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Contingency Theory: An Overview Of Its Use In Management

887 words - 4 pages

Contingency Theory: An Overview of Its Use in Management
Contingency theory is one of the many theories that help to shape managerial practice, define the way that managers make decisions, and form solutions to problems. The intent of this paper will be to define what contingency theory is, identify the theorists that have helped shape the theory describe what areas of business and management it is used in. The paper will also set out to explain how contingency theory could be applied in real world applications.
Contingency Theory
Contingency theory is the theory that; because no two people, organization, problem, or situation are the same, managers should vary their approach to each ...view middle of the document...

When it comes to what level of management apply contingency theory to the organization in which they are involved, that is when the waters become a little murky. Top level executive in many organizations would like to have a very structured system in place, by which, they make decisions for the organization at the corporate level. This approach may not work in all settings as middle and lower level managers are faced with a number of variables the shape the way that they run the day to day operations of the organization. Arrow (as cited in Fisher, 1998) points out that “Although many corporate executives may desire to make all decisions centrally, it may not be possible (desirable) to do so because managers often have access to more decision-relevant information than executive levels” (P. 47). It is this statement that leads to an understanding that middle and lower level managers often use contingency theory more often in making decisions within an organization. This scenario will explain how contingency theory is used in organizations. Consider a business is in its infancy and has one local operation. This business would be able to manage all of the managerial tasks centrally because of the limited number of variables within the business. As the business begins to grow, however, the number of variables increase exponentially. The number of employees, the customers they are dealing with, the way they must communicate within the company all become more complex. It is at this point that managers would begin to use a contingency based management approach to operating the...

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