We have sought to move beyond the picture presented in the preceding chapter of the strengths and limitations of the kind of organization theory most managers are still using—a disjointed combination of classical and human relations theories. By examining and relating some selected modem studies, we have tried to illuminate the prospects of a new re- search-based approach that we have tentatively labeled “contingency organization theory.” This review has given support and further complexity to our own model, which starts with the examination of the interplay between any major part of an organization and its relevant external environment. The environment with which a major department engages is decided by the key strategic choice, “What business are we in?” Once that decision is made, whether explicitly or implicitly, the attributes of the chosen environment can be analyzed. To the environmental variables that we have examined the other studies cited have added the obviously important variables of the collective predispositions of the people (managers, specialists, hourly employees, etc.) who are drawn into the system from the environment. Internal attributes of the organ- ization, in terms of structure and orientation, can be tested for goodness of fit with the various environmental variables and the predispositions of members. Unit performance (which will have to be judged by a number of dimensions, of which profitability is only one) emerges as a function of this fit.
This starting model is complicated as soon as we move to a complex, multi-unit organization in which each unit strives to cope with a different part of the environment. As soon as this happens, it introduces the complication of integrating the work of the different units. We see the existence of an integrating unit and conflict-resolution practices as contributing to the quality of integration and, in turn, to the overall performance. The resulting model does simplify the complex realities of modern organizations, as any model should, but ii lends itself to further elaboration as needed. Each variable has been conceptualized and operationalized, at least crudely, for measurement. From our study and those discussed above we have derived some knowledge about the relationship among these variables. More research can and must be done on all aspects of the model. Even now, it does reflect the find ings of a number of modern organizational studies. It clearly points the way to a more sophisticated model that will not only reduce the confusion in organization theory, but will also have considerable implications for the design and man agement of complex organizations. If such a model, as it evolves and improves, comes into any general usage, it will have impact beyond the boundaries of the specific organizations where it is applied. These practical implications of the contingency approach to organizational study will be exam- ined in the final chapter.
Source: Lawrence Paul R., Lorsch Jay W. (1967), Organization and Environment: Managing Differentiation and Integration, Harvard Business School.