Management theory fundamentals and organizational applications

Systems vs. Contingency Theory of Management: An Analytic Approach

There are two types of dominant management theory relevant to the field of electronics that time has shown effective tools for managing both organizations and people. The first, contingency theory, suggests that managers have to take into account every aspect of a situation before acting upon it, and then act only on those aspects of a situation that are key to resolving the matter at hand (McNamara, 1999). Some have referred to contingency theory as an 'it depends' theory because it allow managers the flexibility of making a spontaneous decision when considering multiple aspects of a problem (McNamara, 1999).

Systems theory is the other and more predominant management theory adopted or currently in practice within the electronics field. To understand this form of management one must first understand that a system is a collection of parts that become unified in order to reach a final outcome (McNamara, 1999). All parts of the system are inter-related and thus if one aspect is changed the entire system is changed. Thus, managing requires that the manager look at how any one decision might affect the overall system framework. Systems theory is beneficial for looking at the broad or bigger picture, or an organization as a whole. It is very useful in electronics and other technical fields, where various departments can become more synchronized if the management technique utilized is effective.

Systems Theory Compared with Contingency Theory

Correct utilization of management theory is vital for organizational planning, decision making and control (Farmer, Richman & Ryan, 1966). Because each organization and situation is unique, one management or leadership style may not be appropriate for governing all situations, however any particularly theory can be applied universally across an organization (Callaway 1999). Systems and contingency theories are examples of two management theories that can be applied universally across the electronics organization to facilitate a productive outcome in virtually any situation.

Systems thinking has been identified as a powerful tool in the electronics and it field, and is "more widely used as the foundation for managing processes related to innovation and technology" in recent years, because it allows an interdisciplinary approach to management that combines multiple management paradigms into one (Currie & Galliers, 1999:5). It is popular and effective and allows managers to work with multiple teams with various skills and abilities to come to a common ground regarding organizational practices and issues.

A contingency theory approach though less widely used, is often a model adopted by technologically oriented firms because it allows clear and independent identification of concepts and structures within the organization (Currie & Galliers, 1999). Contingency theory utilization however might be more limited with regard to knowledge sharing and knowledge management (Thierauf, 1999) an important and vital element of any technologically oriented organization. When there are not integrating activities involved in a particular decision and when an organization is highly specialized rather than diversified, contingency management might prove more beneficial as a management theory, where managers are not obligated to anchor themselves in core competencies or follow specific objectives (Mailick & Stumpf, 1998; Donaldson, 2001). Contingency management might in fact afford managers more flexibility in the short-term.

Perhaps the best approach to management in the electronics industry or any industry is one that is combined, that allows certain elements of various theories to be incorporated into practice (Selden & Sowa, 2004). Any theory can be measured by whether or not it achieves its ultimate goals, which include the overall success and profitability of an organization (Miner, 2003).

Contingency theory allows an organization to adopt a management theory practices that fits situation factors, and this is often touted as an effective method for improving organizational performance (Donaldson, 2001).