Closely related to the situational approach is what has become known as contingency

theory. The contingency theory of leadership was proposed by the Austrian

psychologist Fred Edward Fiedler in his landmark 1964 article, "A Contingency Model
of Leadership Effectiveness."

The contingency theory emphasizes the importance of both the leader's

personality and the situation in which that leader operates. Fiedler and his associates
studied leaders in a variety of contexts but mostly in military context and their model is
based on their research findings.

They outline two styles of leadership:

 task-motivated and
 relationship-motivated.

Task refers to task accomplishment, and relationship-motivation refers to interpersonal

relationships.

Fiedler measured leadership style with the Least Preferred Co-Worker Scale (LPC

scale.) The leaders scoring high on this scale are relationship motivated and those
scoring low are task motivated (Northouse, 2007, p.114).

Central to contingency theory is concept of the situation, which is characterized by three

factors:

 Leader-member relations, deals with the general atmosphere of the group and

the feelings such as trust, loyalty and confidence that the group has for its leader.
 Task structure, is related to task clarity and the means to task accomplishment.
 The position power, relates to the amount of reward-punishment authority the
leader has over members of the group (Northouse, 2007, p.114-115).

These three factors determine the favorableness of various situations

FOUR IMPORTANT IDEAS OF CONTINGENCY THEORY ARE:

1. There is no universal or one best way to manage
2. The design of the organization or its subsystems must fit with the environment
3. The needs of an organization are better satisfied when it is properly designed
and the management style is appropriate to the tasks undertaken and the nature
of the work group
4. Effective organizations not only have proper fit with the environment but also with
its subsystems

Organizational ecology (also organizational demography and the population ecology of

organizations) is a theoretical and empirical approach in the social sciences that is considered a
sub-field of organizational studies. Organizational ecology utilizes insights from biology, economics,
  and sociology, and employs statistical analysis to try to understand the conditions under which
[1]

organizations emerge, grow, and die.

The ecology of organizations is divided into three levels, the community, the population, and the
organization. The community level is the functionally integrated system of interacting populations.
The population level is the set of organizations engaged in similar activities. The organization level
focuses on the individual organizations (some research further divides organizations into individual
member and sub-unit levels[2]).
What is generally referred to as organizational ecology in research is more accurately population
ecology, focusing on the second level.[3

Development[edit]
Wharton School researcher William Evan called the population level the organization-set, and
focused on the interrelations of individual organizations within the population as early as 1966.
[4]
 However, prior to the mid-1970s, the majority of organizational studies research focused on
adaptive change in organizations (See also adaptive management and adaptive performance). The
ecological approach moved focus to the environmental selection processes that affect organizations.
[3]

In 1976, Eric Trist defined population ecology as "the study of the organizational field created by a
number of organizations whose interrelations compose a system at the level of the whole field". He
also advocated for organizational studies research to focus on populations and individual
organizations as part of open rather than closed systems that have both bureaucratic (internal)
regulation and ecological (community environment) regulation (see also Open and closed systems in
social science).[5]
The first explicit formulation of a theory of population ecology, by Michael T. Hannan and the
late John H. Freeman in their 1977 American Journal of Sociology piece "The population ecology of
organizations" and later refined in their 1989 book Organizational Ecology, examines the
environment in which organizations compete and how a process like natural selection occurs. This
theory looks at the death of organizations (firm mortality), the birth of new organizations
(organizational founding), as well as organizational growth and change.
Organizational ecology has over the years become one of the central fields in organizational studies,
and is known for its empirical, quantitative character. Ecological studies usually have a large-scale,
longitudinal focus (datasets often span several decades, sometimes even centuries). The books The
Demography of Corporations and Industries by Glenn Carroll and Michael T. Hannan (2000)
and Logics of Organization Theory: Audiences, Codes, and Ecologies by Michael T. Hannan, Laszlo
Polos, and Glenn Carroll (2007), provide the most comprehensive overview of the various theories
and methods in organizational ecology

