During 1950 and 1960, some small group decision making developed the thought of contingency theory. At the end of 1950s, academics schools began to make use of the contingency idea into company theory(Donaldson 1996). The word "contingency theory was made, it challenged the traditional management idea: finding the one best way to arrange(Hatch & Cunliffe 2006). Together with special and united idea of subsystems, the contingency theory drew theorists' attention and acquire acceptance. Then increasingly more researchers had taken part in learning this effective problem solving methodology.
This article will first elaborate some general idea of contingency theory's theoretical propositions, the definition of contingency theory and the core theoretical idea. Second, Alfred Chandler, A long way and Snow's researches on 'strategy', one of the main organizational contingencies, influences organizational structure. Finally, another important adjustable, technology will be talked based on Woodward, Perrow, Thompson and Robbins four remarkable analysts' work. Some type of technology types will be illustrated with each review and then Robbins divided them into two categories. His bottom line of technology- framework on complexity, formalisation and centralisation will be mentioned as well. On the last part, you have the analysis of contingency theory when applying to organization research.
Organic form and environment are imperative factors supporting the business evolves (Clegg & Hardy 1999). This is the root of contingency theory. Plenty of problem surfaced when scientist and researchers tried to design a universal form for professionals to administrate the business. Because of different inner condition and exterior environment, one procedure is working upon one system does not indicate it can have impact in another system(Daft 2001). Hence, contingency theory appears with the core idea "there is certainly no one easiest way " (Daft 2001: 218, Linstead, Fulop & Lilley 2009:24, Morgan 2006:422). Each corporation constitutes the organizational designs based on its own environment. Efficiency may be accomplished when an organization change well to the subsystems and environment. That is the more business constructs structure properly and meet throughout needs, the greater organization's people feel satisfied. As concluded by Donaldson(1985) the most experienced and efficient methods to figure and administrate a business is in accordance with the organizational feature and out area circumstances. To apply contingency theory aims at distinguishing as much relative internal and external variables as you can (Linstead, Fulop & Lilley 2009). In 1967, Paul Lawrence and Jay Lorsch from Harvard College or university led a report and obtained two main perspectives: 1. Differing types of organizations have to take order with diverse market condition and technical issue. 2. Precarious scenario cause organizations carry on a higher magnitude of interior differentiation then those that are in the less complicate and even more steady environment. The final outcome improved contingency way that, organizational styles may alter among organizational subunits because of their subenvironment's specific factors (Morgan 2006). Contingency theory focused on the nature of the objective, the framework of the system, the individual factors and technology, it was argued that the framework of an organization would be swayed by certain parameters (Linstead, Fulop & Lilley 2009). The factors that can lead group achieve effective performance are called contingencies, contingencies conclude size, strategy, technology and environment, organizations are condition by these contingencies (Donaldson 2001).
In this content we just analysis two of them. Strategy and technology. One show the annals when contingency theory was established, another become one of the important variable with the development of technology.
Strategy can be defined as the long term goods and missions of any company with a set of action applied to accomplish the target and missions(Zwerman 1970). Strategy have two related levels: corporate level and business level. In corporate and business level, strategy make an effort to arrange the assignments for every part of business in firm. It expects to look for the mother nature of business for organizations. Running a business level, multi business organizations would run its own strategy, products for every business brand. Strategy was regarded as the exclusive factor impacts organizational structure 40 years back. After that, other factors' impact in the business were specified, however the substructural affects of strategy continues to be maintained.
Since Afred Chandler, Raymond Mls and Charles Snow, Michael Portor and a great many other professors made a great contribution to strategy- composition marriage. Here we use Chandler, Miles and Snow's research result to have an over-all concept about how exactly strategy determine the organizational composition.
The preliminary most influential research was pursued bu alfred Chandler. From 1900 to1950, Chandler preferred 100 American mass production companies to do large quantity of case studies. From Chandler's observation, at the start of procedure, companies often have one single product, decisions are centralized in the mature manager, the structures are have a tendency to be low complexity and formalization. When companies develop to multiproduct, the composition is divisionalized. As they are looking for growth, the strategy can be ambitious and intricate the complexity increased. The future stage is product diversification. In such a stage, framework form enable the resources are allocated efficiently and support unit shared cooperate performance. So Chandler argued that organizational strategy would be proposed before structure established and ir could lead the variant of the organization's structure(Robbins & Barnwell 2006).
Raymond Mls and Charles Snow(1978) confirmed four organizational tactical types based on the change rate of products and markets. They are called "defenders, prospectors, analysers and reactors". Owning to the wild but specific idea of the types, we can distinguish all the organizations.
