Contingency Theory: Definition and Significance to Organizational Behavior

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  • 0:05 Contingency Theory
  • 1:47 Dependent Variables
  • 2:35 Independent Variables
  • 3:45 Lesson Summary
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Lesson Transcript
Instructor: Jennifer Lombardo
The contingency theory focuses on specific situational factors that can affect the direct relationships between independent and dependent variables. The theory explains that there is not an exact science to organizational behavior.

Contingency Theory

Companies have embraced the discipline of organizational behavior because the area of study can help them better understand employees in a work environment. Organizational behavior can be used to assess, manage and predict behavior of employees so that companies can better understand how to motivate individuals. There are situational factors that can affect the study of organizational behavior and its prediction of the behavior of employees.

The contingency theory explains that there are specific situational factors that can affect the direct relationships between independent and dependent variables in the study of organizational behavior. Independent variables (x) are the cause of the change in the dependent variable, while dependent variables (y) are a response affected by an independent variable.

There is no one best way to structure a corporation and solve employee problems. It all depends on the situation. Cheapo Toys has been trying to perfect their organization by studying different variables that affect employees. Companies need to use trial and error to see what variables provide the results needed.

Motivation and leadership are just two examples of many independent variables of the contingency theory, while productivity, turnover and absenteeism are some examples of dependent variables. Let's take a look at a real corporate example of how the contingency theory is significant to organizational behavior.

Dependent Variables

Dependent variables are affected by independent variables. Cheapo Toys wants to know what can affect worker productivity, turnover, absenteeism and job satisfaction. The company would like to find ways to make workers increase their daily production rate of toys. Managers at the toy company also would like to decrease turnover, or workers quitting or leaving for other positions. Lastly, many workers are constantly absent due to calling out sick. The end result is that Cheapo Toys would like to improve worker job satisfaction so that the company keeps up with sales and profits. According to the contingency theory, independent variables will help improve the problems that Cheapo Toys is facing.

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