This paper introduces open systems theory as applied to organizational studies. It begins by defining an open system — a system that interacts with and is influenced by its environment through inputs, outputs, and feedback mechanisms — and identifies key characteristics such as porous boundaries and interdependent components. The paper then explains how open systems theory emerged after World War II as a framework for analyzing organizations, treating firms as dynamic systems composed of employees, internal processes, and assets. Finally, it demonstrates how the theory can be used to examine both internal organizational dynamics and external environmental forces, including political, economic, technological, and competitive influences.
To understand open systems theory, it is necessary to first consider what is meant by an open system. An open system is a system that interacts with and is influenced by its environment (Scott, 2002). These interactions involve inputs and outputs, such as energy exchanges, the movement of material between the system and its environment, or other types of feedback (Scott, 2002). Environmental influences may include the natural environment — with factors such as weather and competition for food exerting an effect — or, in a commercial context, political, social, economic, technological, and competitive forces.
A system is defined as a group of parts or components that work together as a whole, defined by boundaries that, in an open system, are porous — allowing inflows and outflows. The parts that work together may be mechanical, electronic, biological, or some mixture of these component types. Characteristics associated with a system include the ability of its parts to work together to support self-maintenance and survival, using internal processes and feedback mechanisms. A compelling example of an open system is a human being, composed of many biological processes and parts that interact continuously with the external environment.
Open systems theory, as applied to organizational studies, emerged after the Second World War. It draws on the concepts of open systems to provide a framework for examining and understanding the way organizations operate. The organization is perceived as an open system made up of a range of different components, including employees, internal systems, and assets. The linkages between these different components are recognized as being weaker and more fluid compared to those in other types of open systems. When organizations are viewed as open systems, there is also the potential for different components — especially employees — to be members of numerous overlapping open systems simultaneously.
Open systems theory provides a holistic framework for analyzing and understanding an organization, enabling the observer to consider both internal influences and the way different parts work together, as well as the ways in which external forces may impact the system.
From an internal perspective, the firm may be examined through the lens of its different components and their interactions, viewed as part of a larger and changeable system. For example, an employee may be seen as part of a system in which processes such as the employment relationship, working conditions, and social conditions within the organization all impact on performance. Employees may also work with other systems — such as mechanical production systems and IT systems — all of which interact in an interdependent manner. Because the open system has porous boundaries, however, external influences will inevitably impact the organization and its component parts.
"Explores how external forces shape organizational choices"
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