Contingency theory

Contingency theory is a class of behavioral theory that claims that there is no best way to organize a corporation, to lead a company, or to make decisions. Instead, the optimal course of action is contingent (dependent) upon the internal and external situation. Contingency theory has sought to formulate broad generalizations about the formal structures that are typically associated with or best fit the use of different technologies.

To Fiedler, stress is a key determinant of leader effectiveness (Fiedler and Garcia 1987; Fiedler et al. 1994). and a distinction is made between stress related to the leader's superior, and stress related to subordinates or the situation itself. In stressful situations, leaders dwell on the stressful relations with others and cannot focus their intellectual abilities on the job. Thus, intelligence is more effective and used more often in stress-free situations. Fiedler has found that experience impairs performance in low-stress conditions but contributes to performance under high-stress conditions. As with other situational factors, for stressful situations Fiedler recommends altering or engineering the leadership situation to capitalize on the leader's strengths. Despite all the criticism, Fiedler's contingency theory is an important theory because it established a brand new perspective for the study of leadership. Many approaches after Fiedler's theory have adopted the contingency perspective.

Fred Fiedler's situational contingency theory holds that group effectiveness depends on an appropriate match between a leader style and the demands of the situation. Fiedler considers situational control the extent to which a leader can determine what his or her group is going to do to be the primary contingency factor in determining the effectiveness of leader behavior.

Fiedler's contingency theory has drawn criticism because it implies that the only alternative for an unalterable mismatch leader orientation and an unfavorable situation is changing the leader .The model's validity has also been disputed, despite many supportive tests

Other criticisms concern the methodology of measuring leadership style through the LPC inventory and the nature of the supporting evidence (Ashour 1973; Schriesheim and Kerr 1977a, 1977b; Vecchio 1977, 1983). Fiedler and his associates have provided decades of research to support and refine the contingency theory.