The Contingency Theory Contingency theory is a class of behavioral theory that claims that there is no best way to organize

a corporation, to lead a company, or to make decisions. An organizational/leadership/decision making style that is effective in some situations may not be successful in other situations. In other words: The optimal organization/leadership/decision-making style depends upon various internal and external constraints(factors). Several contingency approaches were developed concurrently in the late 1960s. They suggested that previous theories such as Weber's bureaucracy and Taylor's scientific management had failed because they neglected that management style and organizational structure were influenced by various aspects of the environment: the contingency factors. There could not be "one best way" for leadership or organization. Contingency Theory Factors Some examples of such constraints (factors include): The size of the organization How the firm adapts itself to its environment Differences among resources and operations activities Assumptions of managers about employees Strategies Technologies being used Contingency Theory on the Organization - There is no universal way or one best way to manage an organization - The needs of an organization are better satisfied when it is properly designed and the management style is appropriate both to the tasks undertaken and the nature of the work group. - Effective organizations not only have a proper fit with the environment, but also between its subsystems.
Sources: http://en.wikipedia.org/wiki/Contingency_theory http://www.12manage.com/methods_contingency_theory.html