Open Systems Theory in organizational systems

The open systems theory describes organizational systems which interact with the external environment. This theory assumes that an organization can be analyzed as an open system, just like biological organisms (Lawrence, 1985, p. 231). Katz and Kahn (as cited in Lawrence, 1985, p. 231)explained that just as like the systems of an organism rely on each other, an open system relies on the external environment for obtaining input resources, transforms them and sends the end products back to the external environment. Examples of inputs include raw materials, labour, technological equipment, power supplies and customer’s orders. Examples of the common processes for converting inputs into outputs include production, planning, marketing and sale processes. The output may be in the form of products or services, but waste products may also be transferred to the environment.

The open system theory, therefore, describes an open system which depends upon the external environment for sustenance and must be responsive to it in order to survive. This means that an open system has to be able to adapt to the changes that occur in the external environment. A system that is not able to adapt to changes in the external environment will not be able to compete with others and will eventually die (Schermerhorn, et al, 2011, p. 34). In other words, an organization has to perform the processes of import-conversion-export in order to survive. In order to do so, an organization has to develop a boundary with the external environment, through which the exchanges will take place (Lawrence, 1985, p. 231). Individuals and groups within organizations can also be described as open systems with the internal and external environment.

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The open system theory is quite significant to management in any organization. For an organization to succeed in an open system, the boundaries need to be managed in a way that will ensure that there is appropriate inward and outward flow of resources. The boundary should be managed in a way that prevents leakages to the external environment and protect the organization from dangers emanating from the external environment (Lawrence, 1985, p. 231). The management should learn to respect the boundaries that exist between the internal and external environment of individuals and groups.

The main issues of sustainability

Sustainability in organizations refers to practices that do not negatively affect the economic social and natural environment of an organization but which guarantee future success (Wells, 2010, p. 4). A sustainable business manifests three major principles of sustainability. The first aspect is economic sustainability which implies the application of various business strategies that lead to the efficient and effective utilization of resources such that the future financial success of the organization is guaranteed (Wells, 2010, p. 4). One of the common strategies of attaining economic sustainability is through the implementation of a system that enhances the continuous upgrading of knowledge and skills of employees.

The second aspect is environmental sustainability which implies the move towards the use of renewable rather than non-renewable resources. It also implies the minimization or elimination of pollutants and hazardous wastes or disposing of such wastes in a state that is beneficial to the environment. This can be achieved for instance through replacing inputs that produce harmful wastes with inputs that are less or not harmful to the environment (Schermerhorn, et al, 2011, p. 36). An organization undertaking this practice is regarded as an active promoter of ecological or environmental sustainability.

The third aspect is social sustainability which implies the creation and maintenance of healthy social relationships within an organization and between an organization and the surrounding community. An organization upholding this principle ensures that all ethical principles are respected while dealing with human beings. Ethical standards should be apparent among organizational managers, among employees and between managers and between managers and employees and when an organization is dealing with other stakeholders such as shareholders, investors and customers (Dunphy Andrew & Suzanne, 2003, p. 71).

An organization manifesting these three principles is associated with success in all dimensions. However, many organizations are unable to meet this challenge. A good example is the world’s largest retailer, Walmart. Despite being financially successful, this company has been widely criticized on social responsibility grounds. According to Wells (2010, p. 4), this company has been paying substantially low wages and salaries to workers in the United States. In fact, a study conducted in California has shown that employees from this company earn almost a third lower than employees from organizations of the same class. The company is thus associated with increased poverty among communities neighbouring its stores. Further, the company faces a huge log of lawsuits from employees resulting from mistreatment and discrimination within the company. Though Walmart is now committed to enhancing environmental sustainability, there are no significant efforts to enhance social responsibility. This is likely going to limit the performance of this company given that there have been increasing emphasis of all stakeholders on organizations’ adherence to social responsibilities.



Ethical Behaviour in Management

The term ethical behaviour generally refers to how we organize our actions and decisions to ensure that they conform to legal, moral and professional principles of conduct. Ethical behaviour in organizations involves complying with the existing laws, moral principles, customs and expectations, organizational policies and treating others fairly and equally (Baccarani, 2008, p. 156). At an organizational level, ethical behaviour involves ensuring that our products and services, as well as actions of the members, do not negatively affect employees, the surrounding community and the society as a whole.

Ethical behaviour is one of the key elements of a successful organization and thus, it means much for the management. At the same time, management plays a crucial role in influencing ethical behaviour in organizations. The management has a huge role in setting examples to employees by complying with the ethical codes of conduct in order to sustain culture of ethics. Ethical behaviour may be manifested in management in various ways. First, it is manifested through the way management deals with employees (Baccarani, 2008, p. 158). Ethical behaviour, in this case, involves respecting the rights of all employee and treating them equally and fairly. Secondly, ethical behaviour can be manifested in management through the way management deals with outside stakeholders. This involves embracing social justice while dealing with these stakeholders such that the organization develops a positive public image. The management can manifest this by incorporating social goals into planning processes. The third area in which ethical behaviour of the management of an organization may be manifested is the extent of regulations from government agencies (Baccarani, 2008, p. 161). The management upholding ethical behaviour is able to enhance corporate health by minimizing regulations from government agencies.

