E16: Summary of Contingency Theory


Another convenient featurette to introduce people to this management classic - contingency theory! Join Ralph as he summarizes our reading by Lawrence and Lorsch, covers key points from the discussion and even adds some (more) of his experience-based insight! 

Advocates of contingency theory for organizations argue that an optimum approach to structural differentiation depends – is contingent – on the external and local conditions where an organization functions. This represents a departure from assumptions from the scientific management theories of Taylor and Fayol that we discussed in previous episodes of the show. It shifts the focus of organizational scholars beyond strictly internal dynamics and structure and places greater emphasis on an organization’s alignment with its external environment. Lawrence and Lorsch used the data they collected to argue that the most economically successful organizations were the ones that managed to fulfill the dual goal of differentiation (to cope with environmental uncertainty) and integration (to align the work of highly differentiated departments).