The first one is defenders, reading from the name we can get the info from this type is the business is highly ambitious. Indeed, this type of organizations keep themselves in stable environment by producing a small scale of products, thus they can only just meet a restricted extend of demand and market. They provide competitive prices or high quality products to avoid challengers. Defenders may pay little attention to the external situation, such as hobbies inclination or new area opportunities. But they work on their own product development and optimum producing issues. This plan cause organizational framework have a tendency to be high amount of formalization and centralization, wide scale labour distribution, strick control to accomplish efficiency.
The second type is prospectors. The key point of the strategy is innovation and look at. It emphasizes on new opportunities. They would apply a large scale inspection, do throughout studies, receive the superior product idea and produce the merchandise. Prospectors are not afraid of doubt. They can meet up with the needs of progressing world and settle themselves in strong environment. In another words, prospectors will eventually lose their advantages when tomorrow's world is similar with today's.
The third you are analysers. This proper type can only just show up after prospectors because they are duplicating the successful products from prospectors. They use their ideas, experience to be able to eliminate hazards and obtain profit maximization. Steady is waht they want, nevertheless they can also perform well in flexibility, for example, analysers can have high amount of standardisation and routinization in manufacturing and distribution department meanwhile these are always prepared to develop new products lines, so marketing and Research&Development team are response to aid this overall flexibility. Hence the composition of this type is average centralisation.
The last one is reactors. This type details the organizations fail to respond the market properly and perform very hesitant (Robbins & Barnwell 2006).
The term technology has a development record from mot important to be one of the organizational framework determinants. Fifty years ago in organizational theory, technology was used meticulously however now it becomes a standard word to work with. However, it is very difficult to determine technology based on it effect to the organizational composition. Researchers can only just get the overall agreement on determining technology via performing a widely appropriate method of all organizations. Here, technology means the techniques facilities and information which organization applied to convert inputs into outputs. This definition includes the mechanic producing part and private information contribution to complete an activity. Thus na matter what kind of firm it is, it'll utilize technology in a few extent to create outputs.
Due to analysts can not develop an accurate, universal method of measure technology, the next phase how to estimate become another difficult problem. Identical to "strategy", there are numerous analysts applied different methods to compare. Here we can just analysis three of those significant researches.
Firstly, Joan Woodward's research. She was the pioneer to check out organization framework in the technical way. It was in the middle 1960s, Woodward's research objects were manufacturing factories. Hence her effect can only just analysis processing industry. Her gaol was to determine the bond between organization composition to effectiveness. There have been 100 producing companies taking place in, their variety of employees are from less than 250 to extend 1000. Based on the effect, woodward divided the firms into three types: unit, mass and process creation.
Unit creation were low technology complexity, process creation were high technology complexity. But technically, they both acquired low overall complexity, formalization and centralisation but advanced of skilled employee's proportion. On the contrary, mass production experienced the median technology complexity. It occupied high overall complexity, formalization and centralization but low percentage of trained employees. Woodward also illustrated other numbers from the analysis, there will be a great deal to discuss. Therefore the conclusion to the partnership between organization composition and success was : companies have the most congruent technology to the framework, they can acquire the most efficiency.
The second is Perrow's study. Instead of Woodward doing lots of data analysis. Perrow put forward his predictions. Four types of technology were brought up: routine, anatomist, build and non-routine. There have been depending on Perrow's two knowledge technology dimensions: task variability and problem analyzability. From Perrow's view the amount of technical routine would impact the degree of organization structural intensive. That's, the higher amount of boring technology applied, the higher degree of firm structured, so flexibility structure would be performed in non-routine technologes. This content of specific prediction was: on boring technology high formalisation, centralisation and wide extend of control. On executive the would be low formalisation, high centralisation and would be low formalisation high centralization and average control. For art, moderate formalisation, low centralisation and moderate large extend of control. For non-routine, low formalisation and centralization, modest slim control.
James Thompson's work emphasized technology determined strategy. reference point He feels that technology designs strategy which applies to decrease doubt. Three categories were suggested according to process differentiation: long- linked, mediating and intensive technology.
The feature of long-link technology is the consistant, . mutual interdependent tasks. They have modest complexity and formalisation. Mediating technology's trat is intermediately to hook up different s=customers to meet each other's need. Ti is pooled interdependence with low complexity and high formalisation. The 3rd one, rigorous technology deals with various kind of problems through the use of wide scale customized responses, in addition it is reciprocal interdependence. As a consequence, rigorous technology has high complexity and low formalization.
These three spectacular studies can not content all the technology- structure research. But they were from different facets and selected by Robbins and Barnwell. Despite the fact that everyone of these had restrictions, the criticism cannot conceal the fantastic contribution they made. So we just focus on how does those studies help us understanding the role of technology enjoyed in organization composition. As the conclusion Robbins and Barnwell confirmed that the magnitude of routine lead differentiation of transforming inputs into outputs. They refined all the types into tow categories: schedule and non-routine. Under tedious there were Woodward's mass and process, Perrow's daily habit and engineering, Thompson's long-linked and mediating technology. For non-routine, there were Woodward's device, Perrow's art and non-routine, Thompson's intensive technology.
