What Is A Contingency Approach In OB?


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Environmental change and uncertainty, work technology, and the size
of a company are all identified as environmental factors impacting the
effectiveness of different organizational forms. According to the
contingency perspective, stable environments suggest mechanistic
structures that emphasize centralization, formalization,
standardization, and specialization to achieve efficiency and
consistency. Certainty and predictability permit the use of policies,
rules, and procedures to guide decision making for routine tasks and
problems. Unstable environments suggest organic structures which
emphasize decentralization to achieve flexibility and adaptability.
Uncertainty and unpredictability require general problem solving
methods for non routine tasks and problems. Paul Lawrence and Jay Lorsch
suggest that organizational units operating in differing environments
develop different internal unit characteristics, and that the greater
the internal differences, the greater the need for coordination between
Joan Woodward found that financially successful manufacturing
organizations with different types of work technologies (such as unit
or small batch; large-batch or mass-production; or continuous-process)
differed in the number of management levels, span of management, and
the degree of worker specialization. She linked differences in
organization to firm performance and suggested that certain
organizational forms were appropriate for certain types of work
Organizational size is another contingency variable thought to
impact the effectiveness of different organizational forms. Small
organizations can behave informally while larger organizations tend to
become more formalized. The owner of a small organization may directly
control most things, but large organizations require more complex and
indirect control mechanisms. Large organizations can have more
specialized staff, units, and jobs. Hence, a divisional structure is
not appropriate for a small organization but may be for a large
In addition to the contingencies identified above, customer
diversity and the globalization of business may require product or
service diversity, employee diversity, and even the creation of special
units or divisions. Organizations operating within the United States
may have to adapt to variations in local, state, and federal laws and
regulations. Organizations operating internationally may have to adapt
their organizational structures, managerial practices, and products or
services to differing cultural values, expectations, and preferences.
The availability of support institutions and the availability and cost
of financial resources may influence an organization's decision to
produce or purchase new products. Economic conditions can affect an
organization's hiring and layoff practices as well as wage, salary, and
incentive structures. Technological change can significantly affect an
organization. The use of robotics affects the level and types of skills
needed in employees. Modern information technology both permits and
requires changes in communication and interaction patterns within and
between organizations.

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