The Analysis of the Contingency Theory - Research Paper Example

? Contingency Theory Contingency Theory: Science or Technology? Contingency theory is seen as a dominant and rational approach especially at the structural level of analysis in organization theory and design, and this theory assumes that the environment in which an organization undertakes its activities plays a leading role in how the organization organizes its operations and itself. Studies reveal that there is a link between the features of the environment and that of an organization, and this is referred to as ‘fit’ which enhances the performance of the organization (Betts, 2011). Arguably, contingency theory can be categorized as both science and technology. Science is a process of inquiry and is an organized body of knowledge, and so contingency theory is a science because it involves the two. Accordingly, contingency theory can as well be categorized technology, and technology refers to activities developed by individuals to satisfy their needs. Contingency theory is a body of knowledge and knowledge acquired can be applied in various organizations to change to a more efficient processes. Literally, humans develop organizations and so the application of contingency theory helps to satisfy their needs (Betts, 2011). This article clearly explains how the operation and performance of an organization and the environment in which it operates relates. More so, it provides a clear elaboration of contingency theory as a science and technology. However, some of the weaknesses that have been identified in this article is that the causation that is assumed has not been explained in a more convincing manner. According to contingency theorists, there is an association between the environmental conditions and organizational design and this was assumed the best fit. However, this assumption has not been well elaborated and it does not put into consideration other factors that related to organization’s performance (Betts, 2011). Performance Outcomes of Strategic and IT Competencies Alignment The performance of business is based on the contribution of both business and technology to organization’s goals and objectives. Arguably, both internal and external environments of an organization influence the performance of that particular organization, for instance, organization’s performance is associated with the internal operational effectiveness and support from external forces. More so, the strategy of Information Technology (IT) in an organization is supposed to be aligned with its business strategy since the performance of a business is promoted by effective alignment between the organization’s competitive strategy and technologies that it uses (Croteau and Raymond, 2004). Arguably, the study of competencies alignment and organization’s performance is conducted based on the contingency theory. This article thoughtfully describes IT competencies alignment and organizational performance. It proposes that contingency theory covers other issues such as the organization’s competencies and strategic orientation and explains how they affect the performance of business (Croteau and Raymond, 2004). On the other hand, this article does not provide useful and convincing explanation of the underlying assumptions, for instance, one of the major assumption of contingency theory is that the better the fit among various contingency variables the better performance of the organization. Furthermore, this theory claims that there is a fit between strategic variables and use of IT and this positively affects the performance of information system (Croteau and Raymond, 2004). Tackling Design Anew: Getting Back to the Heart of Organizational Theory This article mainly focuses on the importance of organization design, and according to contingency theory, every relevant axis of an organization needs to be present in the organization design (Greenwood and Miller, 2010). Moreover, contingency theory suggests that the size of an organization and its geographical cover leads to the establishment of more formalized procedures and hierarchy whereby the firm encourages direct participation in decision-making process. Furthermore, this approach would propose the use of lateral integrative devices such as client management teams, to reconcile points of view from diverse axes. All these have been associated with higher performance in an organization and this is compatible with the structural predictions of contingency theory (Greenwood and Miller, 2010). However, contingency theory has been criticized because it pays little attention on how to handle conflicting loyalties and time demands, and different tensions arising from nature of professional workforce. Critiques claim that it is necessary to consider such tensions in the organization since they help in distinguishing professional service organizations. Therefore, the organizational design suggested by contingency theory are incomplete since it only focuses on a single part of design, that is, structure, and also the theory abandons realities in various organizations today. More so, contingency theory is general since it was established to apply to all organizations, and so this minimizes its ability address a particular organizational type. This should not be the case because any workable design solution has to consider