Contingency Theorists

Contingency Theory
Management and the Modern Day Corporation Page 4
Burns & Stalker (1961) – Managing Innovative Firms
1. Before the war, the industry was heavily involves in contract work with the government.
2. During the 1950s, opportunities arose for companies to develop new products for the growing consumer market (radios, TV’s, etc).
3. Consumer markets meant higher profits and greater Risks.
4. This meant moving into a market that was uncertain, competitive, extremely risky and required technical innovation to survive, grow or die.
5. Results were as follows:
- Stable, predictable environment: Mechanistic, bureaucratic – High performance.
- Dynamic, competitive, unstable: Organic, adaptive – High performance.
Lawrence & Lorsch (1967) – Internal differentiation, Integration and the Environment
 Differentiation – refers to the degree to which the organization is sub divided into specialist units (Finance, Marketing, Sales, etc)
 Integration – refers to the degree of coordination and integration required to control differentiated organisational activities.
Lawrence & Lorsch studied firms located in three different kinds of Industrial environment, each selected to represent different states of task environment:
 The plastics industry was dynamic, competitive, technologically innovative;
 The containers industry was stable and far less competitive;
 The packaged foods industry represented a moderately dynamic and competitive environment and therefore came between the other two.
They asked the following question: What types of organizations are most effective under [these] different environmental conditions?
The Results:
1. The more dynamic and complex the environment the more differentiated the organization must be, because;
- Uncertain environments create problems that managers have to deal with, so they establish specialize and expert units to reduce uncertainty.
- Highly competitive product markets require the recruiting of marketing