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The introduction of the contingency theory of organizational design, which states that the best way to organize varies depending on the nature of the environment in which the organization operates, represented a significant progression in design theory.12 In organizational theory, organizations can be classified by structural and cultural characteristics. Organizational cultures are typically classified as either organic or mechanistic, while organizational structures are classified as either centralized or decentralized. Organizational design is the process of introducing cultural and structural characteristics which support the needs of the organization. The most prominent and commonly accepted contingency design approach, put forward by organizational theoreticians Burns and Stalker, recommends selecting the organizational structure based on the demands of the environment in which the organization operates. Organizations which operate in predictable and stable environments are best suited by centralized structural forms which promote efficiency. On the other hand, organizations which operate in unstable or unpredictable environments are best suited by decentralized structural forms (such as the divisional departmentation) which promote flexibility. |
