieve success even when they respond to the contingent factors in different ways.

Subjects: Business and Management.

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