Contingency Theory

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Contingency Theory

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. An organizational / leadership / decision making style that is effective in some situations, may be not successful in other situations. In other words: The optimal organization / leadership / decision-making style depends upon various internal and external constraints (factors).

Contingency Theory factors
Some examples of such constraints (factors) include:
• The size of the organization.
• How the firm adapts itself to its environment.
• Differences among resources and operations activities. • Assumptions of managers about employees.
• Strategies.
• Technologies being used.

Contingency Theory on the organization

1. There is no universal way or one best way to manage an organization. 2. The design of an organization and its subsystems must 'fit' with the environment. 3. Effective organizations not only have a proper 'fit' with the environment, but also between its subsystems.

Contingency Theory of leadership

In the Contingency Theory of leadership, the success of the leader is a function of various factors in the form of subordinate, task, and/or group variables. The effectiveness of a given pattern of leader behavior is contingent upon the demands imposed by the situation. These theories stress using different styles of leadership appropriate to the needs created by different organizational situations. Some of these theories are: • Contingency Theory (Fiedler): Fiedler's theory is the earliest and most extensively researched. Fiedler's approach departs from trait and behavioral models by asserting that group performance is contingent on the leader's psychological orientation and on three contextual variables: group atmosphere, task structure, and leader's power position. This theory explains that group performance is a result of...
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