Organizational mortality[edit]
Organizational ecology is concerned with the capacity of the environment to support organizations
and the rate of growth and decline of organizations within the environment. Each of these forces is a
part of what is called Organizational Mortality.[2][3]
Inertia and change[edit]
This factor holds that organizations that are reliable and accountable are those that can survive
(favored by selection). A negative by-product, however, of the need for reliability and accountability
is a high degree of inertia and a resistance to change. A key prediction of organizational ecology is
that the process of change itself is so disruptive that it will result in an elevated rate of mortality.
Theories about inertia and change are fundamental to the research program of organizational
ecology, which seeks a better understanding of the broader changes in the organizational
landscape. Given the limits on firm-level adaptation, most of these broader changes thus come from
the entry and selective replacement of organizations. Hence organizational ecology has spent
considerable effort on understanding the founding and mortality rates of organizations.
Hannan and Freeman define organizational inertia in terms of internal and external restraints.
Internal restraints include investment and sunk costs; availability of information for decision makers;
political restraints such as organizational culture; and organization history. External restraints include
legal and fiscal barriers to market entry and exit; availability of information about the environment;
external legitimacy; and collective rationality and strategy [2] (See also Bounded rationality).
Niche theory[edit]
Niche width distinguishes broadly between two types of organizations: generalists and specialists.
Specialist organizations maximize their exploitation of the environment and accept the risk of
experiencing a change in that environment. On the other hand, generalist organizations accept a
lower level of exploitation in return for greater security.
Niche theory shows that specialization is generally favored in stable or certain environments.
However, the main contribution of the niche theory is probably the finding that "generalism is not
always optimal in uncertain environments". The exception is produced by environments which "place
very different demands on the organization, and the duration of environmental states is short relative
to the life of the organization".
Thus, the niche theory explains variations in industrial structure in different industries. The theory
shows how different structures in different industries (generalist vs specialist organizations) are
shaped by relevant environments. [2]
Density dependence[edit]
Organizational ecology also predicts that the rates of founding and mortality are dependent on the
number of organizations (density) in the market. The two central mechanisms here are legitimization
(the recognition or taken-for-grantedness of that group of organizations) and competition.
Legitimization generally increases (at a decreasing rate) with the number of organizations, but so
does competition (at an increasing rate). The result is that legitimization processes will prevail at low
numbers of organizations, while competition will at high numbers.
The founding rate will therefore first increase with the number of organizations (due to an increase in
legitimization) but will decrease at high numbers of organizations (due to competition). The reverse
holds for mortality rates. Thus, the relationship of density to founding rates has an inverted U shape
and the relationship of density to mortality rates follows a U-shaped pattern. [2][7]
Age dependence[edit]
How an organization's risk of mortality relates to the age of that organization has also been
extensively examined. Here, organizational ecologists have found a number of patterns:

 Liability of newness. Here, the risk of failure is high initially but declines as the organization
ages.
 Liability of adolescence. The risk of mortality will be low at first as the organization is
buffered from failure due to support by external constituents and initial endowments. But when
these initial resources become depleted, the mortality hazard shoots up and then declines
following the liability of newness pattern.
 Liabilities of aging. Here, the risk of failure increases with organizational age. This could be
due to a liability of senescence (internal inefficiencies arising from the aging of the organization)
or a liability of obsolescence (a growing external mismatch with the environment). [2][3]
Evolutionary approaches to organizations[edit]
Organizational ecology can be usefully compared with evolutionary theories in economics (e.g.
Nelson & Winter, 1982).[1] Hannan and Freeman also note the influences of biological ecology and
economic evolution on their population ecology model (specifically Elton, 1927; Durkheim, 1947;
Hawley, 1950; and Hutchison, 1959). [2] Main similarities between these strands of literature are: (1)
the emphasis on organizational routines and the limits to organizational adaptability, (2) the
population or system level of analysis and (3) the importance of environmental selection.
Organizational ecology's perspective is more Darwinistic (see Hannan & Freeman, 1989, pp 20–22),
while Nelson & Winter (1982, p. 11) provide a more Lamarckian perspective. Another important
difference concerns the question: What is selected by the environment-- 'organizational forms', as in
organizational ecology, or 'routines' as in the evolutionary economics literature? Authors like Joel
Baum and Arjen van Witteloostuijn have argued for the potential of cross-fertilization between these
two research strands.
A social networks perspective on the evolution of large scale interfirm organizational networks was
presented by Braha et al.[8] who propose micro-dynamic models that reproduce actual large-scale
interfirm perceived competition networks. Several evolutionary mechanisms of organizational
networks are identified: spatial locations of firms are positively correlated with the population density;
interfirm competition is governed by cumulative advantage rules and geographic distance; and
competition network formation and firm size dynamics are closely intertwined.

Institutional Theory: Meyer & Rowan, DiMaggio & Powell

Institutional theorists assert that the institutional environment can strongly influence
the development of formal structures in an organization, often more profoundly than
market pressures. Innovative structures that improve technical efficiency in early-
adopting organizations are legitimized in the environment. Ultimately these
innovations reach a level of legitimization where failure to adopt them is seen as
"irrational and negligent" (or they become legal mandates). At this point new and
existing organizations will adopt the structural form even if the form doesn't improve
efficiency.

