Question

Explain the problems with contingency theory and provide an example: direction of causality.

a) Contingency theory is flawless and has no problems.
b) Problems arise when determining the direction of causality – whether structure influences performance or vice versa. For example, it's unclear whether a successful organization adopts a particular structure or if the structure leads to success.
c) Contingency theory always establishes a clear direction of causality.
d) Problems with contingency theory are solely theoretical and have no practical implications.

Answer 1

In contingency theory, the direction of causality is a problem when determining whether structure influences performance or vice versa. An unclear relationship exists between a successful organization and its adoption of a particular structure. Therefore, establishing a clear direction of causality in contingency theory is challenging.

Correct option is b.

Step-by-step explanation:

In contingency theory, a problem arises when determining the direction of causality - whether structure influences performance or vice versa. For example, it is unclear whether a successful organization adopts a particular structure because it leads to success or if the structure leads to success. This issue makes it challenging to establish a clear direction of causality in contingency theory.

One of the problems with contingency theory is the difficulty in determining whether the structure or the performance of an organization is the cause of success or failure. This is because there is no clear evidence showing whether a successful organization adopts a particular structure or if it is the structure that leads to success. For instance, an organization may have certain structural characteristics that contribute to its success, but it is also possible that the organization's success is what led to the adoption of that specific structure. Therefore, the direction of causality remains uncertain in contingency theory.