Final answer:
Contingency theory is the concept that management strategies should be determined by the specific internal and external factors a company faces. The effectiveness of management is contingent on various variables such as company size, technologies used, and leadership styles, which require a flexible approach to managing an organization.
Step-by-step explanation:
The idea that the organizational structures and control systems chosen by managers depend on characteristics of the external environment in which the organization operates is known as Contingency theory. This theory posits that there is no one best way to manage an organization; instead, the most effective management strategy is contingent upon internal and external factors. These factors can include the size of the organization, the technology used, and the style of leadership. For example, telecommuting and the ability for employees to set their own hours align with a Theory Y management style, where workers are seen as intrinsically motivated and capable of self-direction. On the contrary, a traditional Theory X management style assumes that employees need to be controlled and closely monitored, which is less compatible with flexible working arrangements. It is the idiosyncrasies of each workplace and the nature of its environment that determine the best approaches for structure and control.