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. Instead, the optimal course of action is contingent (dependent) upon the internal and external situation. Several contingency approaches were developed concurrently in the late 1960s.

They suggested that previous theories such as Weber

Max Weber

Karl Emil Maximilian "Max" Weber was a German sociologist and political economist who profoundly influenced social theory, social research, and the discipline of sociology itself...

's bureaucracy

Bureaucracy

A bureaucracy is an organization of non-elected officials of a governmental or organization who implement the rules, laws, and functions of their institution, and are occasionally characterized by officialism and red tape.-Weberian bureaucracy:...

 and Taylor

Frederick Winslow Taylor

Frederick Winslow Taylor was an American mechanical engineer who sought to improve industrial efficiency. He is regarded as the father of scientific management and was one of the first management consultants...

's scientific management

Scientific management

Scientific management, also called Taylorism, was a theory of management that analyzed and synthesized workflows. Its main objective was improving economic efficiency, especially labor productivity. It was one of the earliest attempts to apply science to the engineering of processes and to management...

 had failed because they neglected that management style and organizational structure were influenced by various aspects of the environment: the contingency factors. There could not be "one best way" for leadership or organization.

Historically, contingency theory has sought to formulate broad generalizations about the formal structures that are typically associated with or best fit the use of different technologies. The perspective originated with the work of Joan Woodward

Joan Woodward

Joan Woodward was a British professor in organization sociology-Background:Joan Woodward undertook her early research at South East Essex College of Technology, before joining Imperial College in 1957 as a part time lecturer in Industrial Sociology and was appointed to a Senior Lectureship in the...

 (1958), who argued that technologies directly determine differences in such organizational attributes as span of control, centralization of authority, and the formalization of rules and procedures.

Gareth Morgan

Gareth Morgan (author)

Gareth Morgan is a British organizational theorist, management consultant and Distinguished Research Professor at York University in Toronto, known as creator of the "organisational metaphor" concept and writer of the bestseller Images of Organization.- Biography :In 1965 Morgan received a BSc in...

 in his book Images of Organization

Images of Organization

Images of Organization is a bestseller book by Gareth Morgan, professor of organizational behavior/industrial relations at the Schulich School of Business at York University in Toronto, which attempts to unveil organization via a number of metaphors...

describes the main ideas underlying contingency in a nutshell:

• Organizations are open systems that need careful management to satisfy and balance internal needs and to adapt to environmental circumstances
• There is no one best way of organizing. The appropriate form depends on the kind of task or environment one is dealing with.
• Management must be concerned, above all else, with achieving alignments and good fits
• Different types or species of organizations are needed in different types of environments

Fred Fiedler

Fred Fiedler

Fred Edward Fiedler was one of the leading researchers in Industrial and organizational psychology of the 20th century. He was business and management psychologist at the University of Washington. He helped this field move from the research on traits and personal characteristics of leaders, to...

's contingency model

Fiedler contingency model

The Fiedler contingency model is a leadership theory of industrial and organizational psychology developed by Fred Fiedler , one of the leading scientists who helped his field move from the research of traits and personal characteristics of leaders to leadership styles and behaviours.-Two...

 focused on a contingency model of leadership effectiveness. This model contains the relationship between leadership style and the favorableness of the situation. Situational favorableness was described by Fiedler in terms of three empirically derived dimensions

1. The leader-member relationship, which in the most important variable in determining the situation's favorableness

2. The degree of task structure, which is the second most important input into the favorableness of the situation

3. The leader's position power obtained through formal authority, which is the third most important dimension of the situation

Situations are favorable to the leader if all three of these dimensions are high. That is, if the leader is generally accepted and respected by followers(first dimension), if the task is very structured (second dimension), and if a great deal of authority and power are formally attributed to the leader's position (third dimension), then the situation is favorable.

William Richard Scott

William Richard Scott

William Richard Scott is an American sociologist. Scott has been a professor at Stanford University, specialised in institutional theory and organisation science...

 describes contingency theory in the following manner: "The best way to organize depends on the nature of the environment to which the organization must relate" . The work of other researchers including Paul Lawrence, Jay Lorsch, and James D. Thompson

James D. Thompson

James David Thompson was an American sociologist.In 1932, Thompson's family moved to Chicago where he went to a public high school. He graduated from Indiana University with a B.A. in business and served in the United States Air Force from 1941 to 1946...

 complements this statement. They are more interested in the impact of contingency factors on organizational structure. Their structural contingency theory was the dominant paradigm of organizational structural theories for most of the 1970s. A major empirical test was furnished by Johannes M Pennings who examined the interaction between environmental uncertainty, organization structure and various aspects of performance.

Sources

• Burns, T., Stalker, G. M., (1961): The Management of Innovation. London: Tavistock.
• Chandler Jr., A.D., (1962): Strategy and structure: Chapters in the history of the American industrial enterprise. Cambridge, MA: MIT Press.
• Lawrence, P.R., Lorsch, J.W., (1967): Organization and Environment: Managing Differentiation and Integration. Boston, MA: Harvard University.
• Lutans, F., (2011) Twelth Edition, Organisational Behavior, Tata McGraw Hill
• Mintzberg, H., (1979): The Structuring of Organizations. Englewood Cliffs, NJ, USA: Prentice-Hall.
• Morgan, G. (2007) Images of organization, Thousand Oaks: Sage.
• Perrow, C., (1967) A Framework for the Comparative Analysis of Organizations. In: American Sociological Review, 32 No 2, 194–208.
• Thompson, J. D., (1967): Organizations in Action. New York: McGraw-Hill.
• Woodward, J., (1958): Management and Technology. London: Her Majesty’s Stationary Office.
• Woodward, J., (1965): Industrial organization: Theory and practice. New York, NY: Oxford University Press.