It is relevant to consider development of contingency theory and its application to organizational structure in order organizations’ managers had an opportunity to develop flexible approaches to organizational structural development. Therefore, contingency theory is an alternative for organizations looking for solution of their current problems and tending to structural changes. A basic conceptual framework of contingency theory is a phrase it depends (Donaldson, 2001). Therefore, any managerial solution should be made with regard to the external factors of a certain situation in an organization. Moreover, a great role in establishing organizational structure plays nature of the environment of organization. In accordance with the contingency theory: there is no one best way to organize. any way of organizing is not equally effective (Galbraith, 1973). In case a perfect relation between nature of organization, external environment and organizational characteristics is established, an organization is on the right way to performance. Such kind of match is called a ‘contingency theory’ or ‘contingency perspective/view’ (Donaldson, 2001). Studies of organizational structures in relation to external conditions of organizations’ operation resulted in studies based on the contingency theory. … In the study made by Burns and Stalker (1961) mechanistic and organic principles of organizations were discussed. In organizations, where mechanistic principles prevailed, top managers developed a policy. Such kind of organizations was characterized by inflexible policies and rigid decision making. Luthans (1973) develops the idea of relation of contingency theory to management theory. Before theory developed by Luthans management theories were not related to each other. For example, process theory was based on planning, organizing, directing, and controlling (Donaldson, 1996). In order to find a perfect balance between management theories, contingency theory was a unifying approach defining interrelatedness and mutual dependence of all integrative parts of management theories. This approach was broadened and resulted in a theoretical model of Structural Adaptation to Regain Fit (SARFIT) (Donaldson, 1987, 2001). This model can be interpreted in the following manner: in case an organization finds a best relation between internal and external resources, it reaches high performance levels. It is a right way to reach size growth, introduce innovations and diversification (Hamilton and Shergill, 1992). Contingency variables may lead to organizational misfit to external factors. As a result, levels of performance are decreased and structural changes are introduced (Chandler, 1962). SARFIT theory implies consideration of structural contingency theory as relation between divisionalization changes and strategic changes. Bums and Stalker (1961) are focused on discussion about changes in mechanistic and organic structures with regard to technological and market change in the external conditions (Bums and Stalker, 1961).
Discuss the usefulness and problems with contingency theories in understanding organisational structure How relevant can they b