all other factors including tensions of a particular type of organization (Greenwood and Miller, 2010). Interactions between Contingency, Organizational IT Factors, And ERP Success Enterprise resource planning (ERP) systems are used to enhance information flow across various business units and functions of an organization. Contingency factors are one of the areas covered when determining the success of these systems. Ideally, contingency factors incorporate the size and structure of the organization (Ifinedo and Nahar, 2009). Some researchers believe that the size of an organization relates to employee workforce, turnover or even sales. More so, studies reveal that the organization size can be associated with the success of information system, and that the size also matters when it comes to adoption of the ERP system. For instance, it has been noted that small companies face more knowledge constraints as compared to larger organizations during ERP adoption (Ifinedo and Nahar, 2009). Accordingly, organizational structure involves structural dimensions such as centralization, standardization, specialization, hierarchy level, and formalization among others. Many studies reveal that these structural dimensions are associated with technology structure relationships. Arguably, centralization can be defined as the hierarchy of the organization’s decision-making process, and an organization is centralized when decisions are kept at the top and decentralized when decisions are delegated to lower organizational levels. ERP system advocates from command and control structure that enables the top organizational hierarchy to benefit the most. Specialization simply refers to sub-division of tasks into distinct jobs. Moreover, formalization is the extent to which rules and procedures are created and made clear to all employees. EPR system can be effectively applied and be successful in organizations with distinct and specialized tasks as compared to those with less defined tasks. Therefore, organizational structure impacts positively to the implementation of ERP (Ifinedo and Nahar, 2009). Information Technology (IT) Appropriateness: The Contingency Theory Of "Fit" And It Implementation in Small and Medium Enterprises This article explores the role of information and communication technologies in the operation of a business, and this is based on the contingency theory of fit. Arguably, the idea of fit in information system covers the group level of performance and the individual level of performance. According to these studies, a task-technology fit leads to better user performance on tasks and users are able to evaluate task technology fit effectively (Khazanchi, 2005). Moreover, at the group level, the study reveals that there is a relationship between task-technology fit and group performance. However, the researcher of task-technology has been accused of emphasizing on user performance and evaluation IT and fails to put into consideration of structural contingency theory fit as the basis of the study (Khazanchi, 2005). Moreover, some studies state that project management contingency theory is useful in understanding of project failure and other issues (Sauser, Reilly and Shenhar, 2009). Comparably, all these articles propose that contingency theory plays a very significant in enhancing the performance of an organization. The first article argues that the performance of a firm is based on the environment in which it operates, and it presents an explanation of contingency theory as both a science and technology. However, the second article suggests that the study about the competencies alignment and organization’s performance is undertaken based on contingency theory. Accordingly, the third article suggests the size of an organization and its environment determines the organization’s level of performance whereas the fourth one studies suggests that EPR system involves consideration of contingency factors both size and structure of organization matters when it comes to adoption of EPR. Lastly, Khazanchi’s article explores the role of information and communication technology based on contingency theory of fit, overall, they all explains how contingency theory impacts positively on various aspects of an organization. References Betts, S.C. (2011). Contingency Theory: Science or Technology? Journal of Business & Economics Research. Vol.1, no. 8, 123- 130. Croteau, A. and Raymond, L. (2004). Performance Outcomes Of Strategic And IT Competencies Alignment. Journal of Information Technology 19, 178–190 Greenwood, R, and Miller D. (2010). Tackling Design Anew: Getting Back to the Heart of Organizational Theory. Academy of Management Perspectives. pp. 78- 88. Ifinedo, P. and Nahar N. (2009). Interactions Between Contingency, Organizational IT Factors, And ERP Success. Industrial Management & Data Systems. Vol. 109 No. 1, pp. 118-137. Khazanchi , D. (2005). Information Technology (IT) Appropriateness: The Contingency Theory Of "Fit" And It Implementation In Small And Medium Enterprises. The Journal of Computer Information Systems; 45, 3; ABI/INFORM Global pp. 88-95. Sauser, B.J., Reilly, R.R., and Shenhar Aaron J. (2009).Why projects fail? How contingency theory can provide new insights – A comparative analysis of NASA’s Mars Climate Orbiter loss. International Journal of Project Management 27, 665–679. Read More