The Contingency Theory of Organizations

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Lex Donaldson

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  • Foundations for Organizational Science

    A SAGE Publications Series

    Series Editor

    David Whetten, Brigham Young University

    Editors

    Peter J. Frost, University of British Columbia

    Anne S. Huff, University of Colorado and Cranfield University (UK)

    Benjamin Schneider, University of Maryland

    M. Susan Taylor, University of Maryland

    Andrew Van de Ven, University of Minnesota

    The Foundations for Organizational Science series supports the development of students, faculty, and prospective organizational science professionals through the publication of texts authored by leading organizational scientists. Each volume provides a highly personal, hands-on introduction to a core topic or theory and challenges the reader to explore promising avenues for future theory development and empirical application.

    Books in This Series

    PUBLISHING IN THE ORGANIZATIONAL SCIENCES, 2nd Edition

    Edited by L. L. Cummings and Peter J. Frost

    SENSEMAKING IN ORGANIZATIONS

    Karl E. Weick

    INSTITUTIONS AND ORGANIZATIONS

    W. Richard Scott

    RHYTHMS OF ACADEMIC LIFE

    Peter J. Frost and M. Susan Taylor

    RESEARCHERS HOOKED ON TEACHING:

    Noted Scholars Discuss the Synergies of Teaching and Research

    Rae André and Peter J. Frost

    THE PSYCHOLOGY OF DECISION MAKING: People in Organizations

    Lee Roy Beach

    ORGANIZATIONAL JUSTICE AND HUMAN RESOURCE MANAGEMENT

    Robert Folger and Russell Cropanzano

    RECRUITING EMPLOYEES: Individual and Organizational Perspectives

    Alison E. Barber

    ATTITUDES IN AND AROUND ORGANIZATIONS

    Arthur P. Brief

    IDENTITY IN ORGANIZATIONS: Building Theory Through Conversations

    Edited by David Whetten and Paul Godfrey

    PERSONNEL SELECTION: A Theoretical Approach

    Neal Schmitt and David Chan

    BUILDING STRATEGY FROM THE MIDDLE: Reconceptualizing Strategy Process

    Steven W. Floyd and Bill Wooldridge

    MISSING ORGANIZATIONAL LINKAGES: Tools for Cross-Level Research

    Paul S. Goodman

    THE CONTINGENCY THEORY OF ORGANIZATIONS

    Lex Donaldson

    ORGANIZATIONAL STRESS: A Review and Critique of Theory, Research, and Applications

    Cary L. Cooper, Philip J. Dewe, and Michael P. O'Driscoll

    INSTITUTIONS AND ORGANIZATIONS, Second Edition

    W. Richard Scott

    Copyright

    View Copyright Page

    Dedication

    To Derek Pugh, Leader and Supervisor

    Introduction to the Series

    The title of this series, Foundations for Organizational Science (FOS), denotes a distinctive focus. FOS books are educational aids for mastering the core theories, essential tools, and emerging perspectives that constitute the field of organizational science (broadly conceived to include organizational behavior, organizational theory, human resource management, and business strategy). Our ambitious goal is to assemble the “essential library” for members of our professional community.

    The vision for the series emerged from conversations with several colleagues, including Peter Frost, Anne Huff, Rick Mowday, Benjamin Schneider, Susan Taylor, and Andy Van de Ven. A number of common interests emerged from these sympathetic encounters, including: enhancing the quality of doctoral education by providing broader access to the master teachers in our field, “bottling” the experience and insights of some of the founding scholars in our field before they retire, and providing professional development opportunities for colleagues seeking to broaden their understanding of the rapidly expanding subfields within organizational science.

    Our unique learning objectives are reflected in an unusual set of instructions to FOS authors. They are encouraged to: (a) “write the way they teach”—framing their book as an extension of their teaching notes, rather than as the expansion of a handbook chapter; (b) pass on their “craft knowledge” to the next generation of scholars—making them wiser, not just smarter; (c) share with their “virtual students and colleagues” the insider tips and best bets for research that are normally reserved for one-on-one mentoring sessions; and (d) make the complexity of their subject matter comprehensible to nonexperts so that readers can share their puzzlement, fascination, and intrigue.

    We are proud of the group of highly qualified authors who have embraced the unique educational perspective of our “Foundations” series. We encourage your suggestions for how these books can better satisfy your learning needs—as a newcomer to the field preparing for prelims or developing a dissertation proposal, or as an established scholar seeking to broaden your knowledge and proficiency.

    David A.Whetten
    — Series Editor

    Acknowledgments

    I should like to thank those who have helped me with this project. First, thanks to Dave Whetten who asked me to write this book. I am glad Dave gave me the opportunity to lay out contingency theory and its future.

    I should like to thank those who taught me and provided an early introduction to the intellectual excitement of contingency theory: John Child, Jerald Hage, and David Hickson. Also thanks to Derek Pugh, who headed the research group at London Business School where I conducted my first contingency analyses. Other helpful contingency research colleagues there were Roger Mansfield and Malcolm Warner. More latterly I have received support in my contingency endeavors from American colleagues, including Alfred Chandler, Paul Lawrence, Nitin Nohria, and Mike Tushman.

    Thanks also to my generous hosts, especially to Janine Nahapiet, at Templeton College, Oxford University, where part of this book was written. Templeton College combines high levels of efficiency and friendliness and proves to us all that this is possible.

    Other parts of this book were written at London Business School and I should like to thank my hosts there: Nigel Nicholson and Paul Willman. London Business School combines professionalism with sociability, so thanks also to my companions there: Pino Audia, Patrick Barwise, Julian Birkinshaw, Ian Cooper, Sumantra Ghoshal, Rob Goffee, Lynda Gratton, John Hunt, Andrew Likierman, Constantinos Markides, Peter Moran, Tim Morris, Anand Narasimhan, Maury Peiperl, Henri Servaes, Ken Simmonds, John Stopford, and Chris Voss.

