Matching Contingency Variables and Organizational Structure Introduction

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This essay argues that contingency theory is a useful guide to the design of contemporary organizations. In particular, the essay claims that contemporary managers can draw upon the contingency theory research literature relating to relationship between organizational structure and technology, size, the environment, and strategy to design an organization that is well suited to its situation and circumstances and hence more likely to survive and prosper in the long term.

This essay’s structure is as follows. The following section introduces contingency theory to explain its nature and implications for the management of contemporary organizations. Next, the essay explores the contingency theory research literature to identify the most commonly cited relationships between organizational structure and design and Size, technology, environment, and strategy. Finally, the essay contains some concluding remarks.

Contingency theorists reject the validity of attempts to identify the “…one best way to manage an organisation, without particular regard to the situation” (Davidson & Griffin, 2002, p. 52). Instead, contingency theorists argue that appropriate managerial action depends upon the characteristics of the organization and the circumstances confronting that organization (Luthans, 1973; Lee, Luthans, and Olson¸ 1982; Daft, 1999; Bartol, Martin, Tein, and Matthews, 2001). To illustrate, Bartol et al. (2001, p. 51) define contingency theory as a “…[v]iewpoint arguing that appropriate managerial action depends on the particular parameters of the situation”. Similarly, Samson and Daft (2003, p. 62) call contingency theory a perspective “…in which the successful resolution of organizational problems is thought to depend upon managers’ identification of key variables in the situation at hand”.

Like systems theorists, contingency theorists adopt an integrative approach to management theory (Luthans, 1973; Davidson & Griffin, 2002; Robbins Bergman, Stagg, and Coulter, 2003). Underpinning such an integrative approach is the claim that all approaches to the management of organizations offer something of value to the contemporary manager (Davidson & Griffin, 2002; Robbins et al., 2003). However, contingency theorists believe that realizing a particular approach’s value depends upon the manager’s ability to apply that approach at the right time and under the right circumstances (Schemmerhorne, Campling, Poole, and Wiesner, 2004). For this reason, contingency theorists undertake an empirically grounded search for the particular conditions and circumstances that best suit a range of managerial techniques, practices, and approaches (Luthans, 1973). To provide some examples of the guidance contingency theory offers managers as they engage in organizational design, this essay will now turn to some, often cited, contingency theory findings regarding organizational structure and design.

An organizational structure is the “…arrangement of people and tasks [adopted] to accomplish organizational goals” (Du Brin, 2003, p. 222); whereas, organizational design is the process “…of developing an organizational structure” (Bartol et al., 2001, p. 271). In other words, managers engage in organizational design, giving rise to an organizational structure. The contingency variables affecting organizational structure and design that have attracted most interest from contingency theorists are; size, technology, environment, and strategy (Bartol et al., 2001; Davidson and Griffin 2002; Robbins et al., 2003). This essay will now turn those four contingency variables and explore their implications for organizational structure and design.

One can measure organizational size in a number of different ways, such as gross sales, total profits, number of employees etc, (Bartol et al., 2001). Using these measures, contingency theorists have...
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