Contingency theory SoS Liu Spring 2012 Per Åman 2.
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Transcript of Contingency theory SoS Liu Spring 2012 Per Åman 2.
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Contingency theory
SoS LiuSpring 2012Per Åman
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Per Åman 2
The price – performance trade-off
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Per Åman 3
Competition is a race – for survival
Winning (survival) is assured through better fit with the environment
(But if the environment changes so must the organization)
Ergo: it is crucial to understand the environment
Trial and error is the field test of organizations
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Per Åman 4
Fit and adaptation – structure and process
“It is not the strongest of the species that survive, nor the most intelligent, but the one that is most responsive to change”
Charles Darwin
Two qualities: Structural fit – ability to adapt
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Per Åman 5
Contingent upon what?
But: Strategies are contingent/ dependent upon their context
Organizations are purposeful entities
Success is dependent upon 1. formulation of purpose (objective) 2. and delivery of the purpose (implementation)
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Per Åman 6
The search for ‘contingency factors’
Task environment?
1. Environmental uncertaintyStable (little change) – unstable (dynamic, fast changing)
‘Turbulence levels’ (Ansoff 1967), Burns and Stalker (1961)
Moderately dynamic – highly dynamic (Eisenhart, 1995, 2000)
What determines strategy and structure?
2. Technology - Diversity of task environments
3. Size
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Per Åman 7
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Per Åman 8
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Per Åman 9
Environment
Strategy
Structure
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Per Åman 10
Environment Stable Dynamic
Technology Process Unit
Size Large Small
Mechanistic ! ?
Organic ? !
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Per Åman 11
Mechanistic: Organic:
Specialization of tasks Job and task flexibility
Defined duties, responsibilities Redefinition of tasks
Clear hierarchical structure Network structure of control & authority
Top down instructions and info Lateral info and advice
Obedience to org’n and rules Committment to work group
Importance by position Importance by individual’s contribution
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Per Åman 12
Efficiency is good
Slack is bad
Alignment!
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Per Åman
Fit, alignment, congruency, consistency
Inboundlogistics
Operations Outbound logistics
Marketing andsales
After salesservice
Infrastructure
Procurement
Technology
HRM
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Per Åman 14
Contingency theory, summary
• Organizations are open systems• Structure, and therefore performance, is dependent upon the particular
circumstances, situational factors, faced by each organization• There is no best way for all organizations but there is a one best way for
each organization
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Per Åman 15
Efficiency and effectiveness
Effectiveness: Strategies contain choice on goals and over-arching direction
Efficiency: Management control systems integrates efforts towards a common purpose/ goal
Management control systems are dependent upon the firm’s strategy
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Per Åman 16
The early strategy/ control paradigm
Environment – Strategy - Structure
Analysis – Formulation - Implementation
Contingency – congruency – consistency (external and internal fit)
Efficiency and effectiveness
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Per Åman 17
A reflection on the early theories/ propositions
A teleological perspective
A machine metaphor
A utilitarian perspective – Darwin/2
A structural perspective – Darwin/2