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System Theory vs. Contingency Theory: What's the Difference?

Edited by Aimie Carlson || By Janet White || Published on January 27, 2024
System theory views organizations as complex, interrelated sets of elements, while contingency theory posits that organizational effectiveness depends on fitting internal operations to external circumstances.

Key Differences

System theory in management focuses on the organization as a whole, emphasizing the interdependence of all components within the system. Contingency theory, however, argues that there is no one best way to manage; rather, effective management depends on the specific environmental conditions.
System theory advocates for understanding the interactions within an organization, promoting a holistic approach. Contingency theory emphasizes adapting management styles and organizational structures to best suit external and internal variables.
System theory looks at how different parts of an organization work together and affect each other. Contingency theory examines how organizational structures and behaviors are contingent upon various environmental factors.
In system theory, leadership is about maintaining balance and harmony within the system. Contingency theory posits that leadership effectiveness depends on how well leaders' styles match the situational context.
System theory focuses on the organization’s ability to adapt as a whole system. Contingency theory focuses on adapting specific practices and strategies to specific situational demands.

Comparison Chart


Interrelation and integration within an organization
Alignment of organizational strategies with the environment

Management Approach

Holistic, emphasizing the whole system
Situational, emphasizing adaptability to circumstances

Organizational Analysis

Looks at internal system dynamics
Focuses on external environmental factors


Concerned with maintaining systemic harmony
Leadership style adapted to specific situations

Change Approach

Emphasizes adaptation of the entire system
Emphasizes specific adjustments to fit external conditions

System Theory and Contingency Theory Definitions

System Theory

Focuses on the holistic functioning of an organization.
System theory considers both the human and technical aspects of the organization.

Contingency Theory

Asserts that organizational structures and strategies should be contingent upon environmental factors.
Contingency theory prompted us to alter our marketing strategy in response to new consumer trends.

System Theory

Emphasizes the interdependence of all parts within an organizational system.
In system theory, the efficiency of production impacts marketing and sales.

Contingency Theory

A theory positing that organizational effectiveness hinges on aligning internal operations with external environmental conditions.
Contingency theory guided our decision to decentralize management in a dynamic market.

System Theory

Regards organizations as open systems interacting with their environment.
System theory explains how market changes influence organizational strategies.

Contingency Theory

Emphasizes the absence of a universal management strategy.
According to contingency theory, what works for one company may not work for another.

System Theory

Advocates for equilibrium and balance within organizational systems.
System theory emphasizes maintaining a stable work culture during growth.

Contingency Theory

Focuses on situational analysis for decision-making.
Contingency theory influenced our shift in leadership style during the crisis.

System Theory

A theory viewing organizations as complex systems composed of interrelated elements.
System theory helped us understand how changes in one department affect the entire company.

Contingency Theory

Argues for the adaptability of management practices and structures to specific contexts.
Contingency theory led to adapting our production process during supply chain disruptions.


What is system theory?

A theory that views organizations as interdependent systems with interconnected parts.

How does system theory approach organizational change?

It focuses on adapting the whole system to maintain equilibrium.

What is contingency theory?

A theory suggesting organizational effectiveness depends on fitting operations to environmental conditions.

Does system theory consider external factors?

Yes, it views organizations as open systems interacting with their environment.

What does contingency theory say about management?

It posits that management strategies should vary based on situational factors.

How does system theory view leadership?

Leadership is seen as a key element in maintaining systemic harmony.

Can system theory apply to small organizations?

Yes, it applies to any organization as a complex system of elements.

What’s a key principle of contingency theory in leadership?

Effective leadership depends on the leader’s ability to adapt to situational demands.

Is contingency theory relevant in stable environments?

Yes, it's relevant as it advises on structuring operations even in stable conditions.

How does contingency theory approach decision-making?

Decisions are based on an analysis of specific internal and external factors.

Can system theory and contingency theory be used together?

Yes, they can complement each other in understanding and managing organizations.

What’s an example of system theory in practice?

Implementing a change in one department and analyzing its impact across the organization.

How does contingency theory address organizational structure?

It suggests structuring organizations to align with external circumstances.

What role do employees play in system theory?

Employees are integral parts of the system, influencing and being influenced by other elements.

How does contingency theory view innovation?

It sees innovation as a response to specific environmental challenges.

What impact does technology have according to system theory?

Technology is a component that interacts with and affects other parts of the system.

What is the significance of feedback in system theory?

Feedback is crucial for adjusting system processes to maintain stability and effectiveness.

Can contingency theory be applied to non-profit organizations?

Yes, it can guide how they adapt operations to their unique environments.

Does system theory support centralized decision-making?

It supports decision-making that maintains balance and integration within the system.

How does contingency theory interpret crises?

As situations requiring tailored management and organizational responses.
About Author
Written by
Janet White
Janet White has been an esteemed writer and blogger for Difference Wiki. Holding a Master's degree in Science and Medical Journalism from the prestigious Boston University, she has consistently demonstrated her expertise and passion for her field. When she's not immersed in her work, Janet relishes her time exercising, delving into a good book, and cherishing moments with friends and family.
Edited by
Aimie Carlson
Aimie Carlson, holding a master's degree in English literature, is a fervent English language enthusiast. She lends her writing talents to Difference Wiki, a prominent website that specializes in comparisons, offering readers insightful analyses that both captivate and inform.

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