Meyer and Rowan argue that often these "institutional myths" are merely accepted
ceremoniously in order for the organization to gain or maintain legitimacy in the
institutional environment. Organizations adopt the "vocabularies of structure"
prevalent in their environment such as specific job titles, procedures, and
organizational roles. The adoption and prominent display of these institutionally-
acceptable "trappings of legitimacy" help preserve an aura of organizational action
based on "good faith". Legitimacy in the institutional environment helps ensure
organizational survival.
However, these formal structures of legitimacy can reduce efficiency and hinder the
organization's competitive position in their technical environment. To reduce this
negative effect, organizations often will decouple their technical core from these
legitimizing structures. Organizations will minimize or ceremonialize evaluation and
neglect program implementation to maintain external (and internal) confidence in
formal structures while reducing their efficiency impact.

DiMaggio and Powell conclude that the net effect of institutional pressures is to
increase the homogeneity of organizational structures in an institutional environment.
Firms will adopt similar structures as a result of three types of pressures. Coercive
pressures come from legal mandates or influence from organizations they are
dependent upon. Mimetic pressures to copy successful forms arise during high
uncertainty. Finally, normative pressures to homogeneity come from the similar
attitudes and approaches of professional groups and associations brought into the firm
through hiring practices.

They add that rate of institutional isomorphism is increased when firms:

* are highly dependent on the institutional environment

* exist under high uncertainty or ambiguous goals

* rely extensively on professionals

Support for Institutional Theory: Rowan, Tolbert, and Zucker

Rowan examined the growth of three administrative services in California public

schools (school health, psychology, and curriculum) from the standpoint of
institutional theory. He found that when there is a high level of consensus and
cooperation within the institutional environment, diffusion of innovative structures is
steady and long-lasting. However, when the institutional environment is contentious
and unfocused, adoption of innovative structures is slow and tentative.

Tolbert and Zucker extended Rowan's findings by evaluating the rate of adoption of
civil service organizations in the United States from 1880-1935. Their results strongly
support the institutional theories outlined above.

They found that when coercive pressures are high (e.g., under state mandate),
organizations quickly adopt new structures. Under low coercive pressures the rate of
adoption is much slower. However, increased adoption builds legitimacy in the
institutional environment, accelerating the rate of adoption of the new structural form.

Furthermore, Tolbert and Zucker confirmed the hypothesis that while early
organizations adopt the new form to improve efficiency, later organizations adopt the
structural form to maintain legitimacy. Quantitative models predicted civil service
adoption based on city characteristics (in early time periods) , but failed to predict
adoption in later time periods.

Insights: Population Ecology, Community Ecology, and Institutional Theory

After reading articles in each of these organizational perspectives, I've concluded that
debate over the predominance or "rightness" of these approaches is less important
than acknowledging each approach as a useful tool for organizational analysis. The
extreme complexity of organizational environments requires not one but a set of
approaches to increase understanding.

Each approach has gained legitimacy among a subset of organizational researchers.

These approaches compete in the technical environment of NSF and foundation
grants. I wonder if the adoption of these three organizational theories by mainstream
researchers can itself be studied using institutional theory?

Do early researchers adopt new theories for utility, while later researchers adopt for
legitimacy? Are coercive, mimetic, or normative pressures more predominant? Within
the institutional environment of academic research, which entities exert more
influence on their dependents -- organizations granting research money or
organizations reviewing articles for publication?

I suspect that the results of such a study would match findings by Tolbert and Zucker.
When academic research and tenure decisions are intertwined, issues of legitimacy
may become very important. In

Principal/Agent Theory or agency brokerage also applicable in the public sector and in terms of
specificity, have been used to respond to it. This theory is designed to explain the difference in the
private sector that often exists between the goals of shareholders (Agent) and management objectives
(Principal) are the owners of the depositary. How the different interests of members and managers and
how to deal with them is to provide a broad literature on accountability issues and adverse effects on
organizations. Are shareholders want maximum profit, while managers may seek long-term growth and
greater rights for themselves( Mostafaei, Mehran,1991). Institutions may not necessarily maximize
profits for the benefit of shareholders; Shareholders because it reduces the power of the separation of
ownership from control. Although it is not to maximize profit and share of stock, however, there must
be some profit. Theory of incentive schemes aimed at providing a way for the agents to act in
shareholders' interests. Activities are regulated and controlled by the agents of shareholders is possible
that this activity can lead to confiscation or bankruptcy. Authentic and lawyers applying theory in the
public sector will lead to a broken accountability system. Home owners who are hard to detect, and
what their true desires. Government or the public sector can be considered the original owners. For
agents, it is difficult for government managers who do know what they want from each of the owners in
each case. Does not impact the profit motive, the stock market does not exist, and there is no measure
of bankruptcy. If you owned the lack of adequate tools to ensure that they do not fulfill the demands of
the agents, they probably do not give agents. In other words, if a private sector organization, there is a
problem , it is more likely that the problem is more acute in the public sector.