On the whole, the filiation of technology and complexity is the fact that the degree of regular technology is inversely related to complexity. A lot more routine, the low complexity, non-routine technology seems to bring advanced complexity. The connection between usual technology and formalization is proportionate. Non-routine technology necessitate flexible and careful control system. Due to incompatible result, we can just show the technically rational argument of technology would have a centralized system, in the meantime non-routine are depending greatly on professional knowledge.
Let us use the previous knowledge to analysis two good examples, two restaurant. The first one is in our College or university of Leicester, known as "Chi" on the first floor of Charles Willison Building. The second one is worldwide famous "KFC". Different strategy and technology could show the contingencies affect the organizational framework.
Firstly, we discuss strategy, if we apply Mls and Snow's tactical type to evaluation, Chi could be "defenders" and KFC could be "analysers". Because the most customers of Chi are university or college students, teachers or a lot of people incidentally stop by, the doesn't need to pay a lot of money on marketing because many of the customers are regular. The restaurant offers some regular food everyday and possess alternative meal option which modified everyday. They may pay little focus on exterior situation, but focus on the inner development. In each KFC restaurant the customers could be any era, any one from the planet, the level are much broader than Chi. KFC provide regular varieties of food, they may have high scope of standardisation and daily habit at the same time they always create new products by changing the flavour of hamburger or fried chickens to catch the attention of new, old customers.
Secondly, we discuss the technology. Due to there are so various kinds of technology under the category of regular and non-routine, we just about distribute Chi and KFC of non-routine and usual. every day KFC's employees do mass of usual work, all of them response for their own process and the process could be super easy. The standardized equipment support employees to complete their regular job, prepare food time, temperature, preferences are regulated, so these are high formalization, centralization and low complexity. On the contrary, employees of Chi could offer with different foods, vegetables, they need organize the materials well, use their special knowledge to make, temperature, time, tastes need to be done by personal experience. So that is low formalization, centralization and high complexity.
Contingency is one of the most useful theory for organizations to use. It is a substantial theoretical lens to see an organization, the theory basis is after considerable empirical support(Donaldson 2001). Contingency theory offers a consecutive paradigm to analysis the organizational composition. Furthermore, the paradigm has developed a set of framework leading studies keep on within the methodical background knowledge (Donaldson 1996). Contingency theory could solve extensive level problems and issues because this potential, it may lead a simple decision rule progress to gain a large range sway in organization's performance. This is a big advantage comparing with other theories. The filiation among subsystems are obvious and may be easier and better to comprehend than a great many other types thoery. So that it says, contingency theory emerges to be a powerful means to develop organization's performance(Betts 2003).
A common critique on contingency theory is the fact: this theory separates the throughout part of business participating efficiency, it is independent organizing process. Because this process encourages managers decide and design the structure corresponding to different contingencies. Thus this process neglects a fact that under manager's political proposal the organizational framework could be evolved or re-built even if those proposals are irrelevant to environmental turbulence or technology restriction(Silverman 1970, Clegg & Dunkerley 1980, Honour & Mainwong 1982, Mullins 1985, Dawson 1980). Despite the fact that contingency theory emphasize on organization's choice, at the true time it scarcely offers option to change strategy or conditions during firm carrying out change process (Linstead, Fulop & Lilley 2009). Schoonhoven(1981) suggested a view that contingency theory could basically be an orientating strategy, without substance, it can not account to be always a theory. The view of best fitness is faint. The various contingencies may lead a lot more intricate and make the research tougher. Take those various varying tinto accounts have its advantages, but ir may incapacitate professionals to forecast what response business lead to efficiency. And yes it becomes hard to foresee the connection among contingencies. Finally well- set up organization's jogging are supported by the corporation of organizational size, framework, strategy, environment and some other contingencies, however some decisions can not be submit because some contingencies are very hard to improve, like size, composition, especially environment.
Organizational design includes many elements, size, strategy, technology, environment. With the contingency theory demonstrates, corporation effectiveness can be achieved by the coherence of the variables.
As we discussed two contingencies in this article, strategy and technology, strategy is the main one of the original factors to be validated. Nevertheless, technology is confirmed combined with the development of modern-day technology.
Contingency theory as an important approach for managers, leader to check out the business has been trusted all around countries. With the deficiency maximize gaol and empirical foundation contingency theory performs a substantial role in many organizations structure improvement.
Let's end the article with Donaldson's words: "misfit leads toward fit, but also fit leads toward misfit"