Four Types of Management Theory

by Andrew Latham; Updated September 26, 2017

The aim of business management is to find the most efficient and productive ways of operating a business. This usually entails finding strategies to coordinate the different branches of a business. Each business management type is determined by an underlying management theory, which determines the strategy and long term goals of the business. For instance, a successful management theory provides ways to coordinate the financial, marketing, human resources and information technology of a company.

Systems Management

Business people Having Meeting Around Table In Modern Office

The systems management theory requires business managers to view their company or organization as a system as opposed to a monolithic structure. This forces managers to reflect on how their decisions in one aspect of the business, such as laying off workers, will affect other parts of the company, such as customer service. To do this, business leaders divide the company into departments, sections and subsections as part of an overall framework.

Chaos Theory

Top view of a business meeting in progress

A growing number of business theorists view large businesses as live creatures which are part of a complex and erratic world. According to this view, specific events are rarely ever controlled, and the energy expended to manage the company must grow as the business grows. Much like humans, these trends continue growing, according to the chaos theory, until the system becomes overly complex, joins another complex structure and continues to grow.

Freedom-Based Management Theory


The freedom-based management theory suggests there is no reason why a management system should be organized in a hierarchical structure where employees are controlled and restricted by management. This theory supports the use of fully empowered employees that are more like entrepreneurs and act in full freedom while still functioning with accountability and responsibility.

Contingency Management Theory

Two Businesswomen Shaking Hands In Modern Office

The contingency theory is based around the idea there is no single right answer and that the best choices in a given situation depend on numerous factors, which must be considered. A company, according to contingency theory, should take into account all aspects of a situation when making a decision, including which type of management system it chooses. For instance, a leader using contingency theory may decide an autocratic and hierarchical management system is the best when leading soldiers into battle, but not necessarily the best if managing a group of scientists.


About the Author

Andrew Latham has worked as a professional copywriter since 2005 and is the owner of LanguageVox, a Spanish and English language services provider. His work has been published in "Property News" and on the San Francisco Chronicle's website, SFGate. Latham holds a Bachelor of Science in English and a diploma in linguistics from Open University.

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