Organizational controls and organizational control systems

Organizational controls refer to the procedures that guide individuals in organizations to perform their responsibilities. Controls are meant to control the behaviour of people so that they fulfil and achieve the goals of an organization (Flamholtz, 1996, p. 2). There is a variety of controls depending on the area of control within an organizational system. Operations control focuses on controlling the processes used by an organization to convert input resources into finished products or services. An example of this type is quality control. Financial control focuses on controlling the organization’s financial resources. An example of this is monitoring receivables to ensure that customers are paying bills on time (Griffin, 2011, p. 429). Structural controls focus on determining whether various elements of an organization are serving their intended purposes. An example of this type of control is monitoring the administrative ratio to ensure that staff expenses do not become excessive. Finally, strategic controls are concerned with how effectively an organization’s strategies are succeeding in facilitating the organization to realize its goals. A good example is identifying why the implementation of diversification strategy in production does not bring about the intended benefits.

An organizational control system can be defined as “a formal, target-setting, monitoring, evaluation and feedback systems to provide managers with information to determine if strategy and structure are working effectively and efficiently” (Koontz & Weihrich, 2006, p. 397) There are three major types of control systems. The first is the feedforward control which attempts to identify and prevent problems before they occur. A good example of this is preventive maintenance on equipment or machinery. This type of control helps managers to anticipate problems before they arise. A concurrent control system monitors the ongoing activities in an organization to ensure consistency with quality standards. Example of this is adjusting the temperature of water while taking a shower. Finally, the feedback control help in reviewing available information to determine conformity to standards and then taking the necessary action. Example of this is monitoring the complaints of discharged patients about billing errors (Kreitner, 2005, p. 65).

The management concept

There are numerous definitions of the term ‘management’ advanced by different authors. Allen (as cited in Kriel et al,   2005, p. 16) defines management as “a field of human behavior in which managers plan, organize, staff, direct, and control human, financial resources in an organized group effort in order to achieve desired individual and group objectives with optimum efficiency and effectiveness.” Generally, management can simply be regarded as the art of getting things done through other people.

According to contingency theory, there are many ways of doing things but none of them is fit for all situations. The methods and techniques which are most suitable for one situation may not work well in other situations (Fatta, 2003, p. 17). Similarly, there is no single management strategy that works best for all situations. The management comes identifies numerous strategies and evaluates them to choose the one that works best for a particular situation. For example, when planning to market organizational products or services, the management chooses the best strategies among product differentiation strategies, cost minimization strategies and market focus strategies. In other words, management functions are universal but their application is situational. The need to choose the best strategy among many reinforces the need for management in organizations.

Management is important to any organization for a number of reasons. First, management helps an organization to coordinate resources properly through efficient acquisition and utilization. Secondly, management enables an organization to adapt to changing environmental forces. Third, management helps in the achievement of goals by balancing the requirements of employees and jobs. Further, it helps in solving organizational problems. As Kriel et al (2005,  p. 16) explained the management identifies and evaluates among various strategies and chooses the most suitable in solving organizational problems. In addition, management helps in performance control by measuring and evaluating the actual performance of the workers. Finally, management aids organizations to conform to social responsibility principles.


Claudio Baccarani, What does ethical behaviour mean in management activities?, The TQM

Journal,  2008, 20(2), 154 – 165

Dunphy, D. C. & Andrew, G. & Suzanne, B. ‘The sustaining corporation’ In:

Organizational change for corporate sustainability: a guide for leaders and change agents of the future / Dexter Dunphy, Andrew Griffiths and Suzanne Benn. London: Routledge, 2003

Fatta B., Principle of Management. Kathmandu: Sukunda Pustak Bhawan, 2003

Flamholtz, E. G, Effective Management Control: Theory and Practice, New York: Springer,


Griffin, R. W., Fundamentals of Management, California:  Cengage Learning, 2011

Kriel, G., Singh, D., de Beer, A.,  Louw, H., Mouton, J., Rossouw, D., Berning, J.,  & du Toit,

D., Focus on Management Principles: A Generic Approach. New Delhi: Juta and Company Ltd, 2005

Kreitner, R.., Foundations of Management: basics and best practices,

New York: Houghton Mifflin Company, 2005

Koontz, H. & Weihrich, H., Essentials of Management, New Delhi: Tata McGraw-Hill      Education, 2006

Lawrence, G. W., Management development…some ideals, images and realities. In: Colman, A.

  1. and Geller, M. H. (eds.) Group relations reader 2, (1985) A. K. Rice Institute Series. 231-241

Schermerhorn, J.R., Davidson, P., Poole, D., Simon, A., Woods, P., Chau, S.L., Management

foundations and applications. First Asia Pacific Edition. Milton, Australia: John Wiley & Sons, 2011

Wells, Sustainability in Australian Business: Fundamental Principles and Practice,

Sydney: John Wiley & Sons Australia, Limited, 2010




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