    Thanks to Peter Dodd, former Dean of the Australian Graduate School of Management, and Greg Whittred, the Acting Dean, for support throughout the writing of this book. Thank you again to June Ohlson, my ever-enthusiastic editor, whose efforts have resulted in a clearer book.

    LexDonaldson
    Australian Graduate School of Management, Universities of New South Wales and Sydney

    Preface

    This book began when Dave Whetten approached me to contribute a book to the Foundations for Organizational Science series. He wanted each book to make its topic accessible to newcomers to the field, to stimulate their interest in the possibility of joining in its research. The readers would include doctoral students and also faculty and research colleagues who were unfamiliar with the topic. Each book would provide an overview of the literature, the critical issues, and the future possibilities. I enthusiastically agreed to write a book on contingency theory that would match that agenda.

    I have been involved in contingency research for almost thirty years now and so felt equipped for the task. Indeed, since I have now written four books on organizational theory, the reader might well ask: “What's new here?” Most of the book is new and does not repeat material from my earlier books. Of course, there is a thematic continuity with my previous books on organizational theory in that throughout them I have argued for contingency theory.

    While I have written about contingency theory fairly extensively, much of this has been in the context of critiques of other organizational theories that challenge contingency theory. In contrast, in this book there is little (though some) critique of other theories. This book is an exposition and critical discussion of contingency theory and its research. The present book is a far more comprehensive treatment of contingency theory than any I have previously attempted. It is broader in the range of theories considered under the contingency umbrella. It is also much deeper in its analysis of the theories, evidence, and methodological issues. This allows more appreciation of the coherency of contingency theory overall. It also involves frank recognition of some of the deficiencies in contingency theory research. The coherent underlying model provides the platform from which to make good some of the deficiencies through a series of improvements in theory and method that chart a course for future research.

    In keeping with a book intended to explain contingency theory, Chapters 2 and 3 lay out the foundations by reviewing the pioneering contributors to theory and empirical research. I have tried to give an accurate account of the received body of contingency theory as it comes down to us, in order to pass on this tradition to scholars who are new to it.

    However, more personal views are offered also at many places. The opening chapter presents a theoretical integration to provide the reader with an overview that makes sense of what is a large literature. It also argues that there is an underlying core paradigm that renders contingency theory coherent. Chapter 4 makes an in-depth examination of the causal models in the received bureaucracy research literature and finds them to be deficient and attempts to put them on a more truly contingency theory basis. Chapters 7 and 8 examine in detail the concept of fit and its relationship with performance, including the empirical research studies.

    Chapter 9 presents possible new developments for contingency theory, to make it more coherent and, it is hoped, valid. These new developments include the concepts of disequilibrium, quasi-fit, and hetero-performance. All three are novel concepts that, I believe, substantially revise and improve contingency theory. In particular, the hetero-performance concept may be of particular interest to those seeking to advance contingency theory. Chapter 10 offers suggestions on how to operationalize the ideas in this book in terms of hypotheses for future empirical research. Thus most of this book is making arguments that I have not presented previously.

    In order to provide the reader with a rounded treatment of contingency theory in this one book, however, I have restated some arguments made in some earlier books. Thus sections of Chapters 5 and 6 draw upon defenses of contingency theory made in Donaldson (1995a, 1996a). To have omitted this material in its entirety could have left a reader confused about whether contingency theory can reply to certain criticisms. Similarly, a section of Chapter 9 draws upon organizational portfolio theory from Donaldson (1999) to present the implications of the idea that organizational change is performance driven. Hopefully, the condensed summaries offered in these sections may help make this material more accessible to a wider audience.

    Throughout much of this book a unifying idea is that the dynamics of organizational change in contingency theory are best captured by the structural adaptation to regain fit (SARFIT) model. This is integral to the core paradigm articulated in the opening chapter. The SARFIT model recurs in the discussion at many places, such as about organizational change, bureaucracy theory, functionalism, and in the operationalization of fit for future research.

    Thus this book has a triple agenda: to pay homage to a rich tradition and pass it on, to advance a coherent interpretation of the array of theories and research within it, and to set signposts to what may be fruitful avenues for future research. In these ways it seeks to fulfill the intention of the Foundations for Organizational Science series.

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    About the Author

    Lex Donaldson is Professor of Organizational Design at the Australian Graduate School of Management, which is a joint venture of the Universities of New South Wales and Sydney. He holds a B.Sc. in Behavioral Sciences from the University of Aston (1968) and a Ph.D. from the University of London (1974). His research interests are organizational theory, organizational structure, and corporate governance.

    Donaldson is the author of six books, including Performance-Driven Organizational Change: The Organizational Portfolio (1999), For Positivist Organization Theory: Proving the Hard Core (1996), American Anti-Management Theories of Organization: A Critique of Paradigm Proliferation (1995), and In Defence of Organization Theory: A Reply to the Critics (1985). He is coauthor (with Frederick G. Hilmer) of Management Redeemed: Debunking the Fads That Undermine Our Corporations (1996). He also edited a collection of key articles under the title Contingency Theory (1995).

    Donaldson is on the editorial boards of Academy of Management Review, Organization Studies, and the Strategic Management Journal. He has served as a guest editor of a special issue of the Academy of Management Review on “Market Discipline and the Discipline of Management” (1990). He has held visiting appointments at the Universities of Aston, Iowa, London, Maryland, Northwestern, Oxford, and Stanford.


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