Paul Lawrence and Jay Lorsch (1967), who coined the label “contingency theory,” argue that different environments place differing requirements on org… - William Richard Scott

Institutions consist of cognitive, normative and regulative structures and activities that provide stability and meaning to social behaviour. Institutions are transported by various carriers – cultures, structures, and routines – and they operate at multiple levels of jurisdiction.

Contingency theory is guided by the general orienting hypothesis that organizations whose internal features best match the demands of their environments will achieve the best adaptation.

Different subunits within an organization may confront different external demands. To cope with these various environments, organizations create specialized subunits with differing structural features. For example, some subunits may exhibit higher levels of formalization than others; some may be more centralized in decision making; some may be oriented to longer planning horizons. The more varied the types of environments confronted by an organization, the more differentiated its structure needs to be.