SYSTEMS THEORY IN MANAGEMENT
Shye (2019) defines a system as different parts blended to a complex whole. The system theory in management refers to an organizational theory treating an organization as an open or closed system (Shye, 2019). According to Shye (2019), an organization’s open system is a function of its environment, while a closed system of an organization independently relies on the organization’s environment.
Most often, system theory is applied in many organization’s management (Rice, 2013). As many organization theories treat organizations as an open system, system theory considers an organization as either a closed or open system. According to Rice (2013), the organization interacts freely with its environment through inputs, throughput, and outputs in an open system. However, in a closed system, the interaction between the organization and the environment is limited. A system approach of management treats an organization as a system with different parts united to form a complex whole. In this perspective, various production organs of an organization such as employees, products, information, assets, and resources are treated as a complex whole. An open system organization comprises of three main concepts; inputs, outputs, and feedback (Rice, 2013). According to Rice (2013), the organization receives the equipment, work of employees, and natural resources (inputs), transformed the inputs and sends the output to the environment. Feedback is obtained either through a negative or positive feedback loop (Rice, 2013). A negative feedback loop provides information about inadequacies encountered that should be corrected. Comparatively, positive feedback provides details about outputs that have worked well (Rice, 2013). In a closed system, the organization is conceived as a management system on its own besides other internal factors like materials, personnel, technology, and equipment. A closed system is limited to distributors, government policies, suppliers, and competitors (Rice, 2013).
Hence, the system theory in management considers an organization as either a closed or open system. Closed systems limit interaction between the organization’s parameters with the environment while the open system allows interaction between the organization and the environment.
References
Rice, A. L. (Ed.). (2013). The enterprise and its environment: a system theory of management organization (Vol. 10). Routledge.
Shye, S. (2019). Organizational Quality: A Systemic Functioning Theory. International Studies of Management & Organization, 49(